UK: JCT Contracts: Condition Precedent

Last Updated: 18 August 2010
Article by Christopher Hill, Steve Abraham and Donald Warnock

In the following case the court had to consider the construction of a condition precedent in a standard form JCT trade contract, as amended by the parties.

WW Gear Construction Ltd v McGee Group Ltd [2010] EWHC 1460 (TCC)

The employer entered into a trade contract with a trade contractor to carry out excavation and other ground works in connection with the construction of the Westminster Park Plaza Hotel. The construction manager named in the Contract was GC Project Management Ltd. The contract incorporated the JCT Trade Contract terms (TC/C) 2002 edition with Amendment No 1:2003, as further amended by the parties.

The trade contractor completed its work in about May 2009. Disputes arose between the parties in connection with payment including the trade contractor's claims for loss and expense relating to delay and disruption.

The employer referred a number of issues to adjudication, in particular the proper interpretation and application of the extension of time and loss and expense clause in the contract (clause 4.21). The adjudicator decided against the employer and considered clause 4.21 to be "devoid of meaning" and of no effect.

The employer sought a final determination from the court as to the true meaning and effect of clause 4.21. The employer argued that clause 4.21 required the trade contractor to make a timely and detailed application for loss and expense as a condition precedent to entitlement to such a claim.

The parties' amendments to clause 4.21 are shown in bold below.

Clause 4.21

"If the Trade Contractor makes written application to the Construction Manager stating that he has incurred or is likely to incur direct loss and/or expense ... because the regular progress of the Works ... has been or is likely to be materially affected ...; and if as soon as the Construction Manager is of the opinion...that the regular progress of the Works ... has been or is likely to be so materially affected ... the Construction Manager ... shall ascertain the amount of such loss and/or expense ...; provided always that:
.1 the Trade Contractor's application shall be made as soon as and in any event not later than two months after it has become, or should reasonably have become, apparent to him that the regular progress of the Works ... has been or was likely to be affected ... and such application shall be formally made in writing and fully documented and costed in detail, and it shall be a condition precedent to the Trade Contractor's entitlement under this clause 4.21.1 ... that the Trade Contractor has complied fully with all the requirements of this clauses [sic] including, for the accordance [sic] of doubt, the said time period of two months."

Construing Clause 4.21: the contractor's view

The trade contractor submitted that conditions precedent were to be construed strictly and that the words in clause 4.21 should not be construed as barring the trade contractor from a legitimate claim for loss and expense if its application were not made within the stipulated two month period. Much of the argument between the parties centred around whether the words "Trade Contractor's entitlement under this clause 4.21.1" was meaningless because there was no entitlement under that sub-sub-clause.

Construing Clause 4.21: the principles involved

The court noted the following principles as set out by Lord Hoffman in Chartbrook Ltd and another v Persimmon Homes Ltd and another [2009] UKHL 38:

  • a contract should be interpreted by reference to what a reasonable person having all the relevant background knowledge would have understood the words to mean;
  • the court did not readily accept that contractual parties have made a mistake in their written contracts;
  • if something had gone wrong with the language, the court would not attribute to the parties an intention which a reasonable person would not have understood the words to mean; and
  • a strong case was needed to persuade a court that something had gone wrong with the language.

Once it was clear that something had gone wrong with the language, the court would seek as a matter of construction and interpretation to determine what the parties really meant. In so doing, the court would have regard to the background and context of the contract to see what was intended from the wording of the contract. If it was not possible to determine what was mutually intended from the wording, the background and the context then the court might have to conclude that the parties had produced a meaningless term or contract.

There was no direct authority on this particular JCT form of contract, but the form of wording was similar and comparable to that used in the earlier editions of the JCT contracts. The court noted the dicta of Vinelott J in London Borough of Merton v Stanley Hugh Leach Ltd (1985) where the court held clause 24 (1) of the 1963 edition of the JCT contract (the pre-curser to clause 4.21) to be an "if" clause. By this the judge meant that the provisions of the clause only operated if the contractor invoked them first by making a written application. If the application was made the architect then had to form an opinion whether loss and/or expense was suffered if the written application was made within a reasonable time.

Was clause 4.21 a condition precedent: the court's view

Applying those principles, the court analysed clause 4.21 to show that it was an "if" clause similar to that referred by in the Merton case. As a result the court held that:

  • the requirement to make a timely application in writing was a precondition to the recovery of loss and/or expense under clause 4.21;
  • the trade contractor had no entitlement to recover such loss or expense unless and until it had made such an application because it was the application which triggered the ascertainment process;
  • the parties had agreed through the proviso in clause 4.21.1, as amended, that the application must be made in a timely manner and in any event no more than two months after it has become or should reasonably have become apparent that the regular progress of the works had been or was likely to be affected. The timeliness and the two-month period were related to either progress actually being affected or to a time when it was likely to be affected; and
  • The proper construction of clause 4.21 was that it was a condition precedent to the trade contractor's entitlement to recover loss or expense.

Clause 4.21: the detailed analysis

Looking at clause 4.21 in detail the court broke down the essential elements of the clause as follows:

(i) "If the Trade Contractor makes written application to the Construction Manager stating that he has incurred or is likely to incur direct loss and/or expense"

The trigger for the operation of clause 4.21 was the making of a written application by the trade contractor. There was nothing in clause 4.21 which suggested that the construction manager or the employer had any obligation to ascertain loss and expense or adjust the contract sum if there was no application.

(ii) "because the regular progress of the Works ... has been or is likely to be materially affected ..."

This made it clear that the application should state in effect that the regular progress was or was likely to be affected by the various matters listed as entitling additional loss and expense.

(iii) "provided always that"

Use of this wording was often the strongest sign that the parties intended there to be a condition precedent which was followed by a qualification and explanation of what was required to enable the preceding entitlement to materialise, i.e:

".1 the Trade Contractor's application shall be made as soon as and in any event not later than two months after it has become, or should reasonably have become, apparent to him that the regular progress of the Works ... has been or was likely to be affected"

There was nothing particularly difficult or onerous on the trade contractor to make its application within either the general or specific timetables. The application had to be made within the long stop period of two months after it had become or should reasonably have become apparent that the regular progress of the works was or was likely to be affected.

"and such application shall be formally made in writing and fully documented and costed in detail."

The requirement for the application to be made "formally" added very little if anything to the requirement that the application must be in writing. The application had to be made pursuant to clause 4.21 but it was not essential that any particular form of words was used.

"and it shall be a condition precedent to the Trade Contractor's entitlement under this clause 4.21.1... that the Trade Contractor has complied fully with all the requirements of this clauses [sic] 4.21.1 including, for the accordance [sic] of doubt, the said time period of two months"

The incorrect references to "clause 4.21.1" in this part of the sub-clause suggested a lack of attention in the drafting or checking of the draft because there was no specific entitlement under clause 4.21.1. Essentially, the words in this sub-clause were superfluous because the drafting of the earlier parts of clause 4.21 and 4.21.1 was sufficient to establish that the submission of a timely application was a condition precedent to the allowance of loss or expense.

Following the opinion of Lord Hoffman in Chartbrook, what the parties clearly intended was to refer to that part of the overall clause which actually gave rise to an entitlement which was clause 4.21. The whole context of clause 4.21.1 itself is clause 4.21 and it was obvious that the parties were intending to refer to clause 4.21.

Editors' comments

The court was clear in this case how the relevant clause was intended to operate and was prepared to correct the error the parties made in the cross-referencing of clause 4.21 and 4.21.1.

It was clear to the court that it was the trade contractor's application which triggered the ascertainment process and the fact that there was an obvious mistake in the drafting of one of the sub-clause to clause 4.21 did not change that.

View: WW Gear Construction Ltd v McGee Group Ltd [2010] EWHC 1460 (TCC)

This article was first published in the Norton Rose Construction and infrastructure updater July 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions