At first blush, this decision presents a surprising result. Despite bespoke amendments imposing the risk of ground conditions on the sub-contractor, and a clause giving priority to those amendments, the sub-contractor escaped liability for ground conditions by reference to exclusions contained in tender documentation appended to the sub-contract. This highlights the sometimes unexpected outcomes which can arise where pre-contractual documentation is appended to a contract. The tender documents in the present case were taken to have defined the subject matter of the sub-contract, thereby narrowing the scope of the sub-contract conditions.
The court’s findings as to rectification show that E.ON was well aware of the exclusions relied upon by CDL but had placed faith in the general wording of its bespoke amendments. Parties in similar positions should consider carefully whether the drafting of such bespoke provisions are adequate to extend the scope of the works required by the contract and/or to overcome qualifications contained elsewhere in the contract documentation. In the absence of clear wording, clauses which seek to allocate the risk of certain contingencies to one of the parties are likely to be interpreted within the boundaries of the scope of works defined by the contract. They will therefore be susceptible to the types of arguments made by CDL in the present case.
The present decision also bears resemblance to the MJ Hojgaard litigation determined by the Supreme Court last year (see our Law-Now on that case here). That case also involved the court giving effect to appendices to a contract in circumstances which were argued to be surprising and unexpected. The temptation in many projects, due to time or cost constraints, is for such appendices to be included without detailed review or consideration. The use of a priorities clause is unlikely to fully protect against the risks which arise in such circumstances. As these cases show, the court will strive to give full effect to all of the documents forming the contract and the use of appendices should be carefully considered. This underlines the importance of the role of the technical/commercial teams in reviewing any technical and commercial documents making up a contract.
References MT Hojgaard AS v E.ON Climate and Renewables UK Robin Rigg East Ltd [2017] UKSC 59 Clancy Docwra Limited V E.ON Energy Solutions Limited [2018] EWHC 3124 (TCC)