Cameron (sc0tland) Limited V. Melville Dundas Limited
| Jurisdiction | Scotland |
| Judge | Lord Hamilton |
| Date | 28 February 2001 |
| Court | Court of Session |
| Published date | 28 February 2001 |
| OUTER HOUSE, COURT OF SESSION | |
|
| OPINION OF LORD HAMILTON in the cause CAMERON (SCOTLAND) LIMITED Pursuers; against MELVILLE DUNDAS LIMITED Defenders: ________________ |
Pursuers: McLean; DLA
Defenders: Borland; Masons
28 February 2001
[1]In November 1997 the defenders contracted (as main contractors) with Glasgow 1999 Festival Company Limited to carry out construction works at a development in Mitchell Street, Glasgow popularly known as "The Lighthouse". For the purposes of the issue presently before me it is agreed that Clause 41 (an arbitration clause) of the Conditions of the Standard Form of Building Contract Local Authorities Edition with Quantities (1980 Edition) (as amended and modified by various provisions including the Scottish Supplement) was incorporated into that contract.
[2]The defenders engaged the pursuers as sub-contractors to carry out stonework and stone repairs, forming part of the main contract works. The pursuers carried out certain works in furtherance of that sub-contract. Practical completion was eventually achieved in July 1999. The parties are in dispute in respect of certain claims made by the pursuers under or by reason of the sub-contract. The pursuers have raised the present action in which they claim that a sum in excess of £400,000 remains due to them by the defenders. The defenders have lodged defences which include a plea that the action be sisted for the purposes of arbitration, maintaining that Clause 41 (as adapted to the sub-contract) is incorporated into the sub-contract. The issue before me is whether such a clause was so incorporated. It is not disputed that, if it was, the action should be sisted for arbitration.
[3]Although resolution of this issue turns largely on consideration of documents and of the applicable law, the defenders also rely on certain post-contractual conduct on the part of the pursuers. Parties agreed that in respect of three matters touching on such conduct (and one very limited matter occurring at an earlier stage) oral testimony should be adduced. I heard a short proof, to the effect of which I shall return, dealing with those matters. Parties' contentions, however, turned largely on agreed documents and on legal argument.
[4]It is plain that, as not uncommonly occurs, no very close attention was given, at the time when these parties were negotiating the sub-contract, to the implications for their contractual relationship of the manner in which the terms of the main contract were formulated. References were undoubtedly made in the documentation to the conditions, including Clause 41, which formed part of that main contract. But no specific exercise of adapting the terms of those conditions (including that clause) to the sub-contract situation was at that time undertaken. Accordingly, a difficult problem is now presented as to the true legal effect of the parties' communings.
[5]I was favoured with a careful and thorough analysis of the documentation and of the applicable law by Mr Borland for the defenders and by Mr McLean for the pursuers. Mr Borland relied principally on certain propositions which he drew from my decision in Babcock Rosyth Defence Ltd v Grootcon (UK) Ltd 1998 S.L.T. 1143. Mr McLean also cited Brightside Kilpatrick Engineering Services v Mitchell Construction (1973) Ltd [1975] 2 Ll.L.R. 493, Parklea Ltd v W & J R Watson Ltd 1988 S.L.T. 605, Aughton Ltd v M F Kent Services Ltd [1991] 31 Con.L.R. 60, Comorex Ltd v Costelloe Tunnelling (London) Ltd 1995 S.L.T. 1217 and Miller Construction Ltd v Trent Concrete Cladding Ltd, Lord Penrose, 4 August 1995, unreported. He also referred to Goodwins, Jardine & Co Ltd v Charles Brand & Son (1905) 7 F. 995. Mr Borland's primary submission was that, as a result of the parties' communings leading to the conclusion of the sub-contact (which was ultimately concluded by the commencement of work, there being no communing expressly concluding the bargain), there had been incorporated into that contract, among other conditions, Clause 41 (adapted to meet the circumstances of the sub-contract). Mr McLean's primary submission was that, while references to the main contract conditions had been made in the parties' communings, those references had no greater legal effect than what Lord Jauncey described in Parklea Ltd v W & J R Watson Ltd at p. 608 A-B when he said:
"... I consider that the parties have not incorporated the main contract provisions in toto into the sub-contract and that the purpose[s] of [certain words relied on by the defenders] was to make plain that the sub-contract must be capable of performance within but not necessarily upon the terms and conditions of the main contract."
[6]The communings between the parties may be summarised as follows. On 8 December 1997 the defenders sent to the pursuers a "Standard Enquiry Sheet" in which they sought a price for the stonework element in the Lighthouse development. That document included the statement -
"All work executed under sub-contract will be subject to the Terms and Conditions of the Main Contract, Specifications and Drawings which Sub-contractors are requested to examine. The submission of an offer will be taken as evidence that the said General Conditions of Contract, Specifications and the Drawings have been inspected and agreed."
It was then stated that the documents referred to might be inspected at a specified office of the defenders. The Standard Enquiry Sheet also contains the statement -
"Sub-contractors submitting offers on their own Form of Tender containing Conditions at variance with the foregoing will nevertheless be held bound by the General Conditions of Contract as mentioned above."
By fax and by letter both of 5 January 1998 the pursuers responded providing a quotation in the form of a priced bill of the stonework element. The letter also set out certain numbered items which the pursuers asked the defenders to take into account when considering the offer. Further discussions led to revised prices being marked up on a fax transmitted on 12 January. On 22 January a document entitled "Sub-Contract: Pre Award Agreement" was completed and signed by both parties. This contained several entries to which I shall return. Certain revisals, immaterial for present purposes, were made to that document on 27 March. On 31 March the defenders wrote to the pursuers stating:
"We hereby accept your offer of 12 January 1998 for Stonework at the above project less 3.5% Main Contractors Discount, all in accordance with the same Specification, Terms and Conditions of Contract ruling between ourselves and our Employer. These conditions will take precedence over any you may have submitted with your offer. Accordingly, we enclose our official Order No.53559."
This letter then stated the estimated commencement and completion dates for the sub-contract works and continued:
"We also enclose to complete Contract Records:
(a)BOQ Prelims A/1-A/15
(b)Specification F20, F21, F30
(c)Bill of Quantities K1-K13, G/2, G/4, C/10, C/11 and F10
(d)Drawings - As listed within Bill of Quantities and Specification
(e)Pre Award Agreement dated 22 January 1998 revised 27 March 1998."
Arrangements for payment were stated which included the statement "Payment will be made to you at monthly intervals within 35 days of Architect's Certificate." On the same day (31 March) the defenders' Purchase Order was issued. On 14 April the pursuers by fax requested that the defenders append to their Order certain of the numbered items contained in the pursuers' letter of 5 January. Also on 14 April the pursuers wrote to the defenders stating:
"We would acknowledge receipt of your letter... dated 31 March 1998 accepting our offer of 12 January 1998 for stonework to the above project, as amended and agreed at the pre award meetings of 22 January and 27 March 1998 and additionally Items 1, 2, 4, 5, 6 & 7 of our original letter of offer dated 5 January 1998."
Sometime thereafter, without any express response to the communings of 14 April, work was begun by the pursuers on the sub-contract works.
[7]The "Pre Award Agreement" referred to above was a pro forma under the defenders' name with provision for details to be inserted against various headings. Under the heading "Sub-Contractor Particulars" were inserted the name and other details of the pursuers. Under the heading "1.0 Main Contractor Details" were inserted, among other particulars, -
"1.1Contract JCT 80 LA EDITION WITH QUANTITIES CONTRACTORS DESIGNED PORTION
...
1.4Liquidate and Ascertained Damages £12,500/WK
...
1.7Main Contract Conditions PRELIMINARIES PAGES A/1-A/15."
Under the heading "2.0 Sub-contract price details" were inserted, together with other financial details, the following -
"2.5The Sub-Contractor accepts that he fully understands the concept of work and has quoted in accordance with drawings, specification and Contract Conditions. No claim will be allowed through lack of knowledge of these documents.
2.6Any terms and conditions included in the Sub-Contractor's quotation are deleted in favour of the Main Contract Conditions and this agreement.
2.7Documents to be incorporated and form part of the agreement:
2.7.1Prelim pages A/1-A/15."
Various other aspects, including payment arrangements, were set out in subsequent sections.
[8]The main contract Preliminaries pages A/1-A/15 referred to in the "Pre Award Agreement" included particulars of the Employer, the Architect and the Quantity Surveyor under that contract, the Standard Conditions applying to it and a schedule of clause headings and details of amendments and modifications to those Conditions. Among the clauses there referred to was Clause 41 in respect of which it was indicated that the version of that clause set forth in the Scottish Supplement applied. Also among those pages was an "Abstract of Conditions" relative to the main contract. That set out particulars applicable in respect of specific Conditions, including...
To continue reading
Request your trial