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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> John Roberts Architects Ltd v Parkcare Homes (No. 2) Ltd [2006] EWCA Civ 64 (09 February 2006) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2006/64.html Cite as: [2006] EWCA Civ 64 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TECHNOLOGY AND CONSTRUCTION COURT
HIS HONOUR JUDGE RICHARD HAVERY QC
HT-04-379
Strand, London, WC2A 2LL |
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B e f o r e :
THE RT HON LORD JUSTICE KEENE
and
THE RT HON LORD JUSTICE SCOTT BAKER
____________________
JOHN ROBERTS ARCHITECTS LIMITED |
Appellant |
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- and - |
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PARKCARE HOMES (NO. 2) LIMITED |
Respondent |
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Smith Bernal WordWave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Francis Tregear QC (instructed by Messrs Fladgate Fielder) for the Respondent
____________________
Crown Copyright ©
LORD JUSTICE MAY:
Introduction
Adjudication
The agreement for adjudication
"The Adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another as part of his decision. The Adjudicator may determine the amount of costs to be paid or may delegate the task to an independent costs draftsman."
The construction of this clause is central to this appeal.
Facts
The judge's decision
"The meaning which a document … would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammar; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd v. Eagle Star Life Assurance Co. Ltd [1997] AC 749."
The judge did not find it a startling conclusion that an adjudication agreement should contain a provision which operates to enable a party to recover its costs in limited circumstances, such as where the matter goes to a decision of the adjudicator on the dispute referred to him. The parties using the words of clause 29 against the relevant background would reasonably have been understood to mean the meaning of the words. The parties meant what the words mean. Or, as the judge preferred, the meaning of the document appears from the plain meaning of the words in their context. There is, I think, an element of tautology here; but certainly the meaning of the document has to be determined in its context.
"The decision of the adjudicator is his decision of the matters set out in clause 20. It is only as part of that decision that he can direct the payment of legal costs. In reaching that conclusion, I have not so far considered clause 1. That clause provides that the procedure is to be interpreted on the basis that the object of adjudication is to reach an inexpensive decision. Thus in my judgment the words in clause 29 must be interpreted on the basis that the costs in question are likely to be inexpensive (a false basis in this case, but the meaning cannot depend on the particular case). That only strengthens the conclusion I have reached.
The adjudicator did not make a decision on the matters set out in the notice. Thus the effect of clause 29 was that he had no jurisdiction to decide the question of liability for costs."
Grounds of appeal and submissions
"While deprecating the extension of the use of the expression "purposive construction" from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators' award and I take this opportunity of re-stating that if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flights business commonsense, it must be made to yield to business commonsense."
Mr Tregear then referred to the commentary on this passage in the judgment of Hoffmann LJ (as he then was) in Co-operative Wholesale Society Ltd v National Westminster Bank plc [1995] 1 EGLR 97 at 99F as follows:
"This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business commonsense. But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement."
In the present case, says Mr Tregear, the language is not capable of more than one construction. All Antaios allows you to do is to choose between two viable meanings. Here there is only one. One of Mr Walker's submissions – that the words "as part of his decision" are unnecessary and can be notionally left out – is not a solution. That would be illegitimate rectification.
"The difficulty with that approach is that it is commonplace that problems of construction, in relation to commercial contracts, do arise where the circumstances which actually exist at the time when the contract falls to be construed are not circumstances which the parties foresaw at the time when they made the agreement. If the parties have foreseen the circumstances which actually arise, they will normally, if properly advised, have included some provision which caters for them. What that provision may be will be a matter of negotiation in the light of an appreciation of the circumstances for which provision has to be made.
It is not, to my mind, an appropriate approach to construction to hold that, where the parties contemplated event 'A', and they did not contemplate event 'B', their agreement must be taken as applying only in event 'A' and cannot apply in event 'B'. The task of the court is to decide, in the light of the agreement that the parties made, what they must have been taken to have intended in relation to the event, event 'B', which they did not contemplate. That is, of course, an artificial exercise, because it requires there to be attributed to the parties an intention which they did not have (as a matter of fact) because they did not appreciate the problem which needed to be addressed. But it is an exercise which the courts have been willing to undertake for as long as commercial contracts have come before them for construction. It is an exercise which requires the court to look at the whole agreement which the parties made, the words which they used and the circumstances in which they used them, and to ask what should reasonable parties be taken to have intended by the use of those words in that agreement, made in those circumstances, in relation to this event which they did not in fact foresee.
In the present case it seems to me that that question can be answered without the need to resort to any novel principle of interpretation. But, for my part, I am not persuaded that Lord Hoffmann intended, in the passage in the Investor's Compensation Scheme case (at 912-913) which is so often relied upon, to propound any novel principle. To my mind, he was doing no more than emphasising that words are to be construed in the context of the agreement which the parties are making, having regard to the other provisions in the agreement, and the commercial purpose for which the agreement is made. What is, of course, essential is that the court can be confident, from the other provisions of the agreement and an understanding of its commercial purpose, what meaning the parties did intend the words to bear. That may lead to the conclusion that the words used do not express the meaning which the parties intended, but that will be an exceptional case."
Discussion and decision
"The Adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another, but only as part of his substantive contested decision."
In my judgment, the more natural meaning of the clause in its context, and certainly the commercially sensible meaning, is that the words "as part of his decision" mean "as part of what he may decide". This is, in my view, what the words against the relevant background would reasonably be understood to mean. A linguistic purist might say that this duplicates a meaning that can be extracted from the antecedent word "may". But I do not think that the court is required in this instance to attribute an additional meaning to the last five words of the sentence, when to do so produces a very odd and uncommercial result – a result which the parties, by not including the words "but only" and "substantive contested", have not clearly expressed.
Lord Justice Keene: I agree.
Lord Justice Scott Baker: I also agree.