Technology and Construction Court: Whose risk is it anyway?

In this article we provide an overview of the decision of the Technology and Construction Court ("TCC") in John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 TCC, which considered interpretation of a clarification clause and the resulting apportionment of risk between the parties. 

Background

John Sisk and Son Ltd ("Sisk") was employed by Capital & Centric (Rose) Ltd ("C&C") under an extensively amended JCT Design & Build Contract 2016 dated 20 March 2022 for the (1) design and construction of new residential buildings and (2) repair and refurbishment of two listed mills and two other existing buildings at Weir Mill in Stockport ("the Contract").

A dispute arose as to whether Sisk or C&C bore the risks associated with the existing structures on site. Sisk contended that C&C was responsible and adjudicated unsuccessfully for declarator on this point. Sisk thereafter raised a Part 8 Claim for declaratory relief in the TCC.

The contract

The contract provided that:

• C&C gave no warranty as to the condition of the site or existing structures or as to the reliability of its site surveys, reports etc. (Clause 2.42.1).
• Sisk was deemed to have inspected the site and satisfied itself of the site conditions including the existing structures (Clause 2.42.2).
• Sisk acknowledged that it was solely responsible and that the site and existing structures were suitable for the intended development and use (Clause 2.42.3).

The above clauses were said to be "subject to item 2 of the Clarifications", which were defined as "the clarifications headed "Contract Clarifications" contained within Volume 2, Appendix 2.9 of the Employer's Requirements". 

The contract clarifications

There were two versions of the final contract; electronic and hard copy. The electronic version contained two 'clarifications' documents which were each tabbed in one spreadsheet, namely:

1. "Tender Submission Clarifications" dated March 2022 (which pre-dated the Contract by two months), and
2. "Contract Clarifications" dated 17 May 2022. 

The hard copy included only the "Contract Clarifications" document, Item 2 related to "Existing Structures Risk including ability to support / facilitate proposed works". It noted firstly that the Employer was “to insure the Existing buildings / works” and “also to obtain warranty from Arup with regard to the suitability of the proposed works”. It was also noted as an Employer Risk. 

Item 2.1.02 of the "Tender Submission Clarifications" included numerous comments on this topic which ended with a comment that C&C were to insure only.

Conflicting interpretations

Sisk's position was that:

• The "Tender Submission Clarifications" reflected the negotiation process and no weight should be attached to it. 
• The "Contract Clarifications" were to take precedence as they were included in the executed hard copy contract.
• The "Contract Clarifications" reflected the final agreed position on allocation of risk, which lay with C&C.

C&C contended that:

• The "Tender Submission Clarifications" reflected the agreed position on risk and Sisk's approach was inconsistent with the agreement set out in that document.
• Parties had not revisited the Existing Structures Risk allocation and changed their agreement after the "Tender Submission Clarifications" document.
• The "Employer's Risk" referred to in the "Contract Clarifications" related to the risk of failing to obtain insurance and/or a warranty from Arup, the civil and structural engineers instructed by Sisk.

Pre-contract negotiations

Generally, evidence of pre-contract negotiations cannot be used to interpret the concluded contract. It will be permitted in limited circumstances: to establish that a fact was known to both parties, to determine who put forward a particular term, or to glean the general objective of the contract.

Both parties referred to pre-contract correspondence to support their contention that they had or had not renegotiated the allocation of risk between dates of the tender submission clarifications and the contract clarifications documents. C&C argued that the fact the parties had agreed the risk allocation was an 'objective background fact' which could be admitted as evidence of pre-contract negotiations. 

The TCC's decision

As both parties' references to pre-contract negotiation amounted to attempts to aid contract interpretation, the TCC rejected their attempts to include such evidence. Basing its decision solely on interpretation of the contract documents, the TCC concluded that:

1. The contract allocated Sisk "all risks in relation to the existing site, including the risk in relation to the condition of the existing structures and the risk of any of the information provided by C&C being wrong."  
2. This risk was subject only to the Clarification set out at Item 2 of the "Contract Clarifications" document.
3. "Existing Structures Risk" and "Employer's Risk" were not defined contract terms and could reasonably be understood in their normal meaning.
4. Accordingly, the risk associated with the existing structures rested solely with C&C and was carved out of the wider provision of Clause 2.42 of the Contract.
5. Had it considered the pre-contract negotiations in making its decision, the TCC could not agree with C&C that the risk position was agreed at the time of the "Tender Submission Clarification".

Key takeaways

There are limited circumstances in which the pre-contract negotiations can provide context, so parties should ensure that final contract documents comprehensively reflect what they have agreed. In doing so, they should be careful to include only finalised/agreed documents as earlier 'work in progress' documents can conflict with the agreed position leading to disputes. In some situations, setting out an 'order of precedence' may also help avoid disputes further down the line.

As part of a comprehensive contract package, it is crucial to clearly define and allocate risk as ambiguities and conflicting statements can lead to disputes and litigation. Clarifications can play a significant role in interpreting risks and responsibilities, so it is important to ensure that they are explicitly documented, agreed upon, and reflected throughout the contract.

If you would like to discuss this article further please Hayley Swanson.