RWE Npower Renewables Ltd v J N Bentley Ltd

Complex contract documents forming one agreement should, so far as possible, be read as complementary and coherently. A contractual order of precedence is engaged only by a clear and irreconcilable inconsistency.

Where competing provisions describe a bundle of obligations, any conflict should be resolved at the level of the obligation concerning the same subject matter, rather than by discarding an entire clause. The scope of sectional completion may be informed by the agreement as a whole, including key dates, programmes and the language used for other sections. A liquidated damages regime may assist, but negotiated figures whose basis is unclear carry limited interpretative weight.

RWE sought declaratory relief under Part 8 concerning the date and scope of Bentley’s obligation to complete section 2 of civil engineering works for a hydro-electricity generating plant. The dispute concerned the relationship between Option X5 in Part 1 of the Contract Data and clause 6.2 of the Works Information.

An adjudicator held that Option X5 took precedence and that section 2 had been completed on 21 February 2012. Akenhead J held that the contract should be read as a whole, that the provisions were substantially consistent, and that the penstock pipeline had to be completed by 27 May 2011. The appeal concerned the proper construction of those contractual provisions and the extent of the precedence clause.

The Court of Appeal unanimously dismissed Bentley’s appeal.

1. The contract documents were to be read, so far as possible, as complementary and as expressing the parties’ intentions consistently and coherently. The contractual order of precedence was relevant only if there was a clear and irreconcilable discrepancy.
2. Option X5 and clause 6.2 could be read together. Both referred to completion and testing of the penstock pipeline. The references to installation, testing and commissioning of the hydro plant did not create an inconsistency because that work belonged to Andritz, not Bentley. Section 2 therefore comprised substantially all Bentley’s work other than section 1, and Bentley was obliged to complete the pipelines by 27 May 2011.
3. If a genuine discrepancy existed, precedence was to be determined by reference to individual obligations concerning the same subject matter. An inconsistency in one respect did not require the abandonment of an entire complex contractual provision. The pipeline requirement could not be extracted and treated as a free-standing obligation separate from the obligation to complete the prescribed work for section 2.
4. The liquidated damages provisions provided limited assistance. Although the figures had been negotiated, the material did not disclose the basis on which they had been calculated. Their principal significance was that they were intended to compensate RWE for losses caused by delay affecting the following contractor.
5. Even construing Option X5 without clause 6.2, the key dates for completion of the intake and testing of the pipelines, the contractual programmes, and the contrast between the wording of sections 1 and 2 showed that the parties contemplated completion and testing of the whole pipelines before installation of the hydro plant. Section 2 was therefore not complete until the whole penstock pipeline had been completed and tested.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 150, the appeal was dismissed.
• High Court of Justice, Technology and Construction Court: Akenhead J gave judgment for RWE on its claim for declaratory relief in [2013] EWHC (TCC).
• Adjudication: The adjudicator held that Option X5 took precedence and that section 2 had been completed on 21 February 2012.