In RWE Npower Renewables Ltd v JN Bentley Ltd,  EWCA Civ 150, England's Court of Appeal had to consider how ambiguities between contractual provisions should be resolved and whether it was necessary to resort to the order of precedence of the provisions.
Under the relevant contract, JN Bentley Ltd (“JN Bentley”) agreed to carry out civil engineering works for RWE Npower Renewables Ltd (“RWE”). Clause 2 of the contract contained a list of the contractual documents, which included the NEC3 Engineering and Construction Contract Conditions 2005 (revised 2006), Contract Data Parts 1 and 2, post-tender clarifications and Works Information and Site Information. Clause 2 stated that the documents were agreed to form part of the contract and were to be read and construed as part of it in the order of precedence in which they had been listed.
A dispute arose between JN Bentley and RWE over the date for completion of certain works and the crux of the dispute was whether JN Bentley's obligation was governed by a particular clause in the Works Information or a particular clause in Part 1 of the Contract Data. The dispute was referred to adjudication. The Adjudicator held that there was an inconsistency between the two clauses in question and that the clause in Part 1 of the Contract data took precedence over that in the Works Information.
RWE, being dissatisfied with the Adjudicator's decision, commenced proceedings in the High Court, seeking a declaration that JN Bentley's obligations were defined by a clause in the Works Information. The High Court held that the contract should be read as a whole and construed so far as possible to avoid inconsistencies between different parts, on the assumption that the parties had intended to express their intentions in a consistent and coherent way. It was the court's view that there was no significant inconsistency between the two clauses in question and that they were quite capable of being read together without undue difficulty.
JN Bentley appealed to the Court of Appeal, arguing that the High Court judge was wrong in his approach to the documents in that there was a clear discrepancy between the clauses in question which meant that the judge should have discarded the whole of the clause in the Works Information. However, the Court of Appeal upheld the High Court's decision and held that the contract documents should as far as possible be read as complementing each other and therefore as expressing the parties' intentions in a consistent and coherent manner. Despite differences in detail between the two clauses (one of the clauses identified the works in greater detail, while the other was worded in more general terms) one would expect, the Court of Appeal said, the two provisions to complement each other and only in the case of a clear and irreconcilable discrepancy would it be necessary to resort to the contractual order of precedence to resolve ambiguity. In this case, the Court of Appeal said, the two parts of the contact were capable of being read sensibly together and in harmony with each other.
The Court of Appeal said that even where there is a genuine discrepancy between documents, deciding the order of precedence of the provisions only becomes necessary where “…different provisions on their true construction impose different obligations in relation to the same subject matter.” It said that a contract is a bundle of related obligations, each of which can be separately identified and there was no reason in this case that the parties would have intended to abandon the whole of any provision if it was shown to be inconsistent in any respect with another. The correct approach was to resolve discrepancies between individual obligations, rather than forcing a choice between one clause over another.
This case demonstrates that the court will not look straight to the order of precedence provisions in a contract in order to resolve apparent ambiguities between contractual provisions and will work on the assumption that the parties had intended to express their intentions in a clear and consistent way. The court will only resort to the contractual order of precedence provisions where there is a clear and irreconcilable discrepancy between provisions.
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