The Engineer's view may be of some potential relevance,
but it cannot displace the proper application of the terms of the contract.
Uniform Building Contractors Ltd v The Water and Sewerage Authority
of Trinidad and Tobago [2026] UKPC 2 at [29]
Introduction
All too frequently, we read adjudicators and arbitrators (and judges, when we're fortunate enough to have a construction dispute get considered in court) making decisions based on balance of probabilities and fairness, outside of the express terms of the contract. This may be justified by the behaviour of the Engineer or Independent Certifier, but it is often outside of the negotiated and priced context of the contract.
Worse, we also read of expert evidence being assessed on the basis of what is likely to have happened, rather than the burden of proof on the part of the claimant. But I digress.
In January this year, the Judicial Committee of the Privy Council, sitting in its Trinidad & Tobago jurisdiction released its judgment in Uniform Building Contractors v The Water & Sewerage Authority of Trinidad and Tobago [2026] UKPC 2, clarifying that obligations of the parties rest where they sit in the contract, rather than as established by the practice of the parties.
This affirms the long standing position in CIS v Henry Boot [2002] EWHC 1270 (TCC), in relation to ground conditions; and Workman Properties v Adi Building & Refurbishment [2024] EWHC 2627. In each case, as in the UK Supreme Court decision of MT Hoejgaard A?S v E.On Climate & Renewables UK [2017] UKSC 59, the contracts allocated design responsibility to the contractor, but the Employer's Requirements contained drawings and design information which were at odds with the contractor's design responsibility. The courts affirmed that clear and unequivocal words were required to transplant express contractual wording.
This approach is consistent with our Supreme Court's approach to contractual interpretation in Bathurst Resources v L&M Coal Holdings [2021] NZSC 85 in which it was affirmed that post award conduct, while relevant to interpretation of a contract, cannot be used to create ambiguity. The contract wording, in the Supreme Court's judgment, is the first port of call in contract interpretation, and is paramount.
Facts
The contractor had been engaged to design, supply and instal 28.43km of pipeline by the Trinidad & Tobago water authority. The drawings supplied with the Employer's Requirements illustrated the cross-section of installation in the berm, adjacent to the roads themselves.
For various reasons, the works proposed and priced by the contractor were varied as follows:
- the pipeline was installed in the roadway, rather than the verge;
- this required the removal of material unsuitable for use as backfill;
- the contractor was required to import new material; and
- this all required night work.
The Engineer approved the work as variations under the 1999 FIDIC Yellow Book (Plant and Design and Build Conditions of Contract). The Water Authority disputed the variations.
In the first instance, the High Court found for the Water Authority. The Court of Appeal reversed that decision, finding that the parties, through the Engineer, required "flexibility in ... day to day operation" of the works, and that the variations were justified.
The Privy Council reversed that decision.
Privy Council decision
Four issues were put to the Privy Council:
- what were the terms of the contract;
- were the claims variations under the contract;
- was the procedure for variations followed; and
- is this a case where fairness should be taken in to account (estoppel).
On the first point, citing Sharpe v San Paolo Railway Co (1873) LR 8 Ch App 597 and Keating on Construction Contracts, the Board came to the view that the contract clearly place the design obligations on the contractor and that, at [23]:
... [the] variation provisions can have left UBC in no doubt as to the comprehensive nature of their contractual obligations, and the need for them to take all such matters into account when pricing the works. An underestimate of the work required to meet the contractual requirements of a lump sum contract cannot be a variation ...
In conclusion, the Board noted that there was no legal basis for the contractor's attempt at such a comprehensive re-allocation of risk and reward under the contract.
On the second point, as quoted at the head of this article, while the Engineer's view may potentially be relevant, it cannot displace the terms of the contract.
This should be a salutary lesson for all project managers, engineers and contract administrators. While they may be agents of their clients for some purposes (as settled in Sutcliffe v Thackrah [1974] AC 727), that agency does not extend to varying the terms of a contract. This needs to be distinguished from instructing or approving variations in accordance with the procedures outline in the contract.
The Board did not need to decide the third issue, but went on to find that the contractor failed to give any contemporaneous notice of the change to the works, and failed to issue a claim which complied with the procedures in clause 20.1, at [69]:
The purpose of the contractual; regime was to ensure certainty so that, if there were claims for additional monies ... they were clearly set out and promptly made... That was UBC's responsibility: in particular, they failed to comply with the condition precedent set out in clause 20.1. In those circumstances, [the contractor] had no entitlement under the contract to be paid for items (i)-(iv) in any event.
Finally, on the estoppel and fairness claim, citing MWB Business Exchange Centres v Rock Advertising [2018] UKSC 24, the Board noted and accepted the principle at [81] that "... the law of contract does not normally obstruct the legitimate intentions of businessmen, except for overriding reasons of public policy.” Its conclusion was that the disputed items, which did not meet the condition precedents of notification, could not be held variations simply on the grounds of fairness.
Conclusion
The case provides a timely reminder that "throwing the contract in the bottom drawer and getting on with the project" is not a sound basis for undertaking complex projects. Nor should the time honoured approach of seeking a "fair" determination or instruction by the Engineer, thereby transferring contractual obligations, succeed.
Equity will not come to the rescue in such circumstances!
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