BHC Ltd v Galliford Try Infrastructure Ltd (t/a Morrison Construction)

Declaratory relief may be granted in Part 8 proceedings where the declaration would serve a useful purpose and would do justice between the parties. The claimant need not show that the declaration will resolve the whole dispute or substantially reduce the proceedings.

Contractual wording must be construed objectively, by considering its natural and ordinary meaning, the contract as a whole, its purpose, the relevant background and commercial common sense. An express provision that a change-order price is subject to final re-measurement means full re-measurement. It overrides an inconsistent reference in an underlying quotation to valuation on an add/omit basis.

The claimant carried out structural steelwork, cladding and related works for the defendant under a construction subcontract. Several additional buildings were instructed by change-order instructions. The parties agreed that some instructions were subject to re-measurement, but disputed whether the works under COI 2, COI 3 and COI 5 were to be fully re-measured or valued as fixed lump sums subject only to add/omit adjustments.

The claimant brought Part 8 proceedings for declarations as to the proper construction of the change orders. The defendant objected that declaratory relief would serve no useful purpose. The central issues were whether the Part 8 procedure was appropriate and whether the relevant wording required full re-measurement.

1. Declaratory relief. The court had jurisdiction under section 19 of the Senior Courts Act 1981 and CPR 40.20. The discretion should be exercised by considering justice to each party, whether the declaration would serve a useful purpose and any special reasons for or against granting it. The test differs from the approach to preliminary issues in Part 7 proceedings. A claimant need not establish that the declaration will resolve the whole or a substantial part of the dispute.
2. The dispute was sufficiently clear and could be resolved without determining the parties’ remaining valuation issues. The declaration would establish the basis on which the parties should undertake the valuation exercise and would therefore serve a useful purpose. The Part 8 proceedings were appropriate.
3. Construction of the change orders. Applying the principles in Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services Ltd [2017] UKSC 24, the words of COI 2, COI 3 and COI 5 had to be read in their documentary, factual and commercial context. Each expressly stated that the relevant quotation price was subject to final re-measurement on issue of finalised construction drawings.
4. The natural and obvious meaning was that the prices were subject to full re-measurement, rather than fixed lump sums subject only to add/omit adjustments. The quotations contained rates and prices capable of being used for that exercise, with extrapolation where necessary. The quotation reference to add/omit valuation appeared only in relation to COI 2 and was inconsistent with, and overridden by, the express wording of the change-order instruction.
5. The court did not need to determine which drawings constituted the final construction drawings. It granted the declaration that the works under COI 2, COI 3, COI 4, COI 5 and COI 7 were to be valued by final re-measurement in accordance with the rates and prices in the relevant quotations.