Construction Law | Dispute Resolution | Procurement | Training Interpretation of Contracts London +44 (0)20 7022 2192 London@QuiggGolden.com Dublin +353 (0)1 676 6744 Dublin@QuiggGolden.com Belfast +44 (0)28 9032 1022 Belfast@QuiggGolden.com Maidstone +44 (0)1622 541 700 Maidstone@QuiggGolden.com Quigg Golden

Here today James Golden BEng LLB CEng FICE FIEI FCIArb FCInstCES MRICS Director Adjudicator Solicitor James.Golden@QuiggGolden.com

Quigg Golden What we do Construction Law Procurement Law PWC, NEC, FIDIC contract advice/drafting Procurement Law Strategy, bid support, training, challenges Dispute Avoidance/Resolution Conciliation/Mediation Adjudication Arbitration Project Management

Agenda & Learning Objectives Ambiguity in Contracts How the courts deal with it A selection of case law Unforeseen Ground Conditions Common law position Position under the standard forms of construction contracts Misrepresentation

Ambiguity in Contracts “Rubin’s Vase is an image used in psychology but now well known. It is an ambiguous form that can be seen either as a vase or two symmetrical faces, but not both.” O’Donnell J, Law Society of Ireland v Motor Insurer’s Bureau (MIBI) [2017] IESC 31

Ambiguity in Contracts Ambiguous – having more than one meaning; open to different interpretations (Concise Oxford English Dictionary, (12th Edition, Oxford University Press 2011). What can the parties do to rectify an ambiguity in a contract? Mutually agree to the meaning; or Refer it to the courts or a decision maker.

Principles of contract interpretation Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 (Lord Hoffman) set the general principles: Consider the meaning a document would convey to a reasonable person having all the background knowledge reasonably available to the parties at the time. The background knowledge – all relevant factual information which would have affected the way in which the language of the document would have been understood by a reasonable person. Pre-contract negotiations excluded. Ascertain what the words were intended to convey as opposed to their literal meaning. May conclude that something has gone wrong with that language and the court must attempt to give effect to what the parties meant to say.

Law Society of Ireland v Motor Insurer’s Bureau (MIBI) [2017] IESC 31 Approved the Investors Compensation Scheme principles Adopted a holistic approach Judgment of O’Donnell J: “It is necessary to understand the entirety of an agreement and then to consider what that means for the specific issue now raised. It is necessary therefore to see the agreement and the background context, as the parties saw them at the time the agreement was made, rather than to approach it through the lens of the dispute which has arisen sometimes much later.”

02/10/2018 MT Højgaard v E.ON CWMF Training (Pilot Scheme)

Avoiding Ambiguity in Contracts Put all of the contractual terms in writing Define contractual terms i.e. Completion Include all documents that form part of the contract Review amended or bespoke contracts Have an effective hierarchy clause

Ground Conditions

Ground Conditions The problem is what lies beneath…

Common Law Position In the absence of an express contractual provision reliance on common law position Bottoms v York Corporation (1892) HBC (4th ed), Vol 2 York had made no express guarantee or representation with regard to the ground conditions Contractor bears the risk sub-soil

PWC Schedule Part 1K: 10.3 – Condition Precedent K5 – Factual error in the Works Requirements K19 – Unforeseeable ground conditions 10.3 – Condition Precedent

NEC4 Cl 60.1.12 – physical conditions – experienced contractor would have judged at the Contract Date. Cl 60.2 – What the Contractor is assumed to have taken into account. Cl 60.3 – Ambiguity or inconsistency.

FIDIC Red and Yellow Book - Cl 4.12, Employer bears risk of physical conditions which could not have been reasonably foreseen by an experienced Contractor at the date of tender. Employer must provide all data. Silver Book Cl 4.11 and 4.12  - Contractor is responsible

IEI (4th edition) Cl 12(1) – reasonable foreseeability by an experienced contractor.

Misrepresentation An untrue statement made by one party to another to induce it into the contract Types of misrepresentation: Fraudulent Misrepresentation Negligent Misrepresentation Wholly Innocent Misrepresentation

Fraudulent Misrepresentation Leading case Derry v Peek (1889) “…fraud is proved when it is shown that a false representation has been made (1) knowingly, (2) without belief in its truth, or (3) recklessly, careless whether it is true or false.” Relief – contract void and can sue for damages in Tort

Pearson v Dublin Corporation [1907] A.C. 351, HL A clause providing that the contractors must not rely on any representation would not protect employers for the reckless fraudulent misrepresentation of the employers’ engineer.

Negligent Misrepresentation Section 45(1) of the Sale of Goods and supply of Services Act 1980 “Where a person has entered into a contract after a misrepresentation…and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true”

Wholly Innocent Misrepresentation Section 45(2) of the Sale of Goods and supply of Services Act 1980 “Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled…to rescind the contract…the court may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so”

Conclusion Parties decide who bears the risk If silent = common law position Contractors beware Be clear about representations and their status

Questions

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