This is another instalment of the Vinci / Beumer dispute (see [2016] EWHC 2283 (TCC) and comment). In this decision, Vinci, having won the last round to set aside an adjudicator’s decision to hold contract terms unenforceable, sought declaratory relief that the terms of the contract detailing sectional completion and delay damages are valid. Beumer argued that it was impossible to tell which works were to be completed in which section, and that the provisions were therefore void for uncertainty.

The factual background of the case involved a contract between Vinci and Gatwick Airport for development works at the South Terminal. The works to be carried out consisted of demolition of a pier connecting the terminal to the gates, design and construction of a new pier, and a new baggage handling system.

Vinci hired a subcontractor to carry out works dealing with the new baggage handling system, including design, manufacture, installation, testing and user training. The subcontract divided the works into sections with different completion dates. Section 5 was entitled ‘baggage’ and section 6 ‘remaining works’. The subcontract also provided for liquidated damages for each section, in differing amounts. The amount of liquidated damages for ‘baggage’ was £22,000 / calendar day, and £17,000 / calendar day for ‘remaining works’.

Delays occurred, and the parties entered into a settlement agreement whereby they agreed to extend the completion dates for sections 5 and 6. A dispute arose as to the operation of this sectional scheme. Beumer argued that the delay damages were unenforceable by reason of uncertainty on a true construction of the subcontract as amended by the settlement agreement. Vinci brought the case seeking declaratory relief that the delay damages provisions are valid.

Vinci argued that works required to make the baggage system operational are within section 5, and disconnecting the existing equipment was within section 6. Beumer argued that it was unclear whether disconnecting the existing equipment was within section 5 or 6. Although it was clear that some works must be included within ‘Remaining Works’, it was unclear what this would be and therefore the contract as amended, together with the liquidated damages scheme, was too uncertain to be enforced.

Mrs Justice O’Farrell began her legal analysis with the now-familiar consolidation of principles dealing with contractual construction given in Arnold v Britton [2015] UKSC 36 and Wood v Capita [2017] UKSC 24. Of particular importance were decisions showing the courts’ reluctance to hold a term void for uncertainty (Anangel Atlas v Ishikawajima-Harima [1990] 2 Ll Rep 526; Whitecap v John H Rundle [2008] EWCA Civ 429) and that a term must be interpreted so as to bring it into harmony with other terms in the context of the whole contract.

In finding for Vinci and upholding the enforceability of the contract, O’Farrell J noted that the parties had agreed different delay damages for each section, meaning they must have had some idea of what the works included, even though the works were not specifically defined for each section. A schedule of the contract which included relatively vague statements of works nevertheless could be grouped into two distinct phases, corresponding to different sections of the works. Section 5 works were all to do with making the new baggage handling system operational. Section 6 included works necessary to remove redundant facilities and to provide associated infrastructure (paras 53 to 56).

Section 6, the central section for Beumer, was interpreted to include subcontractor works like disconnection of the redundant baggage equipment. This was clearly meant to be done after the new baggage system is operational, as an airport terminal cannot operate without a baggage handling system. Such works were therefore clearly within section 6, and not within section 5. The completion of the new baggage system was also timed in the schedule detailing subcontractor access as being before access was given for disconnecting old equipment (Paras 57 to 61).

The sectional completion and delay damages provisions were therefore sufficiently certain to be operable and enforceable.

While most of the case is fairly straightforward contractual interpretation, it does serve to highlight how the relevant principles work in practice and that the court is reluctant to hold a term in a contract void for uncertainty.