Contractual interpretation – misusing order of precedence provisions

RWE –v- J Bentley (2013) CILL, TCC

Facts

RWE entered into a main contract with Bentley for civil engineering works to a Scottish hydro-electric project.  The works fell into delay and an argument arose as to what the “works” were for purposes of determining whether a delay had occurred and over what period.

The contract was on NEC3 terms and consisted of a number of different documents.  Bentley successfully argued in its adjudication that the limited description of the works in the Contract Data took precedence over the more detailed description of the works in the Works Information document.

TCC Held:

When the documents were all read together, and a sensible commercial interpretation applied, there was no ambiguity.  Bentley was therefore bound by the detailed description in the Works Information.  By that definition it did not finish on time, so that it had to pay delay damages.

Comment

1. The Judge came to a different conclusion from that which the adjudicator had reached.  Adjudications are often used to obtain a ruling on points of law in principle but there is an increasing willingness on the part of losing parties to use the relatively quick and informal means of an application to the Court under Rule “CPR8″ to get a different decision.  The parties should bear this in mind before embarking upon the expense of adjudication.
2. There is a temptation to study each of the contractual documents separately trying to find ambiguities and discrepancies between the documents.  Akenhead J was very clear that this is the wrong approach.  The whole bundle of contractual documentation should be looked at in the round, and if a sensible interpretation could be found which makes commercial sense, it could be adopted.  Only if there is no sensible interpretation which makes sense of all the documents read together, should one then move to application of the order of precedence.  That is the last resort, not the first.

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