WW Gear Construction Ltd v McGee Group Ltd

Contractual conditions precedent are construed by applying the ordinary principles of contractual construction. They are not subject to a separate rule of unusually strict construction. Where drafting contains an obvious mistake, the court may correct it as part of construing the contract if it is clear that something has gone wrong and clear what the parties intended. Under a loss and expense clause, a requirement to submit a timely written application may operate as a condition precedent to contractual recovery. The clause must be read as a whole, including its trigger, timing requirements and machinery for ascertainment. Such a condition does not necessarily exclude an independent claim for damages for breach of contract.

McGee Group Ltd carried out groundworks for WW Gear Construction Ltd under amended JCT Trade Contract terms. Disputes arose concerning delay, disruption and the Contractor’s entitlement to loss and expense under clause 4.21. An adjudicator had treated the condition precedent in clause 4.21.1 as devoid of meaning. The Employer commenced proceedings seeking a declaration as to the proper construction and effect of the clause. The central issue was whether a timely, detailed written application was a condition precedent to recovery under clause 4.21, despite the reference in clause 4.21.1 to entitlement under that sub-clause itself.

1. Declaration granted. The Contractor was required to comply with clause 4.21.1 as a condition precedent to recovering loss and expense under clause 4.21.
2. The ordinary principles of contractual construction apply to conditions precedent. Although the court does not readily assume that formal contractual language contains a mistake, it may construe the language to give effect to the parties’ clear intention where it is clear that something has gone wrong and clear what correction is required. This is part of interpretation, not rectification. The approach in Chartbrook Ltd and another v Persimmon Homes Ltd and another [2009] UKHL 38 was applied.
3. Clause 4.21 is an “if” clause. The Contractor’s written application triggers the contractual ascertainment process, and the Construction Manager has no obligation to ascertain or allow loss and expense that has not been applied for. The application must be made as soon as, and in any event within two months after, it became or should reasonably have become apparent that regular progress had been or was likely to be materially affected.
4. The reference to entitlement under clause 4.21.1 was an obvious drafting error. Clause 4.21.1 was a proviso to the substantive clause and created no separate entitlement. Construed in context, the reference was to the entitlement arising under clause 4.21 as a whole. The other requirements, including formal written submission, full documentation and detailed costing, were operative. “Formally” added little, no particular form of words was required, and the required detail was not necessarily infinite.
5. The condition precedent governed recovery under the contractual adjustment machinery. It did not prevent the Contractor pursuing preserved common-law claims for damages for breach of contract. The Employer’s first requested declaration was therefore made; its proposed second declaration was abandoned.

First instance decision. The judgment records an earlier adjudication decision dated 29 March 2010, but no appellate history is stated.