England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(HIS HONOUR JUDGE COULSON QC)

		Royal Courts of Justice Strand London, WC2
		11th March 2005

1. LORD JUSTICE RIX: This is an application for permission to appeal by Mr NK Tombs from a judgment in the Technology and Construction Court of His Honour Judge Coulson QC of 9th November 2004. Mr Tombs, as sub-contractor, entered into a sub-contract with the respondents to this application, Wilson Connolly Ltd, to provide the brickwork on a house building estate in Thetford. Defects appeared and this led in due course to a dispute between the parties.
2. The first issue which the judge had to consider and decide was which were the appropriate terms and conditions which applied to the sub-contract between the parties. The judge had to decide that as a preliminary issue because other issues arose depending upon whether the applicable conditions were what I can briefly refer to as Wilson Connolly's "new terms" or, on the other hand, what I can refer to as their "old terms".
3. Their old terms appeared on the back of their form called a "sub contract order", the front of which referred to conditions overleaf and the back of which, on a single page, contained 20 terms. One of those 20 terms, term 10, was the term upon which Mr Tombs particularly relied in his litigation, as giving to him an opportunity within a specific limitation period to make good any defects himself, before the employer had the opportunity himself to have the work done and to seek an indemnity for the cost from Mr Tombs as sub-contractor.
4. The new terms were connected with a new form of contract called a "Labour (& Materials) Sub-Contract (Short Form)". This form, after brief particulars of the contracting parties and the work to be done, stated:

"Subject to the General Conditions overleaf and to the Special Conditions below."

5. In the bottom half of the form, headed "Special Conditions", there was a space for special conditions to be added (we are not concerned with that), and then the form ended as follows. Above a space for the dating of the sub-contract and its signature, there were the printed words:

"I accept the terms and conditions of this sub-contract and authorise the deductions from payments made to me under Clauses 28, 29, 32, 36."

6. As it was, the new terms, referred to as being overleaf, were not in fact overleaf, but were contained in a separate document of some four pages, running to 42 terms which included terms 28, 29, 32 and 36, as referred to on the contract form itself.
7. There are a number of these contracts, but the parties considered that it would be sufficient to test the position by reference to one particular contract which Mr Tombs had entered into on the new form, and which he had signed and dated 1st October 2001.
8. The essential position, as the judge found it, was this. Mr Tombs had received these new contract forms with the appropriate new terms included (albeit on separate sheets of paper and not overleaf), and had signed and dated them. The judge also found as a fact that Mr Tombs had read and noticed the reference just above his signature to clauses 28, 29, 32 and 36, and that he had very possibly looked at those clauses themselves. The judge cited Mr Tombs' evidence to the effect that he assumed that the reference to these four clauses was part of the contract. Mr Tombs therefore accepted that he had made his contract on the new form and in accordance with the new terms which had come forward with that form.
9. The judge went on to find that after signing these new contract forms Mr Tombs returned them, as he was requested, to Wilson Connolly. It was only after the signature and the return of these forms to Wilson Connolly, that Wilson Connolly then issued orders on the old form which contained, on their back, the old terms. However, Mr Tombs was not asked to and did not sign the order forms.
10. The judge's reasoning in his conclusion that the contracts were made on the new forms and in accordance with the new terms is contained in the paragraphs of his judgment under the heading "Issue (1)" which run from paragraphs 22 to 33 of his judgment.
11. In essence, after making the findings to which I have briefly alluded, he stated his judgment that the contracts were made on the new forms and in accordance with the new terms for essentially five reasons.
12. The first was on the basis of Mr Tombs' own evidence, which he had previously summarised in his judgment, in which Mr Tombs had effectively accepted that he had contracted on the new form and in accordance with the new terms.
13. Secondly, the judge referred to the fact that in that evidence, and indeed by reference to his express written acceptance on the new form, clauses 28, 29, 32 and 36 were accepted expressly as being part of the contract, and that plainly only made sense if they formed part of the series of 42 new contractual terms upon the enclosed document. The judge went on to point out that these were significant terms, not only because they were highlighted in the new contract form, but also because that form specifically referred to those clauses as authorising deductions from payments otherwise to be made to the sub-contractor.
14. Thirdly, the judge accepted the unchallenged evidence of Wilson Connolly, by their witness Mr Canning, that the new terms were sent out every time a new contract form was sent out. So there was no doubt, on the evidence and on the facts, that, albeit the new terms were not on the same document as the new form contract, they were present to Mr Tombs when he signed the relevant contract forms.
15. Fourthly, the judge turned from the question of evidence to the question of law, and asked himself the question as to what in law was the significance, if any, of the old contract terms being on the back of the order forms which were sent out subsequent to the completion of the parties' written contracts on the new terms. The judge concluded, by reference to a citation of paragraph 2-036 of Chitty on Contracts, 29th edition, that the submission of a further document to one contracting party to another after their contract had been made would not vary the terms of that previously made contract unless they had been accepted as variations of the contract, either expressly or by contract by the contracting parties.
16. Fifthly, in the light of that statement of the law, the judge said that there had been no evidence from Mr Tombs or elsewhere as to how or why it was said that, the contracts having been made on the new terms, the old terms had become incorporated by variation into the contracts.
17. The judge concluded by saying this:

"Mr Berry's argument could only get off the ground if it could be shown that the parties, by conduct, effectively agreed to the replacement of the new short form terms and conditions by the old conditions, but there was absolutely no evidence of that at all."

18. Against that background, this morning, on behalf of Mr Tombs, Mr Simon Walsh has succinctly and clearly put before me the single point (which he is correct to put forward as a matter of law and not of fact) as to whether it is the law that where contracts had previously been made on one set of terms and then a party wishes to contract with a previous contracting partner on new terms and conditions, there is an obligation upon the proposer of the contract to draw to the other party's attention the changes between the old terms and the new terms. Mr Walsh candidly called that a somewhat novel proposition, but he relied for it on the case of Circle Freight International Ltd v Medeast Gulf Exports Ltd [1988] 2 Lloyd's Rep 427, albeit not so much for the facts of that case as for the citation in it of something that Ackner LJ had said in an unreported decision of the Court of Appeal in Keeton Sons & Co v Carl Prior Ltd, 14th March 1985. The citation at page 430 of the Circle Freight v Medeast report is as follows:

"The question in a case of this kind must always be, 'has reasonable notice of the terms been given?' This is essentially a question of fact depending on the circumstances of the case, and in particular on the nature of the business and position of the parties to the transaction."

19. In my judgment, that sort of question only arises in circumstances where a contract is not made in writing, but there may be a notice or a ticket, or possibly an invoice or something of that kind, which seeks to refer to terms and conditions being incorporated into the contract in question. It may be that there are some other situations in which even a written and signed contract may refer to terms and conditions as being incorporated which are not present to the contracting parties when they enter into the contract, but in general the statement I have put forward is I believe to be correct.
20. However, we are not concerned with the question of whether reasonable notice of incorporated terms has been given in the case of a contract which has not been made in writing. Our contracts have been made in writing. The general rule in relation to those is that set out in Chitty on Contracts, 29th edition, at paragraphs 12-002 and 12-008, which is to the effect that if a party signs a contractual document he will normally be bound by its terms. That is the position in this case.
21. In my judgment, the proposition of law on which Mr Walsh relies is an entirely novel proposition. It is in no way supported by the case to which Mr Walsh has referred me, or to the dictum of Ackner LJ to which he has referred me in particular. I am entirely satisfied by the reasoning of the judge that, on the facts of this case, Mr Tombs contracted by the terms to which he gave express assent by his signature in a written contract signed by him, and that there was no evidence whatsoever to vary that contract by reference to the old terms. It is not necessary, but I could add that it would be particularly surprising for this novel proposition to be given effect in circumstances where the new terms had been in operation since the year 2000, and where there were numerous written contracts in question on the basis of the new terms.
22. For these reasons, in my judgment there is no real prospect of any success upon appeal. I would therefore dismiss this application.
23. In these circumstances, it is not necessary perhaps for me to decide the question of whether an extension of time should be given. The notice of appeal was filed 13 days late. The explanation was that at this time immediately after the judgment in question Mr Tombs was embroiled in the breakdown of his marriage. If I had thought that this was a matter which should go to a full appeal, I would have had no hesitation in extending time in this case.

ORDER: Applications for permission to appeal and an extension of time in which to file the appellant's notice refused.

(Order not part of approved judgment) ______________________________