A recent Technology and Construction Court case has highlighted key issues for contractors including the need to ensure the unambiguous drafting of construction contracts.
This case Workman Properties Ltd v Adi Building And Refurbishment Ltd [2024] EWHC 2627 (TCC) has reaffirmed the principle that in design-and-build projects, the contractor bears the responsibility for completing the design. Any attempt to shift this responsibility must be explicitly stated in the contract.
It is a reminder that English courts will primarily rely on the language used in the contract itself when interpreting the parties’ contractual obligations. Extrinsic evidence or pre-contractual discussions will have limited influence unless these are explicitly incorporated into the contract or in specific circumstances like identifying the meaning of a descriptive term.
The Court’s endorsement of CPR Part 8 procedure confirmed its value in resolving matters of contractual interpretation efficiently. Parties should carefully assess whether their disputes involve significant factual issues before challenging the use of this procedure.
In this case Workman Properties Ltd (“Workman”) engaged Adi Building and Refurbishment Ltd (“Adi”) for the expansion and refurbishment of facilities at Cotteswold Dairy in Gloucestershire, on the basis of an amended JCT Design and Build Contract 2016. The project suffered delays and cost overruns as a result of issues with the design of the dairy refurbishment works.
The contract entailed works including new cold storage and drainage systems. At the heart of the dispute was the interpretation of WPL’s design responsibilities under the JCT contract.
Adi initiated the first adjudication in the dispute, asserting that Workman had breached its contractual obligations by failing to provide a design completed to Stage 4/4(i). The Adjudicator sided with Adi and this became the foundation for Adi’s subsequent financial claims.
In the second adjudication, Adi sought compensation for delays and additional costs incurred due to the alleged breach. The adjudicator awarded significant sums to Adi, attributing the project’s difficulties to Workman’s failure to deliver a fully developed design. Workman challenged the adjudicator’s decisions in court under CPR Part 8.
Adi, as the design and build contractor, assumed responsibility for the design’s completion. The contract documentation included the Employer’s Requirements (“ERs”), which described the state of the design handed over to Adi.
Specifically, clause 1.4 of the ERs became the focal point of the dispute. Adi claimed thia amounted to a contractual warranty by Workman that the design had been fully developed to Stage 4/4(i). This assertion formed the basis of Adi’s contention that any shortcomings in the design provided were a breach of Workman’s obligations.
Adi argued that it had priced and planned the project on the assumption that the design was already at the specified stages. When issues arose during construction, requiring further development, Adi sought compensation for delays and additional costs, claiming they were a direct result of Workman’s breach of warranty.
The Court had to determine whether clause 1.4 of the ER’s constituted a warranty by Workman or simply described the design’s state of progress.
Treating the clause as a warranty, the Court noted, would undermine the essence of a design-and-build contract. Adi was contractually required to complete the design, and any suggestion to the contrary would need unequivocal contractual language.
The judge rejected Adi’s interpretation and found in favour of Workman, ruling that the contractor retained full design responsibility.
The Court ruling found the case turned on contractual interpretation rather than factual disputes and reaffirmed that general references to potential factual issues are insufficient to challenge the use of Part 8.
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