Dynniq UK Ltd v Lancashire County Council

Contractual provisions must be interpreted objectively, by considering the natural and usual meaning of the language in its contractual and commercial context. The court should give effect to all provisions and avoid treating wording as surplusage. Bespoke provisions prevail over inconsistent standard-form wording. Where a contract states that an item is to be separately measured and paid for only in specified circumstances, it is not ordinarily recoverable separately in other circumstances. Difficulties in applying an expression do not justify rewriting or deleting clear contractual language.

The claimant sought declarations concerning the proper interpretation of a term service contract for traffic-signal maintenance and construction works. The dispute concerned whether traffic safety and management costs were generally included in other prices, or were separately measurable and payable under Series 100 of the Price List. The court also considered whether the relevant contractual wording was inoperative, inconsistent, or surplusage.

1. Interpretation. The court applied the established objective approach reflected in Chartbrook Limited v Persimmon Homes Limited [2009] UKHL 38, Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36 and Woods v Capita Insurance Service Limited [2017] UKSC 24. The meaning was to be derived from the language used in the contract, read against its background and context, with business common sense considered where rival interpretations existed.
2. Following Alexander v West Bromwich Mortgage Company [2016] EWCA Civ 496, the court approached the alleged inconsistency objectively and without a preconceived wish either to find or avoid inconsistency.
3. The Preamble and the Note at the beginning of Series 100 had one clear meaning. Traffic safety and management was generally deemed to be included in the prices for other Price List items. It was separately measured and paid for only where instructed on a Task Order for the exclusive use or benefit of the defendant or one or more third parties.
4. The repetition of the exception in the Preamble and Series 100 was purposeful, not surplusage. The court applied the principle against rendering contractual provisions inoperative, relying on Macquarie Internationale Investments Ltd v Glencore UK Ltd [2010] EWCA Civ 697 and noting Lord Neuberger’s observation in Antigua Power Co Ltd v The A-G of Antigua and Barbuda [2013] UKPC 23 that surplusage arguments are rarely compelling.
5. The bespoke provisions would prevail over any inconsistent standard-form measurement provisions, applying Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. The wording was capable of operation and did not require rectification. Declarations that traffic safety and management was always separately payable were refused. The proposed third declaration was substantially consistent with the exception, but the court preferred the contractual wording itself.

Not stated in the judgment.