Case Alert: John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 (TCC) - Leave no page unturned

A recent judgment in the TCC has considered the proper interpretation of a provision in an amended JCT Design & Build Contract (2016 edition) which sought to qualify a condition on risk allocation by reference to other wording contained in the contract documents.

Due to inconsistencies between the electronic and physical copies of the contract, the judge had to consider issues of which documents were incorporated, and were being referred to in this instance, as well as arguments on interpretation, and the admissibility of pre-contract negotiations.

The case raises no new law, but should serve as a keen reminder to contracting parties to use very clear drafting when settling negotiated positions on risk allocation, and to pay attention when compiling contracts electronically, as is now common practice in the industry, to avoid uncertainties around proper incorporation of documents.

Case Facts

The case – John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 (TCC) – related to a project for the design and construction of two new residential buildings together with repairs to and refurbishment of two listed mills and other associated works. The contract was based on a JCT Design and Build 2016 form – but with an extensive Schedule of Amendments. The nub of the dispute was around the allocation between the parties of risk for ground conditions and existing structures. The Schedule of Amendments included new clauses 2.41.1 to 2.41.3 which sought to impose the risk of ground, sub-soil and other physical conditions including in relation to existing buildings onto Sisk in very extensive terms (for example whether the risks in question were foreseeable or not). However, an additional clause 2.43.4 had also been included to qualify those risks by saying “this clause 2.42 shall be subject to item 2 of the Clarifications”. Quite properly the parties had sought to reflect in the Schedule of Amendments the fact that an adjustment to the contract terms had been debated and agreed between them; had they failed to do so the contract clarifications would, in all likelihood, have had no effect despite being included in the contract documents. The debate was around the meaning of those clarifications.

“Clarifications” were defined as “the clarifications headed ‘Contract Clarifications’ contained within Volume 2, Appendix 2.9 of the Employer’s Requirements”. 

Prior to the proceedings, there had been an adjudication between the parties pursuant to which the adjudicator had found that the ground conditions and existing structures risk lay solely with Sisk. Sisk then brought Part 8 proceedings seeking a declaration that the risk associated with the existing structures on the site (including their suitability to support/facilitate the proposed works) lay with Capital & Centric (“C&C”). (There was no challenge in these proceedings as to the adjudicator’s finding that the risk of ground conditions lay with Sisk.)

The first issue arose because the electronic version of the contract had two clarifications documents, one called “contract clarifications” and one called “tender submission clarifications”. However, the physical version only included an initialled copy of the “contract clarifications” documents. C&C argued that the reference in the contract to “Contract Clarifications” included both documents, which was important to its case because it argued that the “tender submission clarifications” made apparent that C&C was not willing to accept the risk of the existing structures. The judge found that both documents formed part of the contract documents. However, this finding was primarily the result of Sisk not having pleaded a case that the “tender submission clarifications” document was not a contract document. Had that point been pleaded and argued then perhaps the result might have been different.

However, while the judge found that the electronic “tender submission clarifications” did form part of the contract documents, he also found that clause 2.43.4 and the contractual definition of “Clarifications” was making specific reference to the document called “contract clarifications” (not the “tender submission clarifications”) in both the electronic and hard copy appendices.

Item 2 of the contract clarifications document said:

The debate revolved around the meaning of “Employer Risk”. Sisk argued that this should be interpreted as passing the risk of the existing structures to C&C. C&C argued it simply meant that it was to insure the existing structures and to seek to obtain a warranty from Arup. Despite there being no contractual definitions of “Existing Structures Risk” or “Employer Risk”, the judge found that they could “reasonably obviously be understood in their normal or natural meaning, especially in the context of construction contracts generally and this design and build contract in particular, as referring respectively to: (a) the contractual risks associated with the condition of the existing structures (as a defined term); and (b) the contractual risks accepted by the employer”.

As such, he dismissed C&C’s argument that the words “Employer Risk” only meant that C&C took the contractual risk of failing to provide the insurance and / or to obtain the warranty from Arup, and held that “the far more likely meaning of these words … is that C&C was the ‘risk owner’, i.e. it held the contractual risk as to the suitability of the existing structures including their suitability to support and facilitate the contract works” and as such clause 2.42.4 provided a carve out of the existing structure risk from the other risks imposed on Sisk by clause 2.42.

In considering the “tender submission clarifications”, the judge conceded that the document was “plainly potentially relevant, like any other contract document, to the interpretation of contract clarification two”, but was not to be read into clause 2.42.4 in the same way as the contract clarifications. The judge placed more weight on the fact that other clarifications included in the Contract Clarifications document dealt with risk allocation between the parties to support his finding as to the meaning of item 2.

The relevant parts of the “tender submission clarifications” that C&C relied upon was that they contained a record of the parties’ negotiations on existing structure risk, and C&C’s objections to accepting the risk, which it maintained were subsequently agreed between the parties two months before signing the contract. However, the judge observed that there was no specific recorded agreement that Sisk would accept the existing structures risk, and that C&C was unable to adduce any other evidence that the parties had reached a firm agreement, not to be revisited, on that point before executing the contract.

On the basis that (i) parties can and often do change their positions during contract negotiations, and there was no compelling reason to assume that had not happened in this case, and (ii) it was extremely unlikely that C&C would have agreed to include the relevant contract clarification and the wording “Employer Risk” if they believed that they were not agreeing to take the risk for the existing structures, the judge agreed with Sisk’s position.

Admissibility of pre-contractual negotiations

C&C had sought to rely on pre-contractual negotiations to support its argument that no different agreement was reached between the parties on existing structures from that set out in the “tender submission clarifications”.

The judge considered the relevant principles of contract interpretation and found no proper basis to have regard to the pre-contractual negotiations as admissible, which would “depart from the clear guidance in the textbooks and the authorities”, meaning that neither party could rely on them to support their positions.

That notwithstanding, the judge briefly considered the pre-contractual negotiations evidence before him and concluded that it would not have assisted him one way or another as regards the proper interpretation of the contract. It did, however, demonstrate that C&C’s contention that agreement was reached in March 2022 (when the tender submissions clarification document was updated) and nothing changed thereafter was demonstrably wrong.

Conclusion

The need for this separate Part 8 claim could probably have been avoided with more meticulous drafting and greater care taken over compiling the contract, and it serves as an important reminder to:

1. ensure clear drafting is used at all times, accurately reflecting agreements, and especially in respect of key risk areas that have been the subject of debate and negotiations between the parties;
2. avoid ambiguities arising through references to contract documents by enshrining the major terms in the contract conditions;
3. carefully review all contract documents and take care to ensure consistency between them;
4. consider what should and should not be included as contract documents;
5. consider the use of priorities clauses where appropriate; and
6. double check which files are saved or uploaded when compiling electronic contract documents, and check consistency of file names with descriptions of documents in the contract.