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Vinci Construction UK Ltd v Beumer Group UK Ltd [2017] EWHC 2196 (TCC)

  • United Kingdom
  • Construction and engineering

12-10-2017

Facts

Vinci was employed to carry out construction works in Gatwick airport. It subcontracted part of the works (relating to the new baggage handling system) to Beumer, splitting the works into six sections. Section 5 (relating to “Baggage”) and section 6 (relating to the “Remaining Works”) provided the basis for the dispute.

The subcontract provided for sectional completion with liquidated damages payable by Beumer in respect of each section. When the sub-contracted works were delayed, the question arose as to which section the delayed works fell under; Beumer contended that the subcontract did not define with sufficient precision what works were included in section 5 and what works were included in section 6. As a consequence, Beumer contended that the liquidated damages provisions attached to both sections were void for uncertainty.

The adjudicator agreed with Beumer and found the subcontract’s provisions for sectional completion and liquidated damages inoperable because of the lack of certainty and, as a consequence, were unenforceable. Vinci commenced Part 8 proceedings for a declaration by the court.

Decision

In her judgment, O’Farrell J demonstrated the court’s often reluctant approach to finding a contractual provision void for uncertainty; this reluctance was somewhat compounded by the fact the contracted works had been performed. In the event of a vaguely phrased contract, the court will take into account the commercial context and the parties’ intentions. Only when the parties’ intentions are impossible to ascertain would the court be minded to find a contractual provision uncertain:

 “If it is open to the court to find an interpretation that will give effect to the parties’

intentions, then it will do so […]

However, a provision in a contract will be void for uncertainty if the court cannot

reach a conclusion as to what was in the parties’ mind”

Beumer was correct in pointing out that “baggage” and “remaining work” were not defined and that the subcontract was unclear as to what works were covered by sections 5 and 6.

However, the judge found this alone was insufficient to render both sections void for uncertainty and to discharge Beumer from the delay liquidated damages attached to both sections’ completion dates.

O’Farrell J identified that Vinci and Beumer clearly planned for the works to be split into several sections and had agreed on a completion date per section; both parties also consented to delay liquidated damages to be attached to each section’s completion date, acting as a clear incentive on Beumer to complete the works in a timely manner.

Consequently, the delay damages provisions were held enforceable.

Comment

It is essential for contracts to be drafted clearly and to avoid uncertainty; achieving this however is no mean feat and even the plainest of terms can (and commonly are) subject to the artifice of alternative interpretations when viewed in the context of a dispute.

The TCC, Court of Appeal and Supreme Court have not always followed the same path on matters of contractual interpretation, as evidenced by appeals being overturned, dissenting judgments and extra-judicial commentary.

One common theme in this line of jurisprudence is the courts’ willingness to take into consideration the parties’ intentions; within this context, this judgment represents a consistent approach by the courts that, in order to find a contractual provision void for uncertainty, there remains a high threshold that a party must meet.

Separately, Vinci contested the adjudicator’s decision by commencing court proceedings under the Alternative Procedure for Claims (Part 8 of the Civil Procedure Rules), rather than using the ‘standard’ process under Part 7. The Part 8 procedure is an effective process for resolving disputes where the question to be decided by the court is unlikely to involve a substantial dispute of fact.

When faced with such disputes the Part 8 procedure is a valid option; as parties are not required to produce significant factual evidence, the need for disclosure and witness statements is significantly curtailed, saving both time and cost.

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