England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		27/02/2007

MR. JUSTICE JACKSON :

1. This judgment is in seven parts, namely: Part 1 Introduction; Part 2 The Facts; Part 3 The Present Proceedings; Part 4 Under the Subcontract Does Honeywell Have a Continuing Right to Inspect the Main Contract?; Part 5 If So, Does That Right of Inspection Extend to the Settlement Agreement?; Part 6 If So, is Honeywell Entitled to Obtain Copies of the Settlement Agreement?; Part 7 Conclusion.

Part 1. Introduction

2. This is a claim for declarations and specific performance or an injunction, in order to enforce the Claimant's contractual right to inspect certain documents. The Claimant in this action is Honeywell Control Systems Limited, to which I shall refer as "Honeywell". The Defendant is Multiplex Constructions (UK) Limited, to which I shall refer as "Multiplex".
3. Multiplex is the main contractor constructing the new National Stadium at Wembley. Honeywell is one of the subcontractors. The employer under the main contract is Wembley National Stadium Limited, to which I shall refer as "WNSL". WNSL is a wholly owned subsidiary of the Football Association ("FA").
4. After these introductory remarks I shall now turn to the facts.

Part 2. The facts

5. By a contract dated 26th September 2002 made between (i) WNSL, (ii) Multiplex and (iii) Multiplex's Australian parent company as guarantor, Multiplex agreed to design and construct the new National Stadium at Wembley. I refer to this as "the main contract".
6. Clause 1.3 of the main contract sets out a number of definitions. In particular the "contract" is defined as meaning "the entire agreement between the Employer, the Contractor and the Guarantor comprising the Recitals, Conditions and Appendices, including the Employer's Requirements and Contractor's Proposals".
7. Clause 12.1 of the main contract provides:

"Employer's Changes. The Employer may at any time issue a notice proposing a Change in the form set out in the Employer's Requirements (a 'Change Notice Proposal'). The term 'Change' means:

.1 a change (including any omission of work, services or obligations) to the Employer's Requirements ..."

8. Having entered into the main contract, Multiplex proceeded with the project. Multiplex engaged a number of different sub-contractors to design, construct and install the different elements of the stadium. Indeed, I am told by counsel that the entirety of the works are being executed by sub-contractors.
9. Multiplex entrusted to Honeywell the design, supply and installation of various electronic systems for communication and control of the building. These comprise nine separate systems, as follows: 1. The building management system "(BMS)"; 2. The fire detection and alarm system; 3. The public address and voice alarm; 4. The communications network; 5. The access system; 6. The stewards' and emergency telephones; 7. The MATV system; 8. The CCTV system; and, 9. The commissioning management system. Most of these systems are self-explanatory. I should, however, explain briefly items 1, 4 and 7.
10. Item 1, the BMS, is a computerised control system for all the mechanical and electrical services such as heating, cooling, ventilation, in addition to the Honeywell systems described below. The BMS control system is connected to 35,000 separate points throughout the stadium, each of which may have several individual different control settings.
11. Item 4, the communications network, is a high speed data network which transfers communications between systems. For example, it reports faults from the various systems back to the head end of the BMS system; it allows third party broadcasters, such as television channels, to transfer data from the stadium direct to their own individual systems; it also provides linkage for the CCTV system to the external police systems to enable remote control and monitoring for security purposes. The main spine of the communications network is a fibre optic cable.
12. Item 7 is the MATV system. There are many television screens distributed throughout the stadium which can accept and broadcast a variety of different input signals.
13. By way of shorthand, I shall refer to all of the above systems as "the electronic systems".
14. The sub-contract made between Multiplex and Honeywell was dated 27th May 2004. I shall refer to this as "the sub-contract". The first recital to the sub-contract states "the Contractor has entered into a contract "the Contract" particulars of which are set out in Appendix Part 1, Section A hereto". The fourth recital to the sub-contract states

"the Sub-Contractor has been issued with copies of all documents forming the Contract except any detailed prices of the Contractor included in the Employer's Requirements, the Contractor's Proposals or the Contract Sum Analysis. In addition the Sub-Contractor has examined and discussed the Sub-Contract Documents and the Contract with the Contractor at length and is satisfied:

.1 as to the feasibility, practicality and sufficiency of the Sub-Contract Documents and has consequently agreed to accept full responsibility for the feasibility, practicality and sufficiency of the designs and specifications for the Sub-Contract Works;

.2 that the Sub-Contract Works can be carried out and completed with ten timescale envisaged within the Appendix part 4 at a cost not exceeding the Sub-Contract Sum; and

.3 that there is no divergence or inconsistency between the Sub-Contract Documents or the Contract."

15. Clause 1.1 of the Articles of the Sub-Contract provides

"the Sub-Contractor shall be deemed to have notice of all the provisions of the Contract except any detailed prices of the Contractor included in the Employer's Requirements, the Contractor's Proposal or the Contract Sum Analysis."

16. Article 1.3 of the Articles of the Sub-Contract provides

"the Sub-Contract comprises the conditions together with any Special Conditions annexed hereto (collectively referred to as the 'Sub-Contract Conditions'), the Appendix and the Articles of Agreement. Unless otherwise specifically stated a reference in the Articles of Agreement or the Sub-Contract Conditions or any Special Conditions to any article or clause means that article in the Articles of Agreement or that clause in the Sub-Contract Conditions or Any Special Conditions."

17. The Appendix to the Sub-Contract is divided into 16 parts. I shall refer to this as "the Appendix". Part 1 of the Appendix provides:

"Works: the demolition of existing structures, Site clearance, ground and enabling works, construction, fit out and other works, the supply of goods, materials, components and parts, and all other work specified in or as may reasonably be inferred from or implied in the Employer's Requirements, the Contractor's Proposals or otherwise in the Contract and including all work, actions and services and any changes made to the foregoing in accordance with the Contract necessary or required to implement and complete the design, construction, fit-out, testing, commissioning, setting to work and handover of the Project and any works performed or defects, shrinkages or other faults or outstanding items corrected and/or completed during the defects liabilities period in accordance with the Contract.

Contract: The Design and Construct Contract including the Contract Appendices thereto dated 26 September 2002 between the Employer, (Wembley National Stadium Limited) and Multiplex Constructions (UK) Limited and Multiplex Constructions PTY Limited as guarantor, and referred to as the 'contract'.

Inspection: The contract, the Contract Appendices, the Employer's Requirements, the contractor's proposal and the Contract Sum Analysis (excluding any detailed priced of the Contractor) and following additional documents, if any have been issued to the Sub-Contractor on Compact Disc. Any document referred to herein and/or contained on the compact disc may be viewed at the Contractors offices at a conveniently arranged time ..."

18. Part 2 of the Appendix lists the numbered documents, one of which is the instructions to tenderers.
19. Part 16 of the Appendix makes certain amendments to the Sub-Contract Conditions. When reading out the relevant parts of those conditions, I shall incorporate without further mention the amendments effected by part 16 of the Appendix.
20. Clause 1.3 of the Sub-Contract Conditions sets out a number of definitions. In particular, "Contract" is defined as "the Contract referred to in Appendix Part 1".
21. "Defects Liability Period" is defined as "the period commencing on the date under clause 14 that the Sub-Contract Works have achieved practical completion and expiring on the date twelve (12) months after the date of practical completion of the Works as certified by the Employer's Agent under the Contract or as may be extended pursuant to Clause 14.5.1A".
22. "Employer's Requirements" is defined as "the documents listed in Contract Appendix A as may be varied, amended or supplemented from time to time pursuant to the Contract".
23. "Notice of Making Good Defects" is defined as "the notice issued by the Employer's Agent pursuant to clause 16.4 of the Contract."
24. "Sub-Contract" is defined as "the entire agreement between the Contractor and the Sub-Contractor comprising the Articles of Agreement, the Conditions, the Appendix, the Numbered Documents and any Special Conditions".
25. "Sub-Contract Works" is defined as "the works referred to in the Appendix Part 2 and described in the Numbered Documents to be executed as part of the Works including any changes made to such works in accordance with the Sub-Contract".
26. "Variation" is defined as follows: "the term 'Variation' means any 'Change' under the Contract so far as the same relates to the Sub-Contract Works or any change to the Numbered Documents." I should record that it is common ground that the reference in that term to "Number Documents" must be a clerical error. Clearly, the contracting parties intended to refer to "Numbered Documents".
27. "Works" is defined as "the Contract works including the Sub-Contract Works briefly described in the Second Recital and referred to in the Appendix Part 1 and including any changes made to those works in accordance with the Contract or the Sub-Contract".
28. Clause 2.1A of the Sub-Contract Conditions provides:

"Confidentiality

.1 save in respect of:

.1 for the purpose of complying with any law or court order,.

.2 Confidential Information in the public domain at the time of disclosure by the Contractor to the Sub-Contractor;.

.3 Confidential Information already known to the Sub-Contractor at the time of disclosure by the Contractor to the Sub-Contractor; or.

.4 Confidential Information disclosed by third parties to the Sub-Contractor;

no confidential information shall be disclosed or divulged by the sub-contractor to any third party or used by the Sub-Contractor otherwise than for the purposes of the Sub-Contract without the prior written approval of the Contractor ...

.2 The expression 'Confidential Information' shall mean all literature, drawings, designs, plans, details, specifications, schedules, reports, calculations, cost plans budgets, software, computer storage discs, computer printouts, data files, databases, source codes, object codes, estimates, models, photographs, articles or works and any data used to generate any of them, and any other document and the contents of them and any other information given or prepared for or in connection with the Sub-Contract whether created, used or supplied before or after the date of the Sub-Contract, which has the necessary quality of confidentiality including any timetable or programme or contract entered into in relation to the Project."

29. Clause 2.2 of the sub-contract provisions provides:

"Relationship of Sub-Contract Documents

If any conflict appears between the Conditions and/or the Appendix and/or the Numbered Documents and/or the Special Conditions the foregoing shall take precedence in the following order:-

.1 the Articles of Agreement,

.2 the Appendix,

.3 the Conditions,

.4 the Special Conditions,

.5 the Numbered Documents."

30. Clause 4.2 empowers the contractor to issue directions in writing to the sub-contractor and requires the sub-contractor to comply with such directions. Those directions may include the ordering of a variation.
31. Clause 4.6 sets out another procedure in respect of variations. Clause 4.6.1 provides the Contractor may at any time, in lieu of directing a variation under clause 4.2, issue a request for a variation proposal (a "variation notice proposal"). Clause 4.6.2 sets out the procedure to be followed in respect of those variations which are originated under clause 4.6.1.
32. Clause 4.7 of the Sub-Contract Conditions sets out how variations (whose value has not been agreed) shall be valued.
33. Clause 5 of the Sub-Contract Conditions, provides:

"5.1 The Sub-Contractor shall:

.1 observe, perform and comply with all the provisions of the Contract on the part of the Contractor to be observed, performed and complied with so far as they relate and apply to the Sub-Contract Works (or any portion of the same). Without prejudice to the generality of the foregoing, the Sub-Contractor shall observe, perform and comply with the following provisions of the Contract: clauses 6, 9 and 34; and

.2 Indemnify and save harmless the Contractor against and from:

.1 any breach, non-observance or non-performance by the Sub-Contractor or his servants or agents of any of the provisions of the Contract insofar as they relate and apply to the Sub-Contract; and

.2 any act or omission of the Sub-Contractor or his servants or agents which involves the Contractor in any liability to the Employer under the provisions of the Contract insofar as they relate and apply to the Sub-Contract;

.2A any act or omission of the Sub-Contractor or his servants or agents which prejudices or leads to diminution or loss of any rights, entitlements or benefits of the Contractor under the Contract as they relate and apply to the Sub-Contract; and

.3 any claim, damage, loss or expense due to or resulting from any negligence or breach of duty on the part of the Sub-Contractor, his servants or agents (including any wrongful user by him or them of the scaffolding referred to in the Sub-Contract or other property belonging to or provided by the Contractor).

5.2. Nothing contained in the Sub-Contract Documents shall be construed so as to imply any liability on the Sub-Contractor in respect of any act, omission or default on the part of the Employer, the Contractor, his other sub-contractors or their respective servants or agents nor create any privity of contract between the Sub-Contractor and the Employer or any other sub-contractor."

34. Clause 14 deals with practical completion and the defects liability period.
35. Clause 14.2 provides:

"When the Contractor gives written notice of dissent under clause 14.1 practical completion for all the purposes of this Sub-Contract will be deemed to have taken place on such date as may be agreed or, if the parties fail to agree, as may be determined by the Adjudicator. Failing such agreement or determination practical completion will be deemed to have taken place on the date of practical completion of the Works as certified by the Employer's Agent in accordance with clause 16 of the Contract and 'practical completion' of the Sub-Contract Works for the purposes of the Sub-Contract shall mean either the date notified by the Sub-Contractor under clause 14.1, the date agreed between the Contractor and Sub-Contractor pursuant to clause 14.2, the date determined by the Adjudicator pursuant to clause 14.2 or failing such determination the date of practical completion of the works under the Contract as appropriate."

36. Clause 22 of the Sub-Contract Conditions provides:

"The contractor will so far as he lawfully can at the request and cost, if any, of the Sub-Contractor obtain for him any rights or benefits of the Contract so far as the same are applicable to the Sub-Contract Works but not further or otherwise."

37. Clause 40 of the Sub-Contract Conditions provides:

"Project Agreements

The Subcontractor may, from time to time, be allowed access to or have been supplied with copies of agreements now or hereafter entered into between the Employer and/or the Contractor and third parties, or between third parties (including those identified in clauses 41, 41A, 41B and 41.1.15) which affect the Employer and/or the Contractor, or further information concerning the Project, including funding agreements, security agreements, shareholder agreements, consultancy agreements, planning agreements, Statutory Agreements, and agreements for lease or sale. Subject to the Sub-Contractor having had access to or receiving copies of such agreements or information (or such parts of the same as shall be material) and to the extent that such agreements or information relate to or affect the performance of, directly or indirectly, the Sub-Contract Works including any design of the Sub-Contract Works for which the Sub-Contractor is responsible:

.1 the Sub-Contractor shall at all times so perform its duties and obligations under the Sub-Contract having due regard to such information and so as not to, by any act or omission, cause or contribute towards a breach or act or omission of default on the part of the Contractor and/or the Employer under such third party agreements.

.2 the Sub-Contractor shall comply with any and all procedures set out in such third party agreements requiring liaison, consultation and/or submission of plans and/or proposals for approval by third parties.

.3 except in relation to agreements between the Contractor and such statutory undertakers, to the extent such agreements or information were not available to the Sub-Contractor until after the Base Date and such performance or compliance constitutes a Variation, the Sub-Contractor shall be entitled to claim an extension of time and an adjustment to the Sub-Contract Sum in accordance with clause 4.6."

38. Having entered into the sub-contract, Honeywell proceeded with the design and installation of the electronic systems at the stadium. Unfortunately, by the time Honeywell entered into the sub-contract, the construction of the stadium was already substantially delayed. Some of the reasons for that delay can be gleaned from the judgment of this court in Multiplex Constructions (UK) Limited v. Cleveland Bridge Limited [2006] EWHC 1341 (TCC).
39. During the course of Honeywell's works, further delays occurred and Multiplex issued revised programmes to Honeywell. The responsibility for those delays and the legal consequences of the revised programmes are in issue between Multiplex and Honeywell. Indeed, I shall address some of those issues in another action between Multiplex and Honeywell, the trial of which is due to start later this morning. For present purposes, suffice it to say that because of the ongoing disputes between Multiplex and Honeywell, Honeywell is eager to obtain copies of certain documents from Multiplex.
40. Let me now turn to the position as between Multiplex and WNSL. Those two companies have been in dispute about responsibility for the delayed construction of the stadium, the financial consequences of that delay and other matters. Some of the disputes between Multiplex and WNSL were ventilated in litigation in this court under action number HT-06-271. Happily, the disputes between Multiplex and WNSL were resolved by a settlement negotiated in October 2006. As part of that settlement, the parties agreed to work together to achieve the opening of the stadium in early 2007. In particular, and for obvious reasons, the parties intend that the stadium will be operational before 19th May 2007, the date fixed for the FA Cup final.
41. In addition to the official press release concerning the Settlement Agreement, there have been a number of articles in the press discussing or speculating about the terms of the Settlement Agreement. Honeywell, having read those press articles, was anxious to see the actual terms of the Settlement Agreement. Honeywell believed that sight of this agreement would assist Honeywell's case in its various ongoing disputes with Multiplex. Honeywell took the view that it had a contractual right to inspect and take a copy of the Settlement Agreement. Honeywell asked Multiplex to provide facilities for such inspection and copying.
42. Multiplex, on the other hand, maintained that the Settlement Agreement was confidential. Further, Multiplex maintained that Honeywell had no contractual right either to inspect the Settlement Agreement or to take copies. In those circumstances, in order to break the deadlock between the parties, Honeywell commenced the present proceedings.

Part 3. The Present Proceedings

43. By claim form issued on 2nd February 2007 in the Technology and Construction Court pursuant to CPR part 8, Honeywell claimed against Multiplex four declarations as follows:

"1. On a true construction of the sub-contract between Multiplex and Honeywell dated 27th May 2004, Appendix Part 1 of the Articles of Agreement confers on Honeywell the right to view at a conveniently arranged time the main contract ('Main Contract') between Multiplex and Wembley National Stadium Limited ('WNSL').

2. Honeywell's right to view the main contract described in paragraph (a) above extends to any variations thereof irrespective of whether such variations are formally described as such).

3. The completion agreement entered into between Multiplex and WNSL on or about 19th October 2006 is presumed to vary the terms of the main contract.

4. Honeywell is entitled under the sub-contract to view the completion agreement described above."

44. It should be noted that "completion agreement" is the term used by Honeywell to refer to the Settlement Agreement made between WNSL and Multiplex.
45. Honeywell also claim in the claim form and particulars of claim an order for specific performance or a mandatory injunction requiring Multiplex to provide Honeywell with access to or a copy of the Settlement Agreement.
46. The evidence filed by Honeywell in support of its claim comprises a witness statement made by Mr. Nicholas Gillies, a solicitor employed by Beale & Co., who are Honeywell's solicitors. Mr. Gillies exhibits to his witness statement certain correspondence and press releases from which he draws inferences as to the nature of the Settlement Agreement between WNSL and Multiplex.
47. Mr. Gillies concludes that the Settlement Agreement has the following four features:

(i) Multiplex is given an extension of time for completion of the stadium apparently to 1st June 2006.

(ii) Multiplex cannot claim any further extension of time in respect of events preceding the Settlement Agreement. Thus the extension of time mechanism in the main contract is superseded.

(iii) Multiplex will receive a substantial bonus payment if the stadium is completed in time for the FA Cup final on 19th May 2007.

(iv) The obligations as to time in the main contract are replaced by a new set of obligations as to time for completing the remaining works.

48. Whether Mr. Gillies is correct in his speculation and whether the various press reports are well informed, I do not know. It is, however, clear that the Settlement Agreement has two discrete elements. In part, the Settlement Agreement varies the terms of the main contract and in part the Settlement Agreement sets out other matters which are the subject of commercial resolution between WNSL and Multiplex. Indeed, Multiplex, through counsel, accepts that the Settlement Agreement in part varies the terms of the main contract.
49. A directions hearing was held on 9th February 2007. On that occasion I directed that the hearing of this action should be listed to commence on 26th February 2007 immediately before the trial of another action between Multiplex and Honeywell (action HT-06-212).
50. The present action duly came on for trial yesterday (26th February 2007). Mr. Martin Bowdery QC and Mr. Robert Clay appear for Honeywell. Mr. David Thomas QC and Mr. Mark Rowlands appear for Multiplex. The trial has proceeded on the basis of written evidence and oral arguments.
51. The issues as they have emerged in argument may be formulated as follows:

(i) Under the sub-contract does Honeywell have a continuing right to inspect the main contract?

(ii) If so, does that right of inspection extend to the Settlement Agreement?

(iii) If so, is Honeywell entitled to obtain copies of the Settlement Agreement?

52. I shall now address these three issues separately.

Part 4. Under the Sub-Contract Does Honeywell Have a Continuing Right to Inspect the Main Contract?

53. In support of his argument that Honeywell does have such a right, Mr. Bowdery relies upon the third paragraph of Part 1 of the Appendix to the Sub-Contract. This is the clause entitled "Inspection". I shall refer to it as "the inspection clause". Mr. Thomas, for Multiplex, points out that the first part of Part 1 of the Appendix is expressly referred to in paragraph 1 of the recital. Furthermore, paragraph 4 of the recitals explicitly states that Honeywell has been provided with copies of the contract documents. Thus, says Mr. Thomas, when one looks at those recitals and when one looks at the inspection clause in Part 1 of the Appendix, it can be seen that that clause is in the nature of a recital. It records Honeywell's right to inspect pre-contract. It does not confer upon Honeywell a continuing right to inspect after execution of the sub-contract.
54. In support of these submissions, Mr. Thomas places reliance upon paragraphs 10.09 to 10.14 of the current edition of Lewison on The Interpretation of Contracts (Sweet & Maxwell 2004). Mr. Thomas also relies upon the House of Lords decisions in Commissioners of Inland Revenue v. Raphael [1935] AC 96 and MacKenzie v. The Duke of Devonshire [1896] AC 400. Mr. Thomas also draws attention to clause 40 of the Sub-Contract Conditions, which expressly deals with contracts that Honeywell may be permitted to inspect in the future. By contrast, says Mr. Thomas, the sub-contract confers no right upon Honeywell to inspect the main contract "hereafter". In this connection, Mr. Thomas places reliance upon the Court of Appeal's decision in Dawes v. Tredwell [1881] 18 Ch D 354. Dawes is authority for the proposition that:

"The recital of an agreement does not create a covenant where there is an express covenant to be found in the witnessing part relating to the same subject matter."

55. I have read all of the authorities upon which Mr. Thomas relies with considerable interest. They do indeed support the legal propositions which he advances. Nevertheless, the fallacy in Mr. Thomas's argument, if I may respectfully say so, seems to me to be this. Part 1 of the Appendix is not a recital and it is not in the nature of a recital. It seems to me that the Appendix, including Part 1, is an appendix to the Articles of Agreement, not an appendix to the recitals. It is quite true, as Mr. Thomas points out, that the second paragraph of Part 1 of the Appendix is referred to in the first recital to the sub-contract. However, this circumstance does not convert the second paragraph of Part 1, much less the whole of Part 1, into an appendage of the recitals. It is quite clear that the whole of the Appendix, including Part 1, is an operative part of the sub-contract. See article 1.3 of the Articles of Agreement and clause 2.2 of the Sub-Contract Conditions. Indeed, clause 2.2 elevates the whole Appendix to a superior position. In the hierarchy of the Sub-Contract Documents, the Appendix (including Part 1) prevails over the Sub-Contract Conditions, the Special Conditions and the Numbered Documents. It will also be noted that both the Appendix as a whole and more specifically Part 1 of the Appendix are referred to in clause 1.3 of the Sub-Contract Conditions (the definitions clause).
56. Taking matters shortly, I am quite satisfied from the various references in the articles and the Sub-Contract Conditions that the whole of the Appendix, including Part 1, consists of operative provisions of the sub-contract.
57. Mr. Thomas next draws attention to the fourth recital. This records the fact that Honeywell has received a copy of the contract and has examined it. It also records that Honeywell has discussed the contract with Multiplex and is satisfied about certain pertinent matters. Thus, says Mr. Thomas, paragraph 3 of Part 1 of the Appendix records a past entitlement of Honeywell which was fulfilled before the sub-contract was executed.
58. I asked Mr. Thomas in argument why, if this was so, the parties had troubled to include this paragraph at all in the Appendix. In response, Mr. Thomas submitted that the inspection clause was a relic from the tender documents, which had survived, so to speak, by accident into the sub-contract.
59. I am afraid that I am not persuaded by any of these arguments despite the ingenuity of their presentation. Paragraph 3 of Part 1 of the Appendix is an operative provision of the sub-contract, to which this court must give effect. Clause 40 of the Sub-Contract Conditions, upon which Mr. Thomas relies, does not detract from this conclusion. Clause 40 is specifically focused upon contracts which WNSL or Multiplex may make with third parties. It says nothing about the main contract between WNSL and Multiplex.
60. Let me now draw the threads together. For the reasons set out above, I hold that paragraph 3 of Part 1 of the Appendix is an operative provision of the sub-contract. It is a contractual provision which remains in force after execution of the sub-contract. It expressly confers upon Honeywell a continuing right to inspect the main contract. There is nothing in the language of the inspection clause to cut down its effect. In the result, my answer to the question posed in Part 4 of this judgment is "Yes".

Part 5. If So, Does That Right of Inspection Extend to the Settlement Agreement?

61. It will be recalled that, in part, the Settlement Agreement constitutes an agreement varying the main contract. The crucial question, therefore, is whether Honeywell is entitled to inspect variations to the main contract. Mr. Bowdery submits that the answer to this question is yes. Mr. Thomas submits that the answer is no.
62. All of Mr. Thomas's submissions in relation to this issue were advanced without prejudice to his contentions on the first issue (discussed in Part 4 of this judgment). Since Multiplex has been unsuccessful on the first issue, I shall make no further reference to that caveat.
63. Mr. Bowdery contends that Honeywell's right to inspect the main contract must relate to the main contract in its current form, not to the "fossilized" version of the sub-contract as it was at the outset. Any alternative reading would not make commercial sense. Mr. Bowdery points out that Honeywell is one of the last sub-contractors to work on site. This is a consequence of the nature of Honeywell's work, namely installing the electronic systems. Mr. Bowdery points out that the main contract is liable to have undergone some changes by the time that Honeywell completes its works. Mr. Bowdery also draws attention to a number of provisions of the sub-contract and submits that these support his interpretation of the inspection clause. In particular, he relies upon clause 1.3, clause 5, clause 14 and clause 22.
64. Mr. Thomas, on the other hand, submits that the "contract" which Honeywell is entitled to inspect must be the main contract in its original form. He submits that variations to the main contract do not automatically affect the obligations of Honeywell. If Multiplex wants to pass a variation instruction down the line, Multiplex must operate one of the procedures set out in clause 4 of the Sub-Contract Conditions.
65. Mr. Thomas submits that there is no room and no need to imply a term entitling Honeywell to inspect any subsequent variations to the main contract. He relies upon paragraphs 13-001 to 13-009 of Chitty on Contracts (24th Edition, 2004) as setting out the tests for implication of terms. He submits that none of those tests are satisfied in the present case.
66. In my judgment, in approaching this issue, it is necessary to keep clearly in mind the distinction between variations under a construction contract and variations of that contract. It is commonplace for variation instructions to be issued (often in large number) under a construction contract. Indeed, I doubt that I have ever encountered in this court a construction contract under which there were not at least some variation instructions. On the other hand, agreements to vary the terms of an existing construction contract are not commonplace. Sometimes a construction project proceeds from start to finish without any variation of the terms of the main contract. On other occasions the parties do decide to vary the terms of their construction contract, quite often through the medium of a supplemental agreement.
67. In the present case WNSL and Multiplex did decide to vary the terms of their contract. They did so through the medium of the Settlement Agreement.
68. In my judgment it does not make commercial sense to construe "the contract" in clause 3 of Part 1 of the Appendix as meaning the construction contract as it once was but is no longer. This term must mean the contract as it now is. I reach this conclusion for five reasons:

(i) The terms of the main contract in its current form are of importance to the sub-contractor for many reasons. It can be seen from the provisions which I have read out that the main contract and sub-contract are linked in a variety of ways. For example, the terms of the main contract are relevant to determining when practical completion has been achieved under clause 14. Also they determine benefits to which the sub-contractor is entitled under clause 22. They are highly relevant to quantifying the sub-contractor's liability, if the sub-contractor is in delay or is otherwise in breach of contract. And so forth.

(ii) Accordingly, the sub-contractor has a legitimate interest in inspecting the current version of the main contract. On the other hand, the sub-contractor has no interest in inspecting the historic, outdated version of the main contract because (a) he has already examined and discussed that document and (b) he already possesses the text of that document on compact disc. (See recital 4 and paragraph 3 of Part 1 of the Appendix).

(iii) The phrase "any document referred to herein" in paragraph 3 of Part 1 of the Appendix must add something to the phrase "and/or contained on the compact disc". In my judgment, what that phrase adds is a reference to future versions of the main contract which, by definition, cannot be contained on the compact disc previously provided.

(iv) It can be seen from clause 1.3 of the Sub-Contract Conditions that the reference to "Employer's Requirements" in the inspection clause comprises not only the Employer's Requirements identified in the main contract, but also all post-contract amendments to those Employer's Requirements. In such circumstances, it would be bizarre to treat the inspection clause as excluding any amendments which might be made to the main contract itself.

(v) In order to maintain his purist approach to the inspection clause, Mr. Thomas is forced to postulate certain implied terms permitting Honeywell to inspect amendments to the main contract, when the need arises. When pressed in argument, Mr. Thomas said that clause 14 of the Sub-Contract Conditions is supplemented by an implied term entitling Honeywell to be informed about amendments to the main contract, when relevant. Likewise, said Mr. Thomas, clause 22 is supplemented by an implied term requiring Multiplex to inform Honeywell of amendments to the main contract, generating benefits in which the sub-contractor might share. This approach is not a convincing one. If the inspection clause is interpreted in a sensible and reasonable fashion, the need for such elaborate implied terms disappears.

69. I have reached the conclusions set out above not by implying a term into the sub-contract, but as an exercise of construction. I interpret "the Contract" in the inspection clause as meaning the main contract inclusive of any amendments at the date when the sub-contractor inspects.
70. I must now apply this conclusion to the present issue. Honeywell is entitled to inspect those parts of the Settlement Agreement which vary the terms of the main contract. Honeywell is not entitled to inspect the other provisions of the Settlement Agreement.
71. Let me now draw the threads together. For the reasons set out above, my answer to the question posed in Part 5 of this judgment is as follows: yes, but only those parts of the Settlement Agreement which vary the terms of the main contract.

Part 6. If so, is Honeywell entitled to obtain copies of the Settlement Agreement?

72. It follows from Part 5 of this judgment that Honeywell is entitled to inspect a redacted version of the Settlement Agreement. The question then arises whether Honeywell is entitled to take or receive copies of that document.
73. Mr. Bowdery submits that Honeywell must be entitled, one way or another, to obtain a copy of the document. It would be absurd to construe the inspection clause as only entitling Honeywell to look at the document. Mr. Thomas, on the other hand, submits that in this respect the inspection clause is clear in its terms. It permits the relevant documents to be "viewed at the contractor's offices". It does not confer a right to demand or receive photocopies.
74. On this issue, I prefer and accept the submissions of Mr. Thomas. The inspection clause simply confers a right to view the relevant document at a specific place. Clause 40 of the Sub-Contract Conditions, by contrast, refers to "receiving copies of such agreements or information". The inspection clause contains no similar phrase. I must confess that, if I had been the draftsman of the sub-contract, I would have thought it expedient to add a provision to the inspection clause entitling the sub-contractor to receive photocopies. However, I am not the draftsman of the sub-contract. It is not this court's function to rewrite contractual provisions in a manner which seems expedient to the judge.
75. In the result, therefore, this court will enforce Honeywell's right to inspect but will not create any additional right. In practice this will not cause problems. Multiplex accept that it would not be a sensible use of anyone's time for Honeywell to sit in Multiplex's office's either memorising or taking longhand notes about the redacted Settlement Agreement. Mr. Thomas tells me, and I accept, that if this court upholds Honeywell's contractual right to inspect then a sensible commercial arrangement will be made.
76. Let me now draw the threads together. For the reasons set out above, my answer to the question posed in Part 6 of this judgment is no.

Part 7. Conclusion

77. For the reasons set out above, Honeywell has a contractual right to inspect a redacted version of the Settlement Agreement. By reason of clause 2.1A of the Sub-Contract Conditions (which I read out in part 2 above) Honeywell will be bound to respect the confidentiality of the document disclosed by Multiplex.
78. Let me now turn to the specific remedies claimed in the claim form and particulars of claim. Subject to debate about the precise wording, Honeywell is entitled to declarations 1 and 2. Honeywell is not entitled to declaration 3. It is an admitted fact that the Settlement Agreement varies the main contract. No declaration from the court is required in that regard. Honeywell is entitled to declaration 4, but limited to a redacted version of the Settlement Agreement.
79. The final item of relief claimed is specific performance or an injunction. In principle, Honeywell is entitled to an order for specific performance since (a) damages for breach of the inspection clause would not be an adequate remedy, and (b) in the context of this case an order for specific performance could readily be enforced. The order for specific performance will require Multiplex to permit Honeywell to view an appropriately redacted version of the Settlement Agreement.
80. I request counsel to agree the precise terms of the court's order in accordance with the guidance given above.
81. Finally, I congratulate both solicitors and counsel, not only on the clarity of their respective arguments but also on their expedition. This action has proceeded from issue of claim form to final judgment in the space of some three weeks.