Summary
The Supreme Court rejected reimbursement of increased labour wages under the construction contracts before it. Clause 19 expressly barred escalation on any account, and clause 6.3 reinforced the allocation of wage risk. A separate clause dealing with octroi, sales tax and duties could not be used to create a wage-reimbursement exception. The Union’s appeals were allowed and the decisions below and arbitral award were set aside in the dispute confined to that escalation claim.
Issues
- Whether the express no-escalation terms permitted reimbursement after a government-notified wage increase.
- Whether the tax-and-duty clause created an exception for wages.
Held
- Clause 19 barred reimbursement of increases in materials, fuel and labour wages on any account and required the contractor to price accordingly. Read with clause 6.3, it allocated the wage-increase risk to the contractor, including the notified increase invoked in this case. (¶¶ 5, 9, 10, 14)
- The High Court incorrectly treated clause 25 as a wage-reimbursement exception. That clause dealt with octroi, sales tax and other duties, while clause 19 dealt with wages; neither its opening nor another provision supplied the asserted exception. (¶¶ 11, 12, 13, 14)
- Contract interpretation required an objective assessment of the agreement in context and the parties’ intention. A hypothetical construction importing a provision concerning another subject could not displace the express allocation of this risk. (¶¶ 9, 10, 12, 13)
- The appeal was expressly confined to the wage-escalation issue. The Court acknowledged limited intervention in arbitration but found the reimbursement inconsistent with the contract’s express terms on that issue. (¶¶ 5, 8, 14, 15)
Result
Union’s appeals allowed; decisions of the courts below and arbitral award set aside in the dispute concerning the wage-escalation claim. Parties to bear their own costs.