Part 8 Proceedings and questions of contractual interpretation: further guidance
November 2024In Workman Properties Ltd v Adi Building and Refurbishment Ltd, the Technology and Construction Court (TCC) assessed whether Part 8 proceedings, under the Civil Procedure Rules (CPR) could resolve key contractual interpretation issues without substantial factual disputes. The case adds to a growing body of guidance on using Part 8 to address specific legal questions, underscoring its strategic benefits in construction disputes.
Background
The TCC decision in Workman Properties Ltd v Adi Building and Refurbishment Ltd concerns a Part 8 claim brought by Workman in relation to an amended JCT Design & Build Contract 2016 (Contract). The case involved the expansion of facilities at Cotteswold Dairy, Gloucestershire. Disputes arose regarding the scope of ADI’s design responsibility under the Contract, including how it used the tender design.
Following an initial adjudication between the parties in 2023, where the adjudicator sided with ADI on design responsibility, Workman was found in breach of contract and a warranty. There was a second adjudication in 2024 over valuation of a payment certificate, including extensions of time and loss and expense claimed, as a result of the first adjudication on design responsibility which Workman paid. However, it sought declarations from the TCC through Part 8 proceedings to overturn the design liability finding, relying upon the novation provisions and asserting that it had not warranted the completeness of the existing design.
This case is notable as part of a trend in which the TCC is clarifying the boundaries of the alternative procedure for claims under Part 8 of the Civil Procedural Rules, building upon recent guidance given in Berkeley Homes (South East London) Ltd v John Sisk and Son Ltd [2023] EWHC 2152 (TCC), as discussed in our recent article on Part 8 Guidance which can be found here.[1] The court in Berkeley Homes emphasised that Part 8 proceedings are intended for claims unlikely to involve a substantial dispute of fact, making them well-suited for resolving discrete questions of contractual interpretation.
The issues
The primary issues in this case revolved around the declaration sought on the interpretation of the Contract, specifically Workman’s design responsibility for pre—and post-tender designs.
ADI opposed the use of the Part 8 procedure, arguing that substantial factual disputes existed regarding the parties’ understanding of the design status, the tendering process, and the relevant negotiations prior to the Contract. ADI suggested that a full trial was necessary to adequately address these complexities.
The TCC was therefore tasked with determining the suitability of the Part 8 proceedings for resolving the contractual interpretation issues, as well as clarifying the respective responsibilities of the parties under the contract.
Procedural points to note
Parties can use Part 8 for declarations concerning adjudication business as identified in the TCC Guide, but not any dispute arising from an adjudication context (Merit Holdings Ltd v Michael J Lonsdale Ltd [2017] EWHC 2450 (TCC)). Paragraph 9.4.3 of the TCC Guide states not all applications connected with adjudication are ones where the TCC will hear applications for declaratory relief under the abbreviated timescales applied for adjudication enforcement. Labelling this as ‘an adjudication application’ should not be used to expedite proceedings (e.g., in a Part 8 claim for declaratory relief) unless there is another valid justification for an expedited hearing. In addition, there may be additional procedural requirements to consider or comply with depending on whether this label and certain exceptions apply under the Practice Directions apply.
Decision
The Judge considered that interpretation of the Contract was suitable for a Part 8 application, but criticised:
- Workman for issuing its application in London. Parties should consider the appropriate location to issue proceedings, which includes considering where the parties and project are based, under paragraph 2.3(1) of Practice Direction 57AA. Issuing in the Bristol or Birmingham TCC would have meant earlier listing of this application, potentially before the second adjudication.
- The parties for failing to apply for court directions on the appropriate procedural route under Part 7 or Part 8, i.e. supporting case management and saving significant costs.
- ADI for its failure to clearly identify the disputed facts going directly to the issue of contractual interpretation. Following the requirements in Practice Direction 57AC (Trial Witness Statements) may have assisted with this point and costs.
The Judge ruled in favour of Workman, concluding that all relevant contract terms, except for the contested portion of the Employer’s Requirements, supported Workman’s position as to design responsibility based on the content of the Contract. The TCC determined that:
- ADI had not demonstrated the existence of any genuine factual disputes affecting the question of contract interpretation.[2]
- It was beneficial and fair for both parties to clarify their contractual rights and responsibilities at this stage, given the ongoing disputes in relation to the Contract.[3]
On the interpretation of the Contract, the TCC held that it could make a determination on the issues raised, balancing the interpretation and meaning of differing provisions relied on by the parties, to give judgment as to the design responsibility of ADI and risk for design issues.
Commentary
This decision provides significant insights into contractual interpretation and the strategic use of Part 8 proceedings in construction disputes. Following Berkeley Homes v Sisk, the TCC in Workman v ADI reaffirmed that Part 8 is an appropriate procedural pathway for clarifying legal questions that do not involve substantial factual disputes, allowing parties to avoid the more time-intensive process of Part 7 proceedings. This approach aligns with recent judicial commentary suggesting that Part 8 is an efficient forum for determining discrete contractual issues, such as scope of design responsibility. By successfully using this procedure, Workman was able to overturn unfavourable adjudication findings, highlighting how Part 8 claims (if used correctly and effectively) can serve as a powerful tool in practice.
The TCC’s robust approach demonstrates that reliance on pre-contractual negotiations or extrinsic evidence is unlikely to influence the interpretation of clear contractual terms unless explicitly incorporated into the contract. Further, most contracts contain a form of entire agreement and variation/amendment provisions which will likely impact any future attempts by parties to refer to pre-contractual negotiations or other documentation.
Although the decision is specific to the contractual terms, it also reinforces the importance of precise contract drafting, particularly concerning design responsibilities in design and build agreements. Parties must therefore ensure that the language used in their contractual agreements reflects their intentions accurately and comprehensively. This is particularly important if parties are basing their negotiations on industry standard forms.
If you’re interested in finding out more about the issues covered in this article or wish to discuss any matters arising, please contact James Vernon. For more information on other key trends impacting the construction, engineering, and infrastructure sector and how these might impact your business, please visit our website or contact your Beale & Co lawyer
[1] Berkeley Homes (South East London) Ltd & Anor v John Sisk and Son Ltd [2023] EWHC 2152 (TCC) (24 August 2023)
[2] Workman Properties Ltd v Adi Building And Refurbishment Ltd [2024] EWHC 2627 (TCC) (21 October 2024) paragraphs 19-27
[3] Paragraph 52
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