Adjudication
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KEYWORDS: |
Housing Grants Construction and Regeneration Act 1996, Section 107(2)(c), Section 107(4), writing, evidenced in writing, Judge Kirkham. |
In Debeck Ductwork Installation Ltd v T&E Engineering Ltd [2002] Judge Kirkham was required to decide whether or not a contract was in writing for the purposes of the 1996 Act in order to decide whether summary judgment on an adjudicators decision should be granted. The case is of interest in adjudication because of the application of the ruling of the Court of Appeal in RJT Consulting Engineers Ltd v DM Engineering Northern Ireland Ltd [2002].
By an oral agreement with T&E Engineering Limited, Debeck Ductwork Installation Limited was to install ductwork for air conditioning services for Eli Lilley Pharmaceuticals in Basingstoke. The price was £27,000 plus VAT and the work was in two stages, a first fix and a second fix during March and April 2001. Debeck applied for summary judgment for the agreed sum, plus a sum of £3,204 plus VAT in respect of some extra work said to have been carried out. Debeck had invoiced for those sums.
Debeck claimed under two heads. The first was pursuant to the Housing Grants Construction and Regeneration Act 1996 and the second was simply on the pleaded and factual basis.
Debeck relied on section 107(2)(c) and 107(4) of the 1996 Act. Section 107(2)(c) provides that there is an agreement in writing if the agreement is evidenced in writing. Judge Kirkham held that Section 107(4) explained the parameters of sub-section (2):
"an agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties or by a third party with the authority of the parties to the agreement."
Judge Kirkham was referred to the decision of the Court of Appeal in RJT Consulting Engineers Ltd v DM Engineering Northern Ireland Ltd [2002]. Judge Kirkham observed that the Court of Appeal considered the provisions of Section 107(1) and (7) of the Act principally in connection with Section 107(5), but gave extremely helpful guidance as to the approach which should be taken when considering questions under section 107.
In his judgment in RJT Lord Justice Ward stated:
"Section 107(2) gives three categories where the agreement is to be treated in writing. The first is where the agreement whether or not signed by the parties is made in writing. This must mean where the agreement is contained in a written document which stands as a record of the agreement and all that was contained in the agreement. The second category, an exchange of communications in writing, likewise is capable of containing all that needs to be known about the agreement. One is therefore led to believe by what used to be known as the ejusdem generis rule that the third category will be to the same effect, namely that the evidence in writing is evidence of the whole agreement."
Judge Kirkham observed that the third category to which Lord Justice Ward referred fell within Section 107(2)(c), which was relevant to the instant case.
Further in his judgment in RJT Lord Justice Ward referred to Section 107(4):
"that allows an agreement to be evidenced in writing. What is there contemplated is thus a record of everything which has been said. Again it is a record of the whole agreement."
and stated
"on a point of construction of section 107 what has to be evidenced in writing is literally the agreement, which means all of it, not part of it. A record of the agreement also suggests a complete agreement, not a partial one."
Judge Kirkham observed that Lord Justice Ward went on to refer to the only exception to the generality of that, being the instance falling within sub-section (5) which was not relevant in the instant case.
Debeck submitted that there was an agreement which was evidenced in writing and relied on its fax to T&E Engineering dated 25th March 2001, sent after Debeck began work, but before Debeck stopped work. No point was taken on the timing of the fax. Debeck submitted that the fax recorded all relevant terms of the agreement and it was therefore sufficient to constitute written evidence of the agreement.
Judge Kirkham rejected Debeck's submission:
T&E Engineering provided evidence was that there were further terms of the contract between the parties and on which T&E Engineering relied including references to the specification or standard to which work was to be carried out, matters as to quality and issues as to the timing during which work was to be undertaken. T&E Engineering claimed that the period during which work was to be undertaken was important for them.
Judge Kirkham stated that even if the fax contained all terms relevant to Debeck's claim, it was wrong to allow Debeck to rely on such a document and ignore and completely to disregard the additional terms which T&E Engineering alleged were agreed orally.
Judge Kirkham held that RJT required that the writing must evidence the whole of the agreement. Section 107 did not permit Debeck to identify those parts of the agreement on which they relied and ignored the matters which T&E Engineering said were agreed between the parties.
Judge Kirkham observed that in those circumstances if a contractor wished to obtain the benefit of the protection of the 1996 Act, it could require a contract to be reduced to writing. A contractor could at some later stage clarify the terms which it believed had been orally agreed and invite the other contracting party to agree that those were indeed the agreed terms of the agreement. The door was by no means shut to a contractor in those circumstances.
Debeck submitted that the position in the instant case was analogous to a claimant who sued on a cheque. Debeck submitted that it was entitled to judgment for the sum demanded leaving T&E Engineering to pursue any counterclaim it might have. Judge Kirkham rejected that submission. Quite apart from the factors which were dependent upon the section 107 point, Debeck's submission ignored the principle that the claimant was entitled to be paid only for work done properly and that T&E Engineering in normal circumstances might have not only a counterclaim, but also a right to an abatement if work had not been done at all or had not been done properly.
Judge Kirkham observed that the Court may give summary judgment if it considered that the defendant had no real prospect of successfully defending the claim. It was not appropriate in summary proceedings to conduct a mini trial Swain v Hillman.
Debeck asserts that it was entitled to payment of £27,000 plus VAT and £3,204 plus VAT for extras. T&E Engineering defended the claim and pursued a counterclaim on a number of bases and raised them in pleadings and in a witness statement prepared in connection with the application. In its evidence Debeck had not answered any of those matters.
For the purpose of the application Debeck conceded that T&E Engineering might be able to show an entitlement to two of its heads of counterclaim worth £19,477.94 and £2,523.52 and Debeck sought summary judgment not on the whole of its claim as was originally the case, but on the net sum of £13,486.48. T&E Engineering resisted Debeck's application for summary judgment for a partial sum on the grounds that Debeck had not applied for judgment for the lesser sum.
At the beginning of the hearing Debeck had sought relief for defects in its application for summary judgment. Judge Kirkham gave relief to allow Debeck to put its case on the basis that there was a contract evidenced in writing within the meaning of section 107, and on the basis that it was Debeck's belief that T&E Engineering had no real prospect of successfully defending the claim. She refused to give relief requested in respect of the changed basis of the application for judgment for the lesser sum.
Judge Kirkham stated that it appeared that the changed basis in truth reflected a recognition that the application was unsustainable if the section 107 point did not succeed so that concessions would have to be made to enable Debeck to get anywhere close to the mark. She held that it would be wrong to allow Debeck to succeed on an application for payment of part only of the sum in summary proceedings.
Judge Kirkham held that what could not be said with any confidence was that T&E Engineering had no real prospect of successfully defending Debeck's claim.
In the circumstances therefore Debeck would not be entitled to succeed on its application for summary judgment even if it were appropriate to permit Debeck to pursue its application for payment of part of the sum claimed and not all.
Judge Kirkham held that the documents relied on to evidence the contract did not set out or record all of those matters on which Debeck itself relied on in pursuing its claim. The facts in this case made irrelevant the distinction evident in the judgments of Lord Justice Ward and Lord Justice Auld in RJT. Nonetheless Judge Kirkham considered the possibility and followed Lord Justice Ward as one would expect rather than the minority decision of Lord Justice Auld. It is clear therefotre that the Courts are likely to take the more restrictive view of Lord Justice Ward although in my view that of Lord Justice Auld is to be preferred.