England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
NEWCASTLE UPON TYNE DISTRICT REGISTRY

		The Combined Court Centre The Quayside Newcastle upon Tyne
		25/07/2011

Judge Behrens :

1 Introduction

1. This is an application under CPR 24 by the Defendant ("DCL") to strike out a claim by the Claimant ("IIL") for damages for what is alleged to be negligent workmanship by DCL under a building contract made between the parties on 29^th July 2008.
2. The contract provided for a short limitation period of 1 year in respect of claims against the contractor. DCL contends that this claim has been brought outside the limitation period and is thus bound to fail. IIL seeks to answer the allegation in three ways. First it submits that on the true construction of the clause the limitation period never started to run; second it contends that these proceedings were in fact commenced within the one year period. Finally it contends that in the events that happened between October 2009 and February 2011 DCL waived the right to rely on the limitation clause in the contract.

2 The Contract

Background

3. The claim relates to works carried out by DCL at IIL's unit at Delves Lane Industrial Estate, Consett, County Durham. The Project (as defined in Annexe A) consisted of the construction of Phase 1 of a camera factory.
4. IIL is a Company based in the British Virgin Isles. Mr Medhesh Al-Suhaim is its Managing Director.
5. A total of 7 contractors were employed for the project each of whom were on site for a different specified time. The works were carried out in sequence such that there was only one contractor on site at the time.
6. DCL were specialist roofing and cladding constructors. They were the third (or perhaps the fourth contractor) on site and were followed by a number of others including the contractor who fitted the windows.
7. In early 2008 Mr Al-Suhaim invited DCL to quote for roofing and cladding works at a proposed factory in Consett designed by Mammut Building Systems in Dubai. At the time Mr Al-Suhaim was advised by Solicitors Swinburn Maddison and engineers Peter Eaton Associates (Alan Wagstaff).
8. DCL's revised quotation of £61,225 was submitted to the Claimant's engineer, Alan Wagstaff, and subsequently accepted by Mr Al-Suhaim. The parties negotiated a formal contract. The original draft prepared by IIL's solicitors was amended by DCL. DCL's amendments were accepted in the final executed version dated 29^th July 2008.
9. Although nothing turns on this one of the amendments relates to the limitation clause with which this application is concerned. The original draft proposed a 12 year limitation period for claims against DCL. This was amended to 1 year.

The terms of the Contract

10. Apart from the limitation clause it is not necessary to set out the terms of the contract in detail. There is a helpful summary of the key provisions in Ms Franklin's skeleton argument:

1 First Recital – the Project is described in Annex A as the Construction of Phase 1 of a camera factory consisting of a two floor housing sales office, initial design area and service facility.

2 Under clause 1.1 IIL appointed DCL to act as roofing and cladding contractor in project to perform the services set out in Schedule 1.

3 Schedule 1 –10 Services are referred to in Schedule 1. These are in the main brief descriptions of the works to be carried out although in part they refer to the role of DCL and the allocation of risk. Considerable reliance was placed on one of these clauses (1.8) by Mr Winser. In those circumstances it is convenient to set them out:

1) Assume the role of Principle (sic) Contractor for the period during which the Services are provided

2) Erection of fall arrest netting

3) Erection of roof edge protection scaffold

4) Erection of access tower at one corner of the building

5) Supply and fixing of double skin trapezoidal roof sheeting including insulation

6) Supply and fix microrib composite panels to the walls. Fixed horizontal

7) Supply and fix trimline gutters and down corner pipe

8) Contractor will be responsible for ensuring that the building passes its air pressure test and correcting any defects relating to the cladding at no cost to the client.

9) Remove all scaffolding and clear all rubbish and surplus material from site.

10) Contractor to be responsible for the security of his materials and equipment on site

4 Under clause 1.2 DCL warranted to IIL that it has exercised and will continue to exercise in the performance of the duties and Services all such reasonable skill care and diligence as may be expected of a properly qualified and competent roofing and cladding contractor.

5 Under clause 1.7 DCL was obliged to use reasonable professional skill care and diligence to inspect the Works in accordance with the requirements of Schedule 1.

6 Under clause 1.10 DCL was obliged when requested to enter into a Deed. The form of the collateral warranty at Annexe C includes a warranty that DCL has exercised reasonable skill and care in the exercise of its duties to the client.

7 Section 4 and Schedule 2 deal with remuneration.

8 Section 17 provides for disputes and will be set out in full below

9 The Construction period for DCL's works was 8 weeks

10 The contract was executed as a Deed.

Clause 17.4

11. The limitation clause is clause 17.4 which provides:

"17.4 No action or proceedings under or in respect of this Agreement shall be brought against the Contractor after:

(a) the expiry of 1 year from the date of Practical Completion of the Services or;

(b) where such date does not occur, the expiry of 1 year from the date the Contractor last performed Services in relation to the Project."

12. There is no definition of the phrase "Practical Completion of the Services". There is, however a definition of "Practical Completion":

"Practical Completion" means practical completion of the construction of the Project as certified by Peter Eaton & Associates Limited."

13. As already noted the Project is defined in Annexe A.
14. In the original draft of clause 17.4 neither practical nor completion were capitalised. Capitalisation was introduced in DCL's amendment together with the greatly reduced limitation period.

3 History

Prior to the Pre-Action Protocol

15. DCL carried out the work on site between November and December 2008. On 8^th January 2009 Mr Wagstaff visited the site and took the opportunity to carry out a visual inspection of the low level cladding. He sent DCL an e-mail in which he expressed the view that the workmanship was of poor quality and that little care had been taken with the fitting of the panels generally. He expressed the view that problems would occur with the pressure test. He identified 5 separate areas of defects and stated that when the obvious faults have been corrected he would carry out a full inspection including the high level gutters.
16. On 9 February 2009 Mr Beal (DCL's quantity surveyor) sent e-mails to Mr Wagstaff and Mr Al-Suhaim in which he asserted that the building was complete and had been accepted by Mr Wagstaff.
17. On 27^th March 2009 Mr Al-Suhaim sent an e-mail which referred to "a few technical issues … mainly by loud noise caused by vibration of the cladding panels"
18. On 5^th May 2009 Swinburne Maddison, the solicitors then acting for IIL wrote to DCL. Much of the letter deals with the moneys allegedly due to DCL. At that time some £47,315.50 had been paid and DCL were claiming the moneys outstanding. However the letter also makes a vague reference to "various snagging items that need to be resolved" without going into detail. Swinburne Maddison asked DCL to deal with the snagging items to an acceptable standard within two weeks.
19. DCL replied to this letter on 19^th June 2009. Much of the letter deals with the amounts allegedly due to DCL. However it also contains an assertion by DCL that all the work has been completed and that payment is due.
20. On 27^th July 2009 Swinburne Maddison wrote a further letter to DCL. The letter is headed "Without Prejudice". It is, however agreed between the parties that any privilege relating to the without prejudice status of any letters in the bundle has been waived. After dealing with various money issues the letter asserts that as the final inspection has not taken place there are a number of snagging issues. It criticises the workmanship and makes 4 specific allegations:

1. A recent air leakage test has failed

2. There is a water leak to the property

3. The side panels are vibrating in high winds as a result of poor quality workmanship and the fact that they do not appear to have been fixed to the steel structure correctly.

4. The general quality of the workmanship and finish is poor with general defects and snagging issues requiring rectification.

21. It is then pointed out that IIL has obtained independent reports in respect of the works and has been advised that remedial works would cost between £105,000 and £107,500. At that time IIL were willing to allow DCL to remedy the defects and Swinburne Maddison asked for a response within 10 days.
22. Mr Beal replied to this letter on 10^th August 2009. In the letter he made the point that the final inspection took place in December 2008 and that various snagging items were attended to in January 2009. He made the point that numerous other contractors have been on site since the completion of DCL's works and that DCL was not responsible for any of the 4 specific items alleged in the letter.
23. Between August 2009 and October 2009 DCL sent a number of chasing letters in respect of the outstanding moneys. IIL changed solicitors and instructed their present solicitors Tilly Bailey & Irvine LLP ("TBI").

Pre-Action Protocol

24. On 2^nd October 2009 TBI sent DCL a letter in accordance with the Pre-Action Protocol. It enclosed a number of documents including a report from Building Inspection Services. It alleged that the workmanship has not been carried out to a reasonable standard. It referred to three quotations for remedial work in sums between £105,000 and £113,000 and also asserted that there was a loss of profits valued at £150,000 continuing at between £50,000 and £80,000 per month.
25. The letter pointed out that the Pre-Action Protocol provides for a meeting to take place within 28 days of the letter of response. It continued:

Please note that although our client is willing if necessary to issue proceedings and to pursue these to trial, we are instructed that in order to see a swift resolution to this dispute our client would be willing to meet with you on a without prejudice basis as soon as possible in order to try to resolve outstanding issues.

26. DCL instructed Crutes LLP ("Crutes") to act on their behalf. There was no formal response to the letter of 2^nd October 2009 prior to 17^th December 2009. It is, however, clear that there were informal discussions. On 17^th December 2009 TBI wrote a letter to Crutes in which they stated that IIL was willing to pay the sums in dispute into an escrow account. Those sums would only be paid on completion of remedial works described as substantial to the satisfaction of the cladding manufacturer's expert.
27. On 26^th February 2010 Crutes provided a detailed response to letters of 2^nd October 2009 and 17^th December 2009. It described the claim as "opportunistic and speculative". It made a number of detailed comments on the letter from the roofing contractor and the report from Building Inspection Services. It is not necessary to go into the details in this judgment. It points out that the Air Pressure Test was carried out 4 months after DCL left site and 6 months before the report was compiled. It points to the other contractors on site and the remedial work carried out after the initial e-mail from Mr Wagstaff.
28. In response to the letter of 17^th December 2009 it enclosed a schedule of the £17,565 then alleged to be due and to be placed in an escrow account. It made the point that DCL was willing to attend the site with IIL to identify any required remedial work and that DCL was willing to attend to such work. An independent expert would be present if necessary.
29. On 12^th March 2010 TBI replied to Crutes. They rejected most of the points made in the letter. However in what was described as "one final attempt to see this matter resolved" IIL was willing to agree to an onsite meeting. Mr Slater (IIL's expert) would be in attendance and it was suggested that DCL appoint its own expert.
30. The meeting duly took place on 31^st March 2010. It was attended by the parties, Mr Slater, Mr Franks (DCL's expert) and a representative from TBI. There is no contemporaneous file note of the meeting though there is a letter from TBI dated 1^st April 2010 which describes the meeting as "productive in some senses as there had been some acceptance that works were required". DCL had agreed to provide a report.
31. On 16^th April 2010 Crutes sent the report to TBI. In the covering letter Crutes made the point that the report was provided "on a strictly without prejudice basis at present until your client confirms that funds have been placed in an escrow account".
32. The report dated 15^th April 2010 was prepared by DCL with the assistance of Mr Franks. It contained a few relatively minor admissions but it did contain an offer to return to site to carry out some further investigative work and remedial work if necessary.
33. There was further correspondence between the parties. It is not in my view necessary to refer to it in detail. Suffice it to note that IIL did not accept the offer and did not permit DCL to return to site. On 21^st December 2010 Crutes repeated the offer to carry out the work but stated that the offer would lapse if proceedings were issued. The offer was not accepted. It may be that this was because Mr Al-Suhaim was in the end unwilling for DCL to return to site. In his witness statement he said :

"In the circumstances I was not prepared to allow DCL to carry out the limited scope of remedial works offered. The proposals gave me the impression that they wanted to hide the problems rather than repairing them all."

34. Eventually on 29^th December 2010 these proceedings were issued. Service was acknowledged on 7^th January 2011. There was no mention of a limitation point in the Acknowledgment of Service. An application was made to transfer the proceedings to the TCC. Thereafter on 1^st February 2011 Crutes indicated that the claim was barred by the provisions of clause 17.4. That point was repeated in the Defence.

4 Construction of Clause 17.4

35. Mr Winser's submissions on the construction of clause 17.4 are contained in paragraphs 24 and 25 of his skeleton argument. He submits that clause 17.4(a) is not engaged because there is no date of "Practical Completion of the Services". He relies on the fact that there is no definition of the phrase. In so far as there is a definition of "Practical Completion" it involves a certificate by the Engineer. There is no such certificate here. Alternatively the services must be substantially complete. He submits that it is arguable that the defects are so great that the work is not substantially complete. Ms Franklin does not seek to rely on clause 17.4(a) so that it is not necessary for me to address these submissions in detail. I am content to accept that it is well arguable that this case is not within clause 17.4(a)
36. Ms Franklin relies on clause 17.4(b). She submits that this provides an alternative limitation period for claims against DCL. That period is 1 year from the date the Contractor last performed Services in relation to the Project. Mr Winser seeks to counter this submission by reference to the first six words of the subclause. In his submission clause 17.4(b) only bites "where such date does not occur". It is only engaged in a situation where Practical Completion is not going to be achieved because for example the owner has abandoned or changed the project. He made the point that this was a clause substantially restricting IIL's right to claim against DCL and thus it should be construed "contra proferentem".
37. The difficulty with the "contra proferentem" rule in a situation such as this lies in determining who is the person proffering the clause. As Ms Franklin points out this clause originates from a draft supplied by IIL's solicitors with amendments by DCL.
38. In any event I find more guidance in the well-known passage from Lord Hoffman's speech in ICS v West Bromwich Building Soc [1998] 1 WLR 896:

The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945).

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

'... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.'

39. Clause 17.4 is not a happily drafted clause. The difficulties with 17.4(a) have already been referred to and do not need to be repeated. There are, to my mind, similar difficulties with the first six words of clause 17.4(b).
40. However I cannot accept that a reasonable person with the background knowledge of this contract would interpret clause 17.4 in the limited way suggested by Mr Winser. It is to my mind an interpretation that flouts business common sense. To my mind where as here there is no certificate of Practical Completion of the Services, then the contractual limitation period expires 12 months after the last performance of services in relation to the Project.
41. I reject Mr Winser's argument on the construction of clause 17.4(b).

5 Last Performance of Services

42. Ms Franklin contends that DCL last performed services in relation to the Project in February 2009 when it completed the snagging items referred to in Mr Wagstaff's e-mail of 8^th January 2009. Accordingly it contends that the issue of proceedings in December 2010 was more than 10 months out of time.
43. Mr Winser contends that DCL performed services in relation to the Project on 31^st March 2010 when it attended the meeting on site on that date. He referred me in particular to Item 8 in Schedule 1 (which defines the Services to be performed under the contract). It will be recalled under that item DCL were to be responsible for ensuring that the building passes its air pressure test and correcting any defects relating to the cladding.
44. Mr Winser points out that in order to correct defects in the cladding DCL must assess the extent of the defects. This will be done by an inspection. The inspection on 31^st March 2010 was such an inspection and was accordingly the performance of a service in relation to the project. Equally the report of 15^th April 2010 containing, as it did, an offer to return to site was also the performance of a service under the Contract.
45. Despite the ingenuity of Mr Winser's argument I cannot accept it. I agree with Ms Franklin that the inspection on 31^st March 2010 and the subsequent offers have to be seen in the context that they occurred. In the course of her submissions Ms Franklin made a number of points:

1. The meeting took place as part of without prejudice negotiations following a pre-action protocol letter sent by TBI to DCL in October 2009. Ms Franklin referred me to paragraph 5 of the Pre-Action Protocol which expressly contemplates that parties to a Construction dispute should normally meet as part of the protocol.

2. She accepted that any privilege relating to the negotiations had been waived with the result that it was open to the parties to refer to the meeting and the subsequent offer. However she submitted the meeting remained a "without prejudice" meeting. Accordingly the meeting did not prejudice or create rights under the contract. In particular it did not create a new date for time to start running for limitation purposes.

3. She pointed out that DCL's open position, as set out in the letter of 26^th February 2010 was an outright denial of liability.

4. She pointed out that the offer to carry out work contained in the report of 15^th April 2010 was rejected by Mr Al-Suhaim. If it had been accepted and further work had been carried out then no doubt there would have been a fresh limitation period in relation to that work.

46. To my mind these points are unanswerable. In my view the meeting and the subsequent offer were part of the without prejudice negotiations which were being conducted in accordance with the Pre-Action Protocol in an attempt to avoid litigation. They were not the performance of services under the Contract.

6 Waiver.

47. Mr Winser's final point was that DCL had, by their conduct, waived the right to rely on clause 17.4. In support of this he relies on a number of points:

1. He reminded me that DCL had instructed Crutes to act on its behalf in November 2009. He referred me to the without prejudice correspondence to which I have already referred, to the meeting on 31^st March 2010 and the subsequent repeated offers by DCL to return to site in accordance with the report of 15^th April 2010. Thus he points out that the parties negotiated for 16 months without any mention of the limitation period until on 1^st February 2011 Crutes sought to rely on clause 17.4

2. He submitted that DCL knew when the work was carried out under the contract. DCL itself amended the draft of clause 17.4 and must be taken to be aware of its right to rely on clause 17.4 to bar any proceedings brought after January 2010. By failing to refer to it until February 2011 DCL must be taken to have waived their right to rely on the clause.

48. In support of his submission Mr Winser sought to rely on part of the judgment of Phillips J in The Superhulls Cover Case [1990] 2 Lloyd's Rep 431 at 450 and on the decision of the Court of Appeal in CWS v Chester le Street DC [1998] EGLR 11.
49. In the Superhulls Cover Case the passage relied on by Mr Winser is in the following terms:

A party can represent that he will not enforce a specific legal right by words or conduct. He can say so expressly – this of course he can only do if he is aware of the right. Alternatively he can adopt a course of conduct which is inconsistent with the exercise of that right. Such a course of conduct will only constitute a representation that he will not exercise the right if the circumstances are such as to suggest either that he was aware of the right when he embarked on the course of conduct which is inconsistent with it or that he was content to abandon any rights that he might enjoy which were inconsistent with that course of conduct.

50. In the light of Mr Winser's reliance on the CWS case it is necessary to look at the facts in a little detail. It involved a claim for compensation following the compulsory acquisition of one of CWS's stores in Chester le Street. Under s 10(3) of the Compulsory Purchase (Vesting Declarations) Act 1981 an application to the Lands Tribunal had to be made within 6 years from the date when the claimant knew or could reasonably be expected to have known of the relevant vesting of the land. It was common ground that this date was 10^th October 1986 so that the limitation period expired on 10^th October 1992.
51. There were extensive negotiations between the parties including offers which were rejected in 1988 and 1989. A new valuer was instructed by CWS in October 1991. He held talks with the District Valuer until April 1992. An important meeting was held on 15^th September 1992 at which there was a discussion as to the views which the Lands Tribunal might make if the matter went to the Tribunal. The deadline was not mentioned.
52. Negotiations dragged on and there was a meeting as late as January 1994. A further offer was made following which the surveyor was instructed to refer the matter to the Lands Tribunal. However in June 2004 the authority wrote offering to negotiate. Eventually reference was made to the Lands Tribunal in August 1994. On 2 occasions extensions of time were agreed for the lodging of expert reports. Out of the blue in January 1995 applied for dismissal of the application on the ground that it was out of the time.
53. There was a finding of fact that:

it was always of the essence of the meetings between the two valuers and plainly understood between them, that so far as was possible there should not be a reference to the Lands Tribunal but that the far more acceptable way forward from the point of view of both sides was that there should be a negotiated settlement.

54. The Tribunal held that the local authority was estopped by its conduct from asserting that the six year limitation period applied. The Court of Appeal dismissed the appeal. It was argued on appeal that there was insufficient material for the Tribunal to make the finding it did. Sir Patrick Russell, who gave the leading judgment said this:

My answer to that submission is to be found in the award itself. There are plain findings of fact. They were supported by the oral testimony of Mr Bissett. It is manifestly plain, as I earlier commented, that throughout the negotiations in which Mr Bissett took part, it was common ground between him and the Valuer instructed by the Authority that there should not be a reference to the Tribunal save as a possible last resort, and only then when all efforts to reach a negotiated settlement had failed. There was, in my judgment, as the judgment of His Honour Judge Marder discloses, ample material upon which he could hold that it would be unconscionable for the Authority to rely upon the six year period of limitation having regard to the way in which they conducted the negotiations, and indeed having regard to their reaction to the reference once it had been made and they sought an extension of time without referring to the fact that the reference was flawed from the outset.

55. Ms Franklin seeks to meet this submission in a number of ways. She accepted that as a matter of law it was possible for DCL to have waived or be estopped from relying on clause 17.4. She pointed out that in the Superhulls Cover case Phillips J held that the case for estoppel was not made out on the facts. She drew my attention to the passages (at p 450) in the judgment following the passage cited by Mr Winser. In particular she drew my attention to the judgment of Shaw LJ in Bremer Handelsgesellschaft v Mackprang [1979] 1 Lloyd's Rep 221 at 230 where he said:

What is beyond contention is that waiver of contractual rights is not to be facilely inferred or assumed. On the contrary, in human affairs and more especially in a commercial context the probabilities are against the voluntary sacrifice of vested rights which are or may be of material value. What is said to constitute waiver must always be scrutinized with this in mind. However there are situations in a mercantile environment when insistence on full contractual performance may be commercially inexpedient … Accordingly, so it seems to me whether the conduct of a contracting party may amount to a waiver must be determined by reference to all the prevailing circumstances. It need not be such as to amount virtually to an express representation that this or that right is waived or surrendered. If in the prevailing conditions affecting the position of the parties to a contract the conduct of one of them affords a reasonable foundation for the inference that he is prepared to forego any rights he may have in a certain regard and the other party does draw that inference and persists in the residual contractual relationship upon that basis, then whether it be regarded as waiver or estoppel the foregoing of those rights cannot thereafter be gainsaid.

56. She submits that the facts of this case are a mile from the facts in the CWS case. This is a case where liability is and always has been in dispute. The meeting and the limited offer to return to site have to be seen in the context of the Pre-Action Protocol and the without prejudice negotiations. She points out that the limitation point was taken at an early stage once proceedings had been issued, before the defence was filed. In those circumstances she submits that there is no basis for the Court to infer that DCL has waived its rights.
57. I am conscious that this is an application for summary judgment. Accordingly the application should be refused if there is a real, rather than a fanciful, prospect of success. On the other hand all of the material relied on is before the Court and I am in as good a position as the trial judge to determine it.
58. I agree with Ms Franklin that this is a very different case from the CWS case. To my mind that was very much a case that turned on its own facts. The result depended on the findings of fact and in particular on the finding of fact relating to the common understanding between the two valuers referred to above. In those circumstances it was unconscionable for the Authority to rely on the 6 year limitation period.
59. There are 2 sorts of waiver that are relevant^[1]. The first type may be called waiver by election. Waiver is here used to signify "abandonment of a right which arises by virtue of a party making an election". Typically it occurs when a person is entitled to alternative rights inconsistent with one another and the person acts in a way consistent only with his having chosen to rely on one of them. The classic example is the acceptance of rent by a landlord with knowledge of a non continuing breach of covenant giving rise to a right of forfeiture. The acceptance of rent is consistent with the tenancy continuing and thus waives the right to forfeit (but not to claim damages for the breach of covenant).
60. It seems to me that that sort of waiver has no application to the facts of this case. It is not a case where DCL had alternative rights inconsistent with each other.
61. The second type of waiver is waiver by estoppel. In order to establish such waiver it is necessary to establish the ingredients of the estoppel. Those ingredients were made out in the CWS case.
62. I have great difficulty in seeing that they are made out on the facts of this case. To my mind it is not realistically arguable that the without prejudice negotiations including the meeting and the limited offers made by DCL amounted to a representation by conduct that DCL would not rely on clause 17.4. Equally I do not think it unconscionable to prevent them from doing so.
63. It follows that I would reject this ground of defence. It follows also that the application succeeds and I would strike out the claim.
64. I would not, however go so far as to grant judgment on the Counterclaim. Although the matter was not argued and the application was amended to delete an application for summary judgment on the Counterclaim my present view is that clause 17.4 does not operate to prevent IIL from raising allegations of defective workmanship against DCL by way of a set off to a claim for moneys due under the contract notwithstanding more than 12 months have passed since DCL last performed services under the contract.

Note 1   See the discussion in Chitty on Contracts 30th Ed paragraph 24-007 an also the discussion on pp 448 and 449 of the Superhulls Cover case.    [Back]