Alex Beech
- Solicitor
- Construction
Admission Impossible – John Sisk And Son Limited v Capital & Centric (rose)
The Weight of Pre-Contractual Negotiations
There has been a reminder of potential pitfalls when incorporating documents into a contract in the judgment in John Sisk and Son Limited v Capital & Centric (Rose) Limited [2025] EWHC 594 (TCC). The case also explores the treatment of pre-contractual negotiations when interpreting the intentions of either party in agreeing contractual terms, reinforcing the Court’s continuing reluctance to give regard to pre-contractual negotiations that do not form part of the contract.
Overview
John Sisk contracted with developer Capital & Centric (C&C) to undertake a substantial redevelopment of Stockport’s historic Weir Mill. A dispute arose between the parties regarding the allocation of risk concerning the site’s existing structure.
John Sisk sought various claims for extensions of time and additional costs due to the condition of the existing structure. Concerns were raised regarding Weir Mill’s structural integrity and the site’s ground conditions.
The contract provided that:
- No warranty was given by C&C as to the condition of the site, building or structures;
- John Sisk had a positive obligation to satisfy itself with the site, surroundings and sub-surface conditions; and
- John Sisk acknowledged it was solely responsible for ensuring the site, ground and existing structure were suitable for carrying out the works.
Clause 2.42.4 stated: “This clause 2.42 shall be subject to item 2 of the Clarifications”.
John Sisk’s position was that the contract clarification document addressed which party will bear the existing structures risk and designated the issue regarding the site’s structural integrity is an “employer risk.”
The problem was that the parties disagreed as to which clarification document was the correct version.
Clarity or disparity?
The contract defined the clarifications as the document headed “contract clarifications.” In the electronic version of the contract there were two clarification documents: one headed “contract clarifications” and another headed “tender submission clarifications.”
The tender submission clarifications document contained what C&C argued was the parties’ agreed position on risk which opposed John Sisk’s position that the structural risk was the employer’s.
John Sisk sought to rely on the pre-contractual negotiations as evidence that the position following the tender submissions clarifications document had been renegotiated over the following months, with the parties reaching a different position as reflected in the contract clarifications.
Generally, pre contract negotiations cannot be used as evidence of what the contract should be interpreted to mean.
The judge cited the general rule, quoting section 9 of Lewison:
“Evidence of pre-contractual negotiations is not generally admissible to interpret the concluded written agreement. But evidence of pre-contractual negotiations is admissible to establish that a fact was known to both parties; … to determine which party put forward a particular term; and to elucidate the general object of the contract. Evidence that parties negotiated on the basis of an agreed meaning is only admissible in support of a claim of estoppel or rectification.”
C&C submitted that the parties’ agreement on the allocation of risk in relation to existing structures was an objective background fact and thus fell within the exceptions to the rule.
The judge held that both parties were seeking to rely on pre-contractual negotiations to strengthen their respective arguments on risk allocation in a way that “plainly offends against the restriction of admission of pre-contractual negotiations”. In other words, neither party had attempted to plead that the pre-contractual negotiations were admissible due to estoppel or rectification.
The Decision
The judge found in favour of John Sisk, concluding that the “contract clarifications” document was the correct document to refer to when considering the allocation of risk as:
- The contract definition of “clarifications” referred to “the contract clarifications contained within Volume 2, Appendix 2.9”. This definition could only be referring to a specific clarifications document titled “contract clarifications” and not a series of documents which includes the tender submission clarification document.
- Clause 2.42.4 referred to “item 2 of the Clarifications” which from the content of the two clarification documents could only sensibly be read as referring to the “contract clarifications”.
The words “employer’s risk” were to be given their ordinary meaning, i.e. the risk relating to the building’s existing structure was a C&C risk.
The judge briefly considered whether the decision would have been different had regard been given to the pre-contractual negotiations. The conclusion was that the pre-tender discussions would not have assisted in interpreting the contract. However, they did show that, contrary to C&C’s position, the issue of liability regarding the site’s structure was not agreed upon at the time the tender submission clarification document was circulated.
The Takeaway
The case highlights the importance of ensuring that the correct documents, and, where relevant, correspondence are:
- Incorporated as part of the “Contract Documents”, and
- Clearly referenced in the body of the Contract.
How often do legal representatives spend time negotiating the contractual terms while their principals battle over commercial terms, only for the resulting “agreed position” to take the form of a single-page document inserted as one of many annexes at the last minute before signing?
Marks for “your workings” will be of little help to either party unless those workings are properly and clearly incorporated into the final contract.
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Natalie Pilagos
- Partner
- Construction
