Galliard Homes Ltd v J Jarvis & Sons Plc
| Jurisdiction | England & Wales |
| Judge | Evans,Schiemann L JJ,Lindsay J. |
| Judgment Date | 12 November 1999 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 1999 |
Court of Appeal (Civil Division).
Evans and Schiemann L JJ and Lindsay J.
John Tackaberry QC and M Gibson (instructed by Howard Kennedy) for the appellants.
David Friedman QC and Claire Packman (instructed by Eversheds) for the respondents.
The following cases were referred to in the judgments:
Abdullah M Fahem & Co v Mareb Yemen Insurance CoUNK [1997] 2 Ll Rep 738
Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA (“The Leonidas D”)WLR [1985] 1 WLR 925
Aughton Ltd v MF Kent Services LtdUNK (1991) 57 BLR 1
Excomm Ltd v Bamaodah (“The St Raphael”)UNK [1985] 1 Ll Rep 403
Food Corp of India v Antclizo Shipping Corp (“The Antclizo”)UNK [1987] 2 Ll Rep 130
Frank Fehr & Co v Kassam Jivraj & CoUNK (1949) 82 Ll L Rep 673
Mathind v E Turner & Sons LtdUNK (1986) 23 Con LR 16 (CA)
New Eberhardt Co, Re, ex parte MenziesELR (1890) 43 ChD 118
Nissan (UK) Ltd v Nissan Motor Co LtdUNK (unreported, 31 July 1991, CA)
OT Africa Line v Vickers plc [1996] CLC 722
Paal Wilson & Co A/S v Partenreederei Hannah BlumenthalELR [1983] AC 854
Raffles v WichelhausENRENR (1864) 2 H & C 906; 159 ER 375
Rimeco Riggelsen Metal Co v Queensborough Rolling MillsUNK (unreported, 26 March 1993)
Scriven Brothers & Co v Hindley & CoELR [1913] 3 KB 564
Sim Swee Joo Shipping Sdn Bhd v Shirlstar Container Transport Ltd [1994] CLC 188
Trentham (G Percy) Ltd v Archital Luxfer LtdUNK [1993] 1 Ll Rep 25
Zambia Steel & Building Supplies Ltd v James Clark & Eaton LtdUNK [1986] 2 Ll Rep 225 (CA)
Contract — Arbitration — Whether there was a written agreement to arbitrate — Whether any agreement remained subject to contract — Whether oral agreement incorporated arbitration provision by reference — Arbitration Act 1950, s. 4, 32.
This was an appeal by the defendant, Galliard, from a judge's decision refusing an application for a stay of proceedings begun by Jarvis Interiors, pending arbitration, pursuant to s. 4 of the Arbitration Act 1950.
In January 1995 Galliard sent to Jarvis Interiors contract preliminaries inviting Jarvis to tender for the fitting out of some flats in London. The preliminaries referred to the JCT standard form of building contract 1980 edition (private with quantities) which consisted of two parts: the articles of agreement and the conditions. Article 5 of the JCT agreement provided for disputes to be referred to arbitration. The contract preliminaries proposed certain amendments to the articles and conditions of the JCT agreement. They required the contract to be executed as a deed under seal. Jarvis tendered for the work and Galliard in March 1995 sent to Jarvis a letter of intent on the basis that a formal contract would be executed under which, by way of a new article, the work was to be done for a maximum guaranteed price. The letter also stated that if no contract was executed Jarvis would be reimbursed for costs incurred on a quantum meruit basis. Jarvis began work in August 1995. Galliard then appointed quantity surveyors, BTP, one of whose tasks was drafting a contract between Galliard and Jarvis. BTP wrote to Jarvis “to confirm” that an agreement had been reached in December 1995, that there was a guaranteed maximum sum of £1.325m which covered the completion of the flats and all instructions and any loss and expense so far incurred. Jarvis did not acknowledge that those terms were agreed and sought to be paid for extras on the basis that any contract was a lump sum contract subject to variations. The work continued until Galliard purported to give notice under the JCT agreement terminating Jarvis's employment.
Jarvis issued proceedings claiming a quantum meruit or that there was an agreement that it would be paid on a quantum meruit basis. Galliard sought a stay of proceedings under s. 4 of the Arbitration Act 1950 on the basis that there was a contract on the terms of the JCT agreement containing an arbitration clause. The judge refused a stay on the basis that there was no contract at all between the parties because they were never ad idem and because their dealings remained “subject to contract”. Further any agreement would not have been sufficient to incorporate the arbitration provision in the JCT agreement in accordance with s. 32 of the Arbitration Act 1950. Galliard appealed.
Held dismissing the appeal:
1. There was nothing in the evidence to supersede the “subject to contract” effect of the contract preliminaries and the letter of intent. Accordingly no agreement containing an arbitration agreement came into existence. In particular if any agreement incorporated the JCT agreement and its arbitration provision that would mean that the provision requiring execution of a formal contract was also incorporated.
2. If there was an agreement it did not incorporate the arbitration provision of the JCT agreement. Any agreement was not more than an agreement to do particular works for a particular price and could not lead to the conclusion that some particular or any arbitration provision had been agreed to be incorporated so as to satisfy the requirements of s. 32. ( Excomm Ltd v Bamaodah (“The St Raphael”)UNK [1985] 1 Ll Rep 403 and Zambia Steel & Building Supplies Ltd v James Clark & Eaton LtdUNK[1986] 2 Ll Rep 225 (CA)considered.)
Lindsay J: This is the appeal of Galliard Homes Ltd against the decision of Judge Toulmin QC who, on 22 May 1998, dismissed Galliard's application for a stay, pending arbitration, of proceedings begun by Jarvis Interiors, a division of J Jarvis & Sons plc. In those proceedings, begun as early as July 1996 and which have so far run as far as an amended reply and defence to counterclaim and a reply to defence to counterclaim and in which discovery has already taken place, Jarvis, a contractor, seeks to recover from Galliard, an employer, in respect of works done by Jarvis. Galliard counterclaims, as yet, only for declarations but reserves the right, it says, to expand its counterclaim to claim damages for, we are told, work not done or poorly done by Jarvis. The summons seeking a stay is dated 8 August 1996. Its practical consequence, intended or not, has been that an action which would very likely have by now been long since concluded, has, by reason of the summons, progressed little further in the three years and more since the summons was issued.
The judge dismissed the summons for three not unrelated reasons. First there was, in his judgment, no contract at all between Galliard and Jarvis; the parties were never ad idem. Secondly, such dealings as they had were, in effect, “subject to contract” and hence amounted to no contract and, thirdly, there was, in any event, no written agreement to refer disputes to arbitration such as to permit the court to stay proceedings pending that arbitration. Galliard, as it has to if it is to succeed, appeals against all three conclusions.
The dispute in this court has been far-ranging and it will be as well to set out the facts at some length.
Before Jarvis came on the scene Galliard had earlier arranged for the construction of some 36 flats at Old Sun Wharf, Narrow Street, London E14. The main contractors for the development were Costains but Galliard contemplated that all fitting out would be done by another firm. There had been a meeting between Galliard and Jarvis on 9 January 1995 at which some form of financial statement may have been given by Jarvis to Galliard as to the cost of whatever works were then being discussed. At that point Jarvis had had no details of the terms of contract which Galliard was proposing although it may also be that some drawings or specifications of the works needed had already been given to them. At all events, on 11 January 1995 Galliard then sent “contract preliminaries” to Jarvis Interiors. They were said to include some specifications and drawings. They amounted to an instruction to Jarvis to tender on the bases then explained; they provided (cl. 3.1.11) that the contractor should make no alteration to the text of the specifications, form of tender or to the preliminaries without prior authorisation. They provided, in the alternative, for possession to be given to the contractor on 5 November 1995 or 19 December 1995. The contractor was to complete the whole of the described works “in accordance with the Contract Particulars described hereinafter”. Under the heading “Form, Type & Conditions of Contract” cl. 4.1 of the contract preliminaries began:
“The Form of Contract
4.1.1 The work to be executed in this Building Contract will be carried out in accordance with the terms of the Articles of Agreement and Conditions of Contract of the Standard Form of Building Contract 1980 Edition (Private Without Quantities) incorporating amendments…as published by the Joint Contracts Tribunal…
and the preliminaries included certain standard amendments which had been printed in the years between 1980 and 1994. It is convenient to call the standard form as thus already amended as “JCT 80”. The clause continued, after referring to that JCT 80:
“together with the amendments and insertions to the Standard Form as set out below.”
The standard form JCT 80 is divided into two chief parts: “articles of agreement” and “the conditions”.
The articles, when duly completed, amount to a contract in writing between the named employer and the named contractor on the basis of the contract drawings, specifications or schedules of works which the form contemplates as having been referred to, at the price filled in (“the contract sum”). Provision is made for the naming of an architect and quantity surveyor and there are frequent references in the articles to the conditions, the other main part of JCT 80. Article 5 states:
“5. If any dispute or difference as to the construction of this Contract or any matter or thing of whatsoever nature arising thereunder or in connection therewith shall arise between the Employer…and the...
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