Aqua Design & Play International Ltd (t/a Aqua Design) & Anor v Kier Regional Ltd (t/a French Kier Anglia) & Anor

Contractual wording must be construed objectively by reading the agreement as a whole and in its relevant commercial context. A word such as published cannot bear decisive weight when isolated from the surrounding contractual provisions and incorporated documents. Where amendments reproduce some corrections to a standard form but deliberately omit another significant correction, that pattern may demonstrate which version of the standard form the parties intended to incorporate. The contra proferentem rule applies only where genuine ambiguity remains after other principles of construction have been exhausted.

The claimants, two subcontractors, claimed unpaid sums from Kier Regional Ltd after the employer under the main contract became insolvent. Kier relied on condition 32.1 of the DOM/1 subcontract conditions, which made payment conditional on Kier receiving the corresponding sums from the employer.

On a preliminary issue, the judge held that condition 32.1 had not been incorporated because the contractual reference to the conditions published by the Construction Confederation referred to the corrected version, from which clause 32 had been deleted. Kier appealed. The central issue was whether the subcontract incorporated the corrected or uncorrected DOM/1 conditions.

The appeal was allowed unanimously. The preliminary issue was answered in the affirmative, and the judge’s order was set aside.

1. The correct approach was to ascertain the objective intention of the parties by construing the subcontract as a whole against the relevant background. The reference to conditions “published” by the Construction Confederation could not be determined by dictionary meaning alone.
2. Article 1.3, read in isolation, was capable of referring to either the corrected or uncorrected conditions. Articles 1.2 and 5, together with Kier’s incorporated form 8115a, resolved the issue.
3. Form 8115a reproduced nearly all of the Confederation’s corrections word for word, but omitted the correction deleting condition 32.1. The omission was significant. The only logical explanation was that the amendments were made to the uncorrected conditions and that condition 32.1 was intended to remain incorporated.
4. The parties’ language during negotiations could not be used as an aid to construction. The main contract provision referring to the current standard amendments did not alter the plain meaning of the subcontract, even if Kier might thereby have breached the main contract.
5. There was no ambiguity in the subcontract. The contra proferentem rule therefore had no application, since it operates only where ambiguity remains after other rules of construction have failed.

Lord Justice Dyson gave the principal reasons. Lord Justice Parker and Lord Justice Peter Gibson agreed; Lord Justice Gibson added that the repeated corrections identified the source of the document and that the treatment of clause 32.1 was significant.

• Court of Appeal (Civil Division): Allowed Kier’s appeal, set aside the order on the preliminary issue, and held that condition 32.1 was incorporated.
• Queen’s Bench Division: His Honour Judge Richard Seymour QC held that the corrected DOM/1 conditions had been incorporated and that condition 32.1 was excluded.