This article aims to answer the question of what an obligation to co-operate with the contractor means.
Sub-clause 4.1.1 of an Employer Design Public Works Contract (PWC) states that: "The Employer [subject to restraints as a public authority] and the Contractor shall support reciprocal co-operation for the Contract purposes, including co-operation with and between Contractors Personnel and Employers Personnel."
Pre-COVID 19, this clause was rarely considered. However, due to the impact COVID-19 has had on construction projects, the Office of Government Procurement (OGP) has repeatedly asked in its COVID-19 guidance notes (1) that the parties make every effort to co-operate with each other by making specific reference to sub-clause 4.1.1 of the PWC.
This guidance from the OGP is welcome, but what does an obligation to co-operate with the contractor mean?
This article aims to answer this question and will be delivered in two parts. Part 1 aims to define what an obligation to co-operate means and what the scope of a co-operation clause might be. Part 2 deals with the impact an obligation to co-operate may have on an employer's other rights and obligations in a PWC (2).
An obligation to co-operate, what does it mean?
Many academic papers that examine co-operation clauses refer to them as collaboration clauses and deem them to be an expressed obligation to act in good faith. Mason (3) when examining these collaboration clauses, says that: "Although the standard form construction contracts […] do not typically use the phrase 'good faith' and instead utilise language such as 'mutual trust and co-operation', 'fairness', 'fair dealing' and 'trust and respect', for convenience these clauses shall be collectively described as good faith clauses."
In Costain Ltd v Tarmac Holdings Ltd (4) Coulson J in determining the meaning of the NEC3 collaboration clause 10.1, which uses the term ‘work together in a spirit of mutual trust and co-operation’, agreed with the views reached by Keating on the NEC3 (5). Coulson noted that Keating drew a parallel between ‘mutual trust and co-operation’ and obligations of ‘good faith’.
It is clear from the findings in Costain that a collaboration clause does not have to contain the words ‘good faith’ for it to be deemed a good faith obligation. It appears that the use of words such as ‘mutual trust’, ‘co-operation’, ‘collaborative manner’, ‘fairness’, ‘fair dealing and trust’ and ‘respect’ are all sufficient to mean that the parties will have an expressed obligation to act in good faith with one another.
What is the scope of an employer's expressed obligation to act in good faith?
The scope and application of a good faith provision will depend on the clause wording and rules of interpretation.
The rules of interpretation were summarised in Costain Ltd v Tarmac Holdings (6) where Justice Coulson affirmed that the starting point for the interpretation of a contract provision is the language the parties have chosen.
That is how the courts interpreted the good faith provision in Mid Essex Hospital Services NHS Trust v. Compass Group UK and Ireland Ltd (7) which said:
"The Trust and the Contractor will co-operate with each other in good faith and will take all reasonable action as is necessary for the efficient transmission of information and instructions and to enable the Trust or […] any Beneficiary to derive the full benefit of the Contract."
The court of appeal interpreted the scope of this good faith narrowly. It said it was limited by the second part of the clause where the good faith obligation only applied to two specific areas of the contract, i.e. the efficient transmission of information and to enable the parties to derive the benefit of the ontract.
On the other hand, Keating on NEC 3 (8) and other commentators viewed clause 10.1 of the NEC 3 Contract (see above) and similarly worded clauses as being such an overarching good faith clause (9).
Keating regarded that this widely drafted clause as providing a ‘portmanteau general obligation’ having different aspects or applications to different circumstances that encompass the obligation to act independently in a fair and unbiased manner when say the project manager is exercising his decision-making functions.
Mason suggests that where ‘overarching’ obligations of good faith exist in contracts, then something more may be required than the mere performance of a parties obligation in good faith (10).
He says that enforceable rights may be created by ‘overarching’ obligations which impose obligations in addition to the proper performance of the parties other contractual duties.
However, in Mason (a firm) v WD King Ltd (11) the courts seemed to take the view that there was only a remote possibility that overarching obligations would carry more weight than other more specifically drafted provisions.
Sub-clause 4.1.1 of the PWC is widely drafted like clause 10.1 of NEC 3 and could be regarded as being an overarching obligation to act in good faith. This clause could impose obligations in addition to the employer's other obligations, especially when the employer and its representative is exercising its decision-making functions.
Part 2 of this article will look at what impact an ‘overarching’ obligation to co-operate may have on the employer's other rights and obligations in a public works contract. It will be published on July 27, 2020.
For more information on the content of this Insight, please contact McCarthy Dispute Resolution at (tel): 00-353 86 7816358 or email: peter@mcdr.ie. More details about MCDR and the services it provides can be found on www.mcdr.ie.
References
1) https://constructionprocurement.gov.ie/wp-content/uploads/CWMF-Update-2-to-Note-on-Covid-19-08-05-2020.docx.pdf
2) Part 2 of this article will be published on Engineers Ireland website on July 28, 2020.
3) Brian Mason, ‘Good Faith Clause in Construction Contracts: Fine Sentiments in search of substance’ [2011] ICLR 5.
4) [2017] EWHC 319 (TCC), [2017] 2 All ER (Comm) 645.
5) David Thomas, Keating on NEC 3, [1st Ed, 2012].
6) [2017] EWHC 319 (TCC), [2017] 2 All E.R. (Comm) 645.
7) [2013] EWCA Civ 200, [2013] BLR 265.
8) David Thomas, Keating on NEC 3, [1st Ed, 2012].
9) Anthony Albertini of Clyde & Co ‘The Meaning of “Mutual trust and cooperation” in NEC’, 25 Aug 2017.
10) Brian Mason, ‘Good Faith Clause in Construction Contracts: Fine Sentiments in search of substance’ [2011] ICLR 5, page 12.
11) [2003] EWHC 3124 (TCC) [65], 92 Con. L.R. 144