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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Royal Courts of Justice Strand, London WC2A 2LL
		25 October 2011

HIS HONOUR JUDGE WILCOX:

1. The claimant, Harsco (formerly SGB), provides scaffolding for hire. The defendant is a house builder. During 2007/2008 the claimant was building flats in Edinburgh at the Butterfly site. Harsco provided the scaffolding. On 5 April 2008 there was a serious fire at the site, which damaged the scaffolding. Harsco claim the cost of the scaffolding, said to be of the order of £245,000. They rely on clause 8 of their standard terms and conditions, and really the sole issue between the parties as to liability is whether clause 8 of the standard terms was incorporated into the contract between them at the time of the fire. If not, the claim fails. If clause 8 was incorporated, Bellway is liable for Harsco's proven quantum of loss.
2. In January 2007 tenders were sought by Bellway for the hire of scaffolding on their enclosed terms and conditions. This elicited a quotation by Harsco on their standard terms. A further quotation, again on standard terms, was given on 27 February 2007. On 4 May Bellway in fact put in an order. Harsco provided a final quotation ultimately to Bellway on 9 May. That is in the sum of £332,022. There is an item, 41, relating to the cost of scaffolding in a car park. That was later omitted. That reduced the price to £330,834. Again that quotation was expressed to be subject to Harsco's terms and conditions.
3. Mr Graham Press, the chief surveyor in Scotland, following Bellway's site visit, discussed the requirements with a Harsco representative. He told the court in his written evidence that the Butterfly development was a significant project of Bellway and "we were under considerable commercial pressure to get on with it and make progress as quickly as possible". He then said, "We decided to award the tender to SGB [as he described them then] and instruct them to get on site and work on the enhanced scaffolding programme."
4. The first delivery of scaffolding was on 15 May 2007, and regular deliveries were made thereafter and the job progressed. On 23 May Harsco began to erect the scaffolding and continued to remain on site, erecting and fitting the scaffolding, under their energetic project manager, to ensure that the building project got under way as swiftly as they desired.
5. On 30 May Bellway provided Harsco with a sub-contract order and a further copy of their standard terms. They requested that Harsco sign that order. Harsco acknowledged receipt of the sub-contract order and wrote a letter to Bellway dated 5 June, the relevant part of which was this:

"The order is currently being reviewed by our commercial department and we will therefore contact you further in due course, however we confirm that works have been commenced and will continue to be carried out in accordance with our quotation…dated 9 May 2007 and the terms and conditions therein."

It is clear that they do not say there that they accepted the terms and conditions of Bellway. They are asserting that the job continue on their terms and conditions. Neither can it be said that they ignored the question of whose terms and conditions were to operate. They confirmed that the works had commenced, and they confirmed that the works would continue in accordance with the quotation, and thereby implicitly the terms and conditions hitherto. There was a reference, of course, to the commercial department. Bellway had been in possession of Harsco's standard terms since February. Time had elapsed. Delivery had been made. Erection had taken place, and the plant provided by Harsco had been used.

6. On 29 June a letter written to Mr Press by Mr Scott Hardy, the general manager of Harsco, notes that the order referred to a "lump sum fixed price". In paragraph 3 of his letter he said this:

"Our offer is to carry out the works stated in our quotation on a fixed price basis. This is not a Lump Sum contract."

So he is restating the offer. He is making it clear.

7. The defendant continued to provide scaffolding for the claimant's building works, adapting it as necessary as the work progressed. The claimant continued to permit the defendants and their scaffolding to remain on site and to be used by the claimant under the overview of the claimant's site manager. There was no communication forthcoming from the claimant saying that the defendant's terms were not acceptable. I have no doubt that, had the defendant sought to leave the site with their equipment following the letter of 5 June 2007, the claimant would have protested, loudly pleading a concluded agreement. They may have been right.
8. In my judgment, there was at that stage a concluded agreement on the basis of an acceptance, by conduct, of the defendant's offer of 9 May 2007. The claimant nonetheless seeks to rely upon the defendant's signature upon a sub-contract order dated 30 May 2007 appended to their letter of 4 July. That document is a revision which corrected a reference to a lump sum. It should have been "a fixed sum". It also incorporated a revised tender sum in a negative figure, minus £1,188, which both parties accept is an absurdity on the face of the document, because the tender price, on any view, was £330,000.
9. Mr Rothschild, on behalf of the claimant, submits that Mr Hardy, by appending his signature to the document which purports to incorporate the claimant's terms and conditions in substitution for the defendant's, unambiguously accepted the incorporated terms. In most circumstances that may be the effect of signing such a document. The court is entitled to examine the circumstances in which the document was signed and for what purpose. The defendant had been on site since early May and had not been paid. The claimant declined to make payment unless the document was signed.
10. In Grogan v Robin Meredith Plant Hire [1996] CLC 1127, the defendant plant hire company approached Triact, a civil engineering contractor, seeking work. It was orally agreed that Triact should hire the first defendant's driver and machine for £14.50 per hour in January 1992. Neither party mentioned any other terms. At the end of the first and second weeks Triact's site manager signed a time sheet recording the hours worked. Towards the bottom was printed these words: "All hire undertaken under CPA conditions. Copies are available on request." Were the standard conditions of the Contractors Plant Association incorporated into the contract, Triact was bound to indemnity the first defendant against any liability to a third party in the course of hire. It transpired that in the course of an accident at work the plaintiff was injured. At first instance, it was held that the Contractors Plant Association terms and conditions were incorporated into the contract by the signing of the driver's time sheet, and Triact thus had a liability to identify the first defendant in respect of a two-thirds liability to the plaintiff. The principal judgment of the Court of Appeal was given by Auld LJ. He reiterated the facts of the matter. At the bottom of page 3 he had this to say:

"The central question, adopting and adapting the useful statement of principle in Chitty on Contracts (27th edn), vol. 1, para. 12/008, is whether the time sheet in this case comes within the class of a document which the party receiving it knew contained, or which a reasonable man would expect to contain, relevant contractual conditions. Another way of putting it, as Kerr J did in Bahamas Oil Refining Co v Kristiansands Tankrederie A/S ('The Polyduke') [1978] 1 LI Rep 211 at pp. 215-216, is whether 'the document purport[ed] to have contractual effect'. It has to be borne in mind too that the circumstance to which the question relates, the presentation and signing of a time sheet for work done under an existing contract, is one of alleged variation, not the initial making of a contract.

In The Polyduke a document signed by a ship's master before berthing at a terminal, setting out conditions of use of the terminal, bore all the marks of a contractual document. Kerr J had no difficulty in so finding. The same observation applies to the authorities on which he relied and which he cited in the passage to his judgment to part of which I have referred. A time sheet for work done under an existing contract does not in the ordinary way spring to mind as having a contractual effect in the sense of identifying the nature of the contract between the parties."

He goes on later, after dealing with parts of Kerr J's judgment, to say this:

"A document may have a contractual purpose as a contract making document or in the execution of an existing contract. Documents such as a time sheet, an invoice or a statement of account are within the latter category. They do not normally have a contractual effect in the sense of making or varying a contract. The purpose of time sheets is not normally to contain or evidence the terms of a contract, but to record a party's performance of an existing obligation under a contract."

Later he makes this comment:

"…the common understanding of the purpose of the time sheets, the fact that they made reference to the CPA conditions, not previously part of the contract, cannot, in my view, be of any contractual significance. Certainly such a reference"

These are perhaps the telling words.

"on an essentially administrative and accounting document raised in the execution of an existing contract, did not have the clarity of meaning and purpose required to effect a variation incorporating them into the contract."

He held that the terms and conditions were not so incorporated. Russell LJ, in the course of a brief supporting judgment, said this:

"Mr Turner's primary submission was that it was not permissible for the court to look at the nature of the signed document in order to ascertain whether it has contractual effect. If the content of the document is acknowledged by the signature of any contracting party, that is an end of the matter. In the instant case, the time sheet contained the phrase, 'All hire undertaken under CPA conditions. Copies available on request.' That was acknowledged by Mr Patten's signature and was effective to bind Triact.

I am unable to accept Mr Turner's submission. It seems to me to run counter to a long line of authority and to the passage in Chitty to which Auld LJ has referred. In my judgment, at the heart of this appeal is the question whether the time sheet can be regarded as a contractual document having contractual effect, or simply an administrative document designed to enable the parties to agree what would ultimately be owing by one to the other."

The court emphasised that the approach should not be a mechanistic approach.

11. Here it is submitted that the sole purpose of this document was that it was a trigger to payment. Mr Rothschild says in his submissions that clearly this was a document that purported to have contractual effect. It was an order. It made clear reference to terms and conditions above the signature block of Mr Hardy, and they were delivered with the document. I remind myself that Mr Hardy was in the position of someone who had access to the commercial department. He had baulked at signing the document originally. He decided later that he would sign it, and did sign it. I ask myself this question. Would a reasonable man looking at it objectively, in the position of Mr Hardy, appreciate and realise that to sign a document such as this would have a contractual effect? I am satisfied that the answer to that question is "Yes", that to append a signature to a document in those circumstances is to knowingly accept that there would be an incorporation of those terms into the contract. I have no doubt whatsoever that his motive in signing it was primarily to trigger payment, but he must have appreciated that, in so doing, the terms would be incorporated. I have no doubt that, had there not been a fire, nobody would have turned a hair. He would have been paid, the job would have been done, and that would be an end of the matter. But I hold that clause 8 was not incorporated into the contract at the time when the fire took place.
12. It follows from the analysis that I have given that there was initially acceptance of the quotation of 9 May, and that there was effectively variation of terms by the incorporation, and also by the adjustment of the description from "lump sum" to "fixed".
13. It follows, therefore, that there is no liability so far as the claimant is concerned.
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