Fitzpatrick Contractors Ltd v Tyco Fire and Integrated Solutions (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 13 June 2008 |
| Neutral Citation | [2008] EWHC 1301 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 13 June 2008 |
| Docket Number | Case No: HT 07 364 |
[2008] EWHC 1301 (TCC)
IN THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
Mr Justice Coulson
Case No: HT 07 364
Mr Bernard Livesey QC and Mr Paul Sutherland (instructed by Maxwell Winward LLP) for the Claimant
Mr David Thomas QC and Mr Jonathan Lee (instructed by Cobbetts LLP) for the Defendant
Hearing dates: 17, 18, 19 and 28 March, 22 April 2008
The Honourable
A. INTRODUCTION
In March 2002, Transport for London (“TFL”) engaged the claimant, Fitzpatrick Contractors Limited (“Fitzpatrick”) to carry out the refurbishment of the southbound bore of the Blackwall Tunnel in East London. Fitzpatrick sub—contracted the design, manufacture and installation of the principal M and E works to Tyco Fire and Integrated Solutions (UK) Limited (“Tyco”). The works were significantly delayed. In addition, Fitzpatrick claim that the works carried out by Tyco were incomplete and defective. Fitzpatrick's total claims against Tyco amount to £19 million odd, of which the two principal components are £7.7 million in respect of delay losses, and £9 million in respect of incomplete and defective work.
It is apparent from the pleadings that one of the main issues between the parties concerns the relevant terms and conditions of the sub-contract. Fitzpatrick claim that a basic contract was entered into between the parties on or about the 7 May 2002, and that this contract was varied by agreement, culminating in a meeting on 19 June 2002 at which all remaining contractual matters were agreed. On Fitzpatrick's case, the terms of this detailed sub-contract, agreed no later than 19 June, impose a number of clear obligations on Tyco with which they failed to comply.
Tyco's case is, and has always been, rather more complicated. Originally, Tyco disputed that there was any sub-contract between the parties at all. However following the commencement of these proceedings, by their defence dated 8.10.07, Tyco accepted that there was a sub—contract agreed on or around 7 May 2002, although they disputed a number of the important terms on which Fitzpatrick relied. By an amended defence produced in December 2007, Tyco altered their position again. This time they alleged that the contact of 7 May 2002 incorporated a number of oral agreements emanating from a meeting on the 24 April between Mr Paul Ward of Tyco and Mr Iain Robinson of Fitzpatrick (the so-called 'first meeting'). It is this new case that Tyco advocated in the trial of the preliminary issues before me.
I propose to set out shortly, in Section B below, the relevant principles concerning contract construction. At Section C, I set out the factual background to the contract between the parties. At Section D, I set out the relevant events by reference to the contemporaneous documents and, at Section E, I make various observations about those documents and what they show as to the making of the contract and its relevant terms. At Section F, I then deal with the oral evidence called by the parties, in order to see whether or not that evidence was consistent with the contemporaneous documents and what, if anything, it might add. At Section G below, I set out my analysis of Tyco's new case and my conclusions as to the making of the contract between the parties and the relevant terms of that contract. At Section H below, I then set out my answers to the Preliminary Issues. Additionally, in Section I below, I address one distinct point of construction, concerned with clause 3(4), which only emerged clearly after the conclusion of the main hearing.
B. THE RELEVANT PRINCIPLES
B-1 The Importance of the Factual Background
In his well-known speech in Investors Compensation Scheme v West Bromwich Building Society [1998] I WLR 896, Lord Hoffmann identified five key principles concerning the interpretation of contracts. He summarised them 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…
(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 party using those words against the relevant background would reasonably have been understood to mean…
(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept 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 rule does not require Judges to attribute to the parties an intention which they plainly could not have had….
In BCC v Ali [2001] 1 AC 251, Lord Hoffmann said that the true test of admissible extrinsic evidence was “anything which a reasonable man would have considered relevant” and that he was not, in Investors Compensation Scheme,“encouraging a trawl through 'background' which could not have made a reasonable person think that the parties must have departed from conventional usage”.
The factual matrix should always be considered in any dispute as to construction of contractual terms, even if the wording could be regarded as unambiguous and sensible: see, for example, Westminster CC v National Asylum Support Services [2002] UKHL 38: [2002] 1 WLR 2956: and Chartbrooke Limited v Persimmon Homes Limited and Others [2007] EWHC 409 (Ch): [2007]; All ER (Comm) 1083. However, it is important that a proper balance is retained between the factual background and the words used. In Wayne Martin v David Wilson Homes Limited [2004] EWCA Civ 1027: [2004] EGLR 77, Buxton LJ said,
“One has to remember, when looking at issues about the factual matrix, that although reference to that matrix is not limited to cases where the words are clearly ambiguous, the first place where one expects to find the meaning of the words and the intention of the draftsmen is in the words themselves. If they yield a fairly clear conclusion, and in my judgment these words do, then one has to pause long before concluding that at that point the draftsmen has used words with a meaning that do not fit in with the objective that he was seeking to attain”.
B-2 Negotiations Generally
Particular problems can arise where there have been lengthy negotiations between the parties, but no formal contract has ever been signed. Helpful guidance as to the proper approach in such a situation can be found in the well-known case of Pagnan SpA v Feed Products Ltd [1987] 2 Lloyds Rep 601. If there are difficulties in the determination of whether or not an offer was made and accepted, then it may be necessary to consider all negotiations, including meetings where oral statements may have been made which were not referred to in the correspondence: see for example, Drake Insurance v Provident Insurance PLC [2004] QB 601 at 632, CA.
However different considerations will usually apply where the transaction has been fully performed. In those circumstances, the court will more readily conclude that there was a contract, even if it is impossible to identify the coincidence of offer and acceptance. The best-known guidance on this topic can be found in the judgment of Steyn LJ (as he then was) in Percy Trentham v Archital Luxfer [1993] 1 Lloyds Rep 25, CA when he said:
“The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often be difficult to submit that the contract was void for vagueness or uncertainty. Specifically, the fact that the transaction was executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised as inessential”.
B-3 General Rules of Construction
A number of the other rules relating to the construction of documents, summarised in Chapter 7 of The Interpretation of Contracts by Lewison J, were referred to by leading counsel during the course of their final submissions. Amongst those of particular relevance is the rule, identified at paragraph 7.03, that effect should be given, wherever possible, to all parts of the contract, and that no part of the contract should be treated as inoperative or surplus: see, for example, S.A.Maritime et Commerciale of Geneva v Anglo Iranian Oil Co Limited [1954] 1WLR 492.
On at least one occasion during his submissions, Mr Livesey QC, on behalf of Fitzpatrick, pointed out that the contract did not say in clear terms what Tyco now contended for and he asked forensically: 'if the parties meant that, why did they not say it'. In answer to that, Mr Thomas QC referred to paragraph 2.11 of The Interpretation of Contracts, where the learned author makes the point that it is inherent in most disputes about the interpretation of...
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