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].
Background
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.
The 1996 Act
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:
- She held that the fax did
not set out or record all of those matters on which Debeck itself
relied on in pursuing its claim.
- She held that the fax did not explain even in
summary terms the scope of the work to be undertaken. The contract was
labour-only, but the description of the scope of the work in the fax was
only "reference Eli Lilley, DP area plus HEPA filter".
That did not explain the scope of the work. It was not clear, for
example, whether materials were to be supplied and so on. The contract was
for work to be carried out by way of first fix, then second fix. That was not
clear on the face of the fax itself. There was reference in the fax to
"second fix work" but it was not clear whether first fix work
was relevant between these parties or not.
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.
Application on the Facts
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.
Commentary
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.
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