The difficulties in drafting suitable provisions to deal with ground conditions and existing structures are nothing new. As Katherine Butler explains, the inherent “unknown” aspects of what may be found once construction is underway will always cause issues when it comes to contractual risk allocation. In the modern construction industry, issues surrounding these “unknowns” are becoming much more prevalent as construction spreads over brownfield sites and as “cut-and-carve” projects become more popular.
Construction contracts need to address these issues. By way of context, it is established law that, where a contract is silent on the point, the Contractor will be taken to have assumed the risks surrounding the site and its conditions.[1]
It is therefore timely that His Honour Judge Stephen Davies was able to revisit the topic in John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 (TCC) earlier this year.
The facts
Sisk and C&C, using a heavily amended JCT Design and Build Contract, contracted for the construction of two new residential buildings, together with the repair and refurbishment of two listed mills in Stockport. Unexpected issues were encountered with the existing structures, which impacted on the works. Sisk claimed extensions of time and additional loss and expense as a result. C&C rejected these claims on the basis that Sisk had assumed the risks regarding the existing structures under the contract.
The main body of the contract included bespoke provisions (clauses 2.42.1 to 2.42.4) whereby Sisk was contractually responsible for all risks in relation to the existing site, including existing structures and the risk of any information provided by C&C being wrong. These clauses were, however, noted to be “subject to … the Clarifications” (clause 2.42.4).
This is where matters get a little bit complicated. There was both an electronic and a hard copy of the contract. The electronic version had two clarifications documents: one called “Contract Clarifications” and another called “Tender Submission Clarifications”. However, the physical version of the contract only included an initialled copy of the “Contract Clarifications”.
The Contract Clarifications detailed that the risks regarding the existing structures, including their ability to support and facilitate the proposed works, sat with the Employer, C&C. Conversely, the Tender Submission Clarifications included details of C&C not agreeing to this risk allocation.
The issue as to which party had, as a matter of fact, assumed the risks regarding the existing structures was referred to adjudication. The adjudicator rendered a declaration in the following terms:
“On a proper interpretation of the Contract, and in particular clause 2.42 of the Contract and items 1 and 2 of the Contracts Clarifications schedule, the responsibility for ground conditions, including the identification of the basements, structures, voids, compressed structural elements and obstructions under the existing West Mill, was solely Sisk’s risk.”[2]
Thereafter, Sisk brought Part 8 proceedings, seeking a declaration that the adjudicator’s decision was wrong and that C&C was responsible for the state of the existing structures and their ability to support the proposed works.
The arguments
In its defence, C&C argued that the Tender Submission Clarifications evidenced that the risk allocation in the main body of the Contract (i.e. Sisk’s risk) was the true position. More specifically, C&C’s comments within the Tender Submission Clarifications stated that the existing structures risk was “[n]ot accepted. The PCSA period has been for Sisk to satisfy themselves on exactly these issues. We will categorically not accept a blanket exclusion on existing structures”.[3]
To counter this, Sisk contended that the Tender Submission Clarifications “merely record the initial qualification and some history of negotiations”, whereas the Contract Clarifications “record the final contractual position”. Further and/or alternatively, Sisk argued that “insofar as there is a conflict between the Clarifications and the Tender Clarifications, the former is to be preferred because it was included on the face of the executed contract”.[4]
The decision
The judge first dispensed with C&C’s argument that evidence of pre-contractual negotiations should be admissible as an aid to interpreting the relevant provisions. HHJ Davies did not agree and determined that the facts of this case did not warrant a departure from the established authorities. To that end, the parties’ arguments would stand or fall on the objective meanings of the words used in the contract.
The judge held that the Tender Submission Clarifications, whilst forming part of the Contract, did not fall within the definition of “Clarifications”, which were carved out of the risk allocation clause. Therefore, when determining Sisk’s assumed risks, only the Contract Clarifications document was relevant. This document clearly stated that the existing structures were an Employer Risk.
On this point, HHJ Davies noted that it was extremely unlikely that C&C could have mistakenly agreed to include the concluding words “Employer Risk” against the existing structures in the Contract Clarifications when it had been advised by two separate consultancies and external lawyers.
The judge did, however, make it clear that the risk allocation carve-out in the Contract Clarifications was to be interpreted narrowly. This meant that C&C has assumed responsibility for the existing structures only and that Sisk’s broader responsibilities regarding the site conditions (i.e. the subsoil, utilities, services, etc.) remained in place.
Takeaways
This is a case where the parties had evidently turned their minds to the issue of site conditions and who would be responsible for what. The fact that the matter still ended in dispute highlights the inherent difficulties in setting out these contractual lines of risk allocation with sufficient clarity and certainty.
This decision emphasises the care that needs to be taken when drafting multi-tiered contract documents and in ensuring that they do not contain contradictory provisions. Focus needs to be given to the priority of documents and to ensuring that the main contract reflects the agreement reached.
It should also be noted that parties will not be allowed to latterly try to rely on pre-contract negotiations to demonstrate that a contract means anything other than what it objectively says. The English Courts remain vigilant to ensure that the admissibility of such discussions is permitted only in very limited circumstances.
[1] Thorn v London County Council (1876) 1 App. Cas. 120
[2] Paragraph 6 of the judgment.
[3] Paragraph 36 of the judgment, which also notes in a footnotes that “PCSA” is “usually an abbreviation for Pre-Construction Services Agreement and, in this context, is plainly a reference to the period of time preceding the entry into the design and build contract in which Sisk was – in at least C&C’s opinion – in a position to investigate and satisfy itself as to such matters”.
[4] Paragraph 47 of the judgment.