Clancy Docwra Ltd v E.ON Energy Solutions Ltd

A contract must be construed as a whole, giving primary weight to its language while considering the documentary, factual and commercial context. Where contractual documents define works by reference to incorporated tender documents, express exclusions in those documents may limit the contractor’s obligations. General risk-allocation provisions concerning site conditions do not expand the defined scope of works to include activities expressly excluded. An instruction requiring excluded work is an addition to the contractual works and may constitute a Variation. A court should distinguish an entitlement to payment or time for instructed additional work from any entitlement to compel the employer to issue a variation instruction.

Clancy Docwra Ltd was engaged by E.ON Energy Solutions Ltd to carry out civil works for an underground district heat network. After encountering adverse ground conditions and obstructions, a dispute arose concerning whether hand digging, removal of soft spots, breaking out obstructions, and diversion of services formed part of the Sub-Contract Works, or were excluded and therefore subject to variation.

An adjudicator had decided the dispute substantially in E.ON’s favour. Clancy Docwra commenced these proceedings seeking declarations on construction and, alternatively, rectification of the Sub-Contract. The central questions were the scope of the incorporated tender documents, the effect of clauses 2.1.7 to 2.1.9, and whether the claimed exclusions altered the parties’ contractual allocation of risk.

1. Construction. Applying the principles stated in Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services [2017] UKSC 24, the Sub-Contract was to be construed objectively, as a whole, with the contractual language read in its documentary, factual and commercial context. The relevant evidence of negotiations and subjective intention had limited relevance to construction.
2. The definition of the Sub-Contract Works referred to the Sub-Contract Agreement and the Numbered Documents. Those documents included the tender submissions, post-tender clarifications and Post-Tender Minutes. Read together, they established that the removal of soft spots, hand digging, breaking out obstructions including rock, and diversion of mains and services were excluded from the Sub-Contract Works.
3. Clauses 2.1.7 to 2.1.9 allocated risk only in relation to the defined Sub-Contract Works. They did not impose on Clancy Docwra the risk of carrying out work which it had not contracted to perform. Construing those clauses otherwise would expand, rather than allocate, the scope of the works.
4. If E.ON instructed Clancy Docwra to carry out excluded work, that instruction was an addition to the Sub-Contract Works and therefore a Variation under clause 5. Clancy Docwra had no contractual entitlement to compel E.ON to issue such an instruction merely because the circumstances arose. Declaration no. 1 was granted in amended form, and declaration no. 4 was granted.
5. The broader declaration concerning a clear and unrestricted corridor was not granted. The alternative rectification claim was unnecessary in light of the construction conclusion and would not in any event have succeeded. The parties were directed to agree the precise form of the declarations.

Not an appeal. The judgment records that an adjudicator decided the dispute on 11 August 2017, substantially in E.ON’s favour. The High Court subsequently granted declarations in amended form and rejected the alternative rectification claim.