Brenna Conroy considers conflicting precedents in relation to deleted terms in construction contracts and the possible implications that they may have in practice.
Introduction
In construction contracts it is very common to see standard form provisions deleted and replaced with bespoke terms, either on the face of the document itself, or in the schedules to the document. Often not considered are the implications, if any, of terms which appear in the contract, but which have been struck out. Is the contract to be treated as never containing the deleted words, or can the deleted words be used either as an aid to construction or to negate the implication of words in the same form?
Two Schools of Thought
Historically there has been conflicting authority on whether it is permissible to look at deletions in construing a contract and, if it is permissible, for what purpose. One school of thought is that deletions should not be taken account of at all; deletions are to be treated as if they had not formed part of the concluded contract (having been taken out of the agreement between the parties) and should not therefore be used to construe added words.1 In contrast, there is also a line of authorities in support of the position that the deleted parts can be considered as part of the surrounding circumstances in construing what the parties have chosen to leave in and that the court is entitled to look at deleted words to see if any assistance can be derived from them in solving ambiguity in words retained.2
Mopani Copper Mines Plc v Millennium Underwriting Ltd
In Mopani Copper Mines Plc v Millennium Underwriting Ltd,3 Christopher Clarke J considered the conflicting authorities on the question of whether it is permissible to have regard to deleted words in construing a contract. Whilst the judge did not consider it necessary to refer to or rely on the deleted words to find for the claimant on the preliminary issues determined, he suggested, obiter, that some general principles could be drawn from the cases.4 Whilst the general rule is that deleted words cannot be used as an aid to construction, there were two exceptions, namely:
- Deleted words in a printed form may resolve the ambiguity of neighbouring paragraphs; and
- Deletion of words in a contractual document may be taken into account if the fact of the deletion shows what it is that the parties did not agree and there is ambiguity in the words that remain.
Clarke J also cited with approval the following passage from ‘Keating on Construction Contracts’ (8th Edition):
“In this confusion the second school is generally to be preferred. Where parties have made a contract in a document that contains deletions, to look at the deletions does not offend the principle discussed above which prevents reference to preliminary negotiations. The deletion is physically contained in the concluded contract. It is submitted that the court should first construe the retained words. If they are unambiguous, reference to the deletions is unnecessary. If they are ambiguous reference to deletions from printed documents should be permitted to see whether objectively they throw light on the meaning of the retained words.”5
Nevertheless, the judge expressed that care must be taken as to what inferences, if any, could properly be drawn from the deleted words as the parties may have deleted the words because they thought they added nothing to, or were inconsistent with, what was already contained in the document, or because the words that were left were the only common denominator of agreement, or by mistake.
Narandas-Girdhar v Bradstock
In Narandas-Girdhar v Bradstock,6 the Court of Appeal had to consider whether deleted words in an IVA could be taken into account in resolving an ambiguity in the words that remained. In that case, a debtor had entered into an IVA, and the documentation as originally drafted stated that the IVA would be conditional upon the acceptance of his wife’s simultaneous IVA proposal. As a result of a modification, this condition was deleted and subsequently his wife’s IVA proposal was not approved.
“Deleted provisions are only relevant to construction where express terms are ambiguous.”
- Inglis v Buttery (1878) 3 App. Cas. 552, HL; Ambatielos v Jurgens [1923] A.C. 175 at 185, HL; M.A. Sassoon & Sons v International Banking Corp [1927] A.C. 711 at 712, PC; see also, City & Westminster Properties (1934) Ltd v Mudd [1959] Ch. 129; Prenn v Simmonds [1971] 1 W.L.R. 1381, HL. Compania Naviera Termar v Tradax Export [1965] 1 Lloyd’s Rep. 198 at 204; Ben Shipping v An-Boad Bainne [1986] 2 Lloyd’s Rep. 285 at 291; Wates Construction v Franthom Property (1991) 53 B.L.R. 23, CA
- Lord Cross, stating the majority view in Mottram Consultants Ltd
3 [2008] EWHC 1331 (Comm)
- See paragraphs 120-122 of the judgment
- Paragraphs 121 of the judgment
6 [2016] EWCA Civ 88; [2016] 1 W.L.R. 2366