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Court Interprets Confusing Construction Contract

In a case which underlines the need for precision in the drafting of construction contracts, a plethora of apparently conflicting documents in respect of a major hydro-electricity project necessitated the intervention of the High Court in order to achieve some clarity.

Following a tendering process, a contractor had been engaged by a power company to provide, among other things, a 3.5 kilometre pipeline for the purpose of extracting water from a river from which energy would be generated. Various documents were deemed to form part of the £4 million contract and, following a falling-out between the parties, issues arose as to apparent ambiguities and discrepancies in the documents and the order of precedence in which they should be read.

The underlying dispute between the parties related to the energy company’s proposal to impose liquidated damages on the contractor in respect of alleged culpable failure to complete the pipeline on time. The parties had already engaged in an adjudication process which resulted in findings in favour of the contractor but which were not binding on the court.

After performing a detailed analysis of the various contractual documents, the court ruled on certain aspects of their interpretation and, although not being alive to the wider ramifications of the dispute, was prepared to make a declaration that the river intake and the pipeline had to be fully inspected before completion was achieved and that the relevant work was in fact completed on a particular date.