BNP Paribas Depositary Services Ltd (BNP) entered into a design and build contract with Briggs & Forrester Engineering Services Ltd (B&F) for the design and construction of stair pressurisation works in a high-rise block in Central Manchester. The key issue for the court in this dispute related to the objective interpretation of the contract to ascertain what was within the scope of works for B&F. The central question was what obligations (if any) did B&F have to carry out additional asbestos surveys and associated further remedial works that were necessary after additional asbestos containing materials were found during the course of the works. BNP contended that B&F were required to carry out these works at its own cost. B&F, relying principally on a pre-contractual quotation, contented that the additional works were outside of its scope of work and, if it was required to carry out the work, it would require an additional instruction (and payment) from BNP. 

A dispute ensued which led to B&F issuing a suspension notice under the contact in January 2023 which was followed by a termination notice in February 2023. B&F argued grounds for termination arose as it was prevented from completing works because of a lack of instruction from BNP and for not providing further asbestos surveys. BNP treated this termination as a repudiatory breach of contract.

The TCC Decision

Based on a thorough application of the principles of contractual interpretation, the court ruled in favour of BNP and concluded that B&F had incorrectly suspended works on 8 December 2021. The court held that B&F was required to carry out additional refurbishment asbestos surveys and structural refurbishment works which were within its contractual obligations. Both these obligations, which B&F had refused to undertake without further instruction, fell within the original scope of works. Moreover, the court found that BNP was correct in treating B&F's early termination as a repudiatory breach of contract. Fundamentally, B&F were required to fulfil their obligations under the contract and were held liable for delays and associated costs. 

Practical Impact of the Decision

The ruling has highlighted several notable areas for consideration.

1. Contractual interpretation reminder

A reminder of the approach courts take to contractual interpretation in construction disputes, reaffirming that they will take an objective purposive approach. The court here focused on two key principles of contract interpretation . Firstly, that pre-contractual negotiations should be used cautiously when being relied on to evidence the agreement reached. Secondly, that if a contract contains special provisions then, unless the contract states otherwise, greater weight must be given to the special conditions.

Crucially, the design and build contract stated the following at Clause 2.1:

"Carry out and complete the Works in a proper and workmanlike manner and in compliance with the Contract Documents, the Construction Phase Plan and other Statutory Requirements and for that purpose shall carry out and complete the design for the Works."

The court ruled that by agreeing to the above clause "B&F was accepting full design responsibility for the whole of the design, including that contained in the Employer's Requirements, and including that required to comply with the Statutory Requirements." This encompassed both the removal of unexpected or unforeseen asbestos and connected remedial works.

B&F was not entitled to rely on the accuracy of information contained in previously completed reports and surveys provided by BNP. This was on account of the strict approach the court took when interpreting clause 2.40 which was a special new condition to the contract stating that B&F could not rely on information provided by BNP. HHJ Stephen Davies found that B&F had clearly accepted the role of a design and build contractor meaning they could not contend, as a traditional contractor might, for reliance on the information provided by the employer.

The court additionally addressed the issue of intent in the contract clauses in question. It was highlighted that the special conditions, which are not part of the standard form JCT, represented the parties specific agreed intentions. The Court took an objective approach to interpreting the contract and did not infer parties' intentions, reaffirming that parties should explicitly capture their precise intentions within the written contract.

2. Warning to Contactors

For contractors, this judgment reinforces the need to scrutinise contracts thoroughly to ensure all obligations and their scope of duties are clearly defined and understood. This case highlights the potential risks that contractors can face if they are not fully aware of their obligations or scope of duty under a contract. Further, contractors must give careful attention to extra or special conditions within contracts as the court will give greater weight to these clauses. In B&F's view they were unexpectedly held responsible for removing asbestos that the company was unaware existed at the point of signing the contract. This led to an incorrectly issued suspension notice which was found to be a repudiatory breach of contract, leading to incurring additional costs and reputational damage. 

3. Applications for permission to withdraw admissions

The Defendant, B&F, had made an admission within its Defence. B&F's counsel then attempted in closing oral submissions to revoke this admission and contended that it was an 'oversight'. However, it was determined that allowing this late revocation of an admission would not be in the interests of justice as the Claimant's counsel had been relying on the admission in his written opening speech, served in the run up to trial. This serves as a clear reminder to parties involved in legal proceedings to take great care when making specific admissions and making a late application under CPR 14.5 for permission to remove an admission. This will likely be given short shrift.

Conclusion

The judgment serves as a cautionary reminder for both contractors and employers, emphasising the need for due diligence in understanding and fulfilling contractual obligations whilst navigating the complexities and unpredictability of large-scale projects. Front end efforts with contracts may save time and cost, avoiding back-end disputes!