Construction Disputes – Contract Interpretation and Expert Evidence

The recent case of Pickard Finlason Partnership Ltd v Lock and another [2014] provides useful guidance as to how the court interprets contracts and also clarifies the importance of independent experts.

 

Contract Interpretation

When you are looking to employ a builder in regards to construction works you generally tend to shop around to ensure that you are getting the best deal and a reputable builder that can undertake the job to a satisfactory standard.

However, those looking to enter into a construction contract with a builder should take care in ensuring that the contract wording is such that they are getting what they bargain for. The Courts are often reluctant to imply terms into a contract when the words within the contract have a plain and ordinary meaning.

 

Pickard Finlason Partnership Ltd v Lock and another

This is illustrated in the recent case of Pickard Finlason Partnership Ltd v Lock and another [2014]. The High Court had before it a construction dispute. In this case the Defendant (the employers) had purchased a well-known listed building which they planned to subdivide into self-contained flats. The Defendant employed a consultancy body (the Claimant) to provide what the court described as a full professional service in relation to design and construction.

The key issue that the court had to decide was the employers’ liability for payment of fees claimed by the consultants and whether the consultant was required, at the post planning permission stage, to establish accurate costs of the works before it could render an invoice.

 

Room for interpretation?

The case is useful in illustrating how the court will interpret contracts. According to the judgment, the case involved “bespoke and… complex terms as to payment.” Payment was to be made in four stages, including 40% of the total fee when planning permission was obtained and the development costs were established The judgment stated that words that were used in the contract appeared to make it quite clear that the amount payable only become “firm” once the “cost estimates are refined and the contract sum is known” and once “a more accurate cost of the building and contract works is established”.

Given the apparent clarity of the words, the court decided in the Defendant’s favour and gave the words of the contract their plain meaning. The court was not willing to reject words as being absurd or inconsistent when it was possible to give them their natural and ordinary meaning. The court found that the contract was construed in such a way that the consultants should have established accurate costs of the works, before it could render an invoice. They had not done this and therefore were in repudiatory breach of the contract and not entitled to be paid the invoice.

Parties to a contract should therefore be weary as to what they pay over if the other side has not complied with express contract terms as to payment. In this case the Consultancy Company had failed to establish accurate costs of the works and therefore was not entitled to be paid. It may be the case that you will not be responsible for an invoice that has been presented to you in such a way that is not compliant with the express terms of the contract.

In this case the court chose to construct the contract in such a way that was consistent with the plain and ordinary meaning of the words. In general the court will only imply a term into a contract when it is clear from the expressed terms of the contract that it was what the parties intended.

 

Expert Evidence – Independence is crucial

The case of Pickard Finlason Partnership Ltd v Lock provides a valuable insight into good practice in regards to expert evidence and conduct.

In Pickard the court questioned the impartiality of the experts used to provide evidence and found the experts used were guilty of arguing the case for their specific clients.

Civil Disputes should be conducted in compliance with the Civil Procedure Rules. Part 35 of the Civil Procedure Rules is clear in that experts must remain independent, their duty is to the court to provide an honest and impartial opinion based on the facts of the case.

The case emphasises the importance of choosing and instructing an expert in an appropriate manner and ensuring that the expert provides evidence that does not advocate their party’s case. In this case the court found some of the key witnesses had persuaded themselves of a version of events that was more suited to their case.

Here at Redress Law we have first hand experience in dealing with commercial and construction disputes and interpreting contracts to be able to provide you with a great service and experienced legal advice.

We take special care to ensure that we source suitable experts and ensure that they are made aware of their obligations to remain independent and always have in mind their overriding duty to the court.

Find out more about Construction Negligence.