THE DECISION
The TCC reaffirmed the general principles applicable for the purposes of construction of contracts in English law, and following the approach laid down by the UK Supreme Court in Wood v Capita Insurance Services², Rainy Sky v Kookmin Bank³ and Arnold v Britton⁴, it considered “the language used in the context of the Contract as a whole and the surrounding circumstances”.
Starting with the wording of sub-clause 14.9.6 itself, the TCC noted that the phrase “any work” was not a defined term, and was qualified only by the references to clauses 11 and 12. It would have been possible for clause 14.9.6 to have been qualified by reference to the preamble or to the BDS Works but, without such qualification, it would be necessary to read the phrase “any work” as “any such work” or “any of the said Works” in order to reach the claimant’s reading of the clause.
The TCC also noted that sub-clause 14.9.6 differed in key respects from sub-clauses 14.9.4 and 14.9.5, each of which expressly referred to sections 3, 4 and 5. Furthermore, sub-clause 14.9.5 used the defined term “Works”, which the TCC interpreted as a clear reference to the BDS Works. Sub-clause 14.9.6 could also have used that defined term but did not. These differences in drafting militated strongly against the claimant’s construction. While the claimant also pointed to a ‘bifurcation’ of clause 14.9 caused by the preamble (which appeared part-way through the clause), the TCC disagreed that this provided a complete answer to the interpretation exercise.
The TCC also held that it did not make commercial sense for the claimant to be entitled to the full amount due in respect of the BDS Works at a time when it had received full payment for the Ecostore Works but remedial work in respect of those works remained to be executed.
Finally, in the TCC’s view it was significant that the parties decided to vary the contract to include the BDS Works, rather than entering into a separate contract for those works. Accordingly, the unqualified reference to “any work” was a reference made in a single contract in which the Ecostore Works and the BDS Works were phases or sections of the same project.
On the question of the construction of “any work”, therefore, the TCC agreed with the defendant’s broader interpretation of that term as including both the Ecostore Works and the BDS Works. The defendant, therefore, was entitled to withhold the relevant sums from the retention money.