A. J. Building and Plastering Ltd v Samantha Turner and Others
| Jurisdiction | England & Wales |
| Judge | H.H. Judge Keyser |
| Judgment Date | 11 March 2013 |
| Neutral Citation | [2013] EWHC 484 (QB) |
| Court | Queen's Bench Division |
| Date | 11 March 2013 |
| Docket Number | Cases Nos: 2QT05649, 2QT05650 and 2QT05657 |
[2013] EWHC 484 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CARDIFF DISTRICT REGISTRY
MERCANTILE COURT
Cardiff Civil Justice Centre
2 Park Street
Cardiff
His Honour Judge Keyser QC
sitting as a Judge of the High Court
Cases Nos: 2QT05649, 2QT05650 and 2QT05657
GERARD HEAP (instructed by Phillips Green & Murphy, of 120 Walter Road, Swansea, SA1 5RF) for the Claimant
GERARD MCMEEL (instructed by DAC Beachcroft LLP, of Portwall Place, Portwall Lane, Bristol, BS99 7UD) for the Defendants
Hearing dates: 28 and 29 November 2012
H.H. Judge Keyser Q.C.:
Introduction
These are in the nature of test cases, involving only small amounts of money but raising issues that affect a significant number of further cases.
The claimant company is a general building contractor. Its core business relates to renovation, alteration and repair of domestic properties. Each of the defendants is a householder in the Carmarthen area, who had a policy of household insurance with Zurich Plc ("Zurich").
The defendants' houses all suffered damage, and each defendant made a claim on his or her insurance. In each case, Zurich instructed a company in the Rok group of companies (collectively, "Rok") to carry out remedial works and Rok in turn engaged the claimant to do the works.
In each case, the claimant carried out the works and invoiced Rok. Zurich paid Rok; but, before paying the claimant, Rok went into administration. The claimant was left unpaid and without any prospect of recovering payment from Rok. The claimant has no contractual relationship with Zurich.
In each case, the claimant asserts that it is entitled to receive payment for the works directly from the householder. It relies on a document headed "Works Authority & Mandate" (to which I shall refer as "the mandate"), which was signed by each householder before the works were commenced, and says that the mandate creates a direct contractual obligation on the part of the defendant to make payment in full to the claimant. The defendants say that, for a number of reasons, the mandate does not have that effect.
I have been greatly assisted by the written and oral submissions of Mr Heap for the claimant and Mr McMeel for the defendants and am grateful to them.
Some more background
The details of the business relationships between Rok and Zurich and between the claimant and Rok were not within the scope of the defendants' knowledge. For the purposes of this judgment, it is therefore unnecessary to set them out. However, some background to the present disputes will be of assistance.
Rok plc was the holding company of the Rok group of companies. Among the companies in the group was Rok Building Ltd, which as its name suggests provided building and construction services. The distinctions between the various companies were not always clearly observed, and for the most part they are not important for the purposes of this judgment. The companies in the group entered administration on 8 November 2010. Rok Building Ltd went into creditors' voluntary winding up on 6 November 2012, shortly before the trial of these claims.
The claimant's business relationship with Rok commenced in 2003. At that time, Rok was interested in the prospect of buying the claimant's business. Accordingly the parties entered into a form of partnering agreement, whereby the claimant carried out all Rok's contracts within defined parts of Wales and operated as, in effect, a regional sub-division of Rok. The closeness of the relationship is shown by the fact that in 2004 the claimant placed Rok's name and livery on its vans.
However, in 2008 Rok decided to stop working by means of partnering agreements. Thereafter the claimant carried out works for Rok simply as a subcontractor. On 1 November 2008 Rok and the claimant executed a framework agreement, which set out the terms that would apply to works carried out by the claimant for Rok during the following year. It is unnecessary for me to set out here the detailed provisions of that framework agreement. Suffice it to say that the relationship between the claimant and Rok was clearly to be that of subcontractor and its employer. The persons in whose houses the works were to be carried out were described in the framework agreement as "End Users". Clause 5 prohibited the claimant from undertaking works privately for End Users without Rok's written permission.
The framework agreement expired at the end of October 2009. Despite its efforts, the claimant failed to persuade Rok to put pen to paper on a new twelve-month framework agreement. The claimant's managing director, Mr Andrew Jones, gave evidence that the claimant had thereafter been uncertain who its employer was when it did insurance work on Rok's instructions. In fact, the documentation in the case shows clearly that Rok instructed the claimant as a sub-contractor and on terms that purported to incorporate the terms in the framework agreement. The claimant for its part sent invoices to Rok. Until the latter part of 2010 Rok made the payments to the claimant. It is possible that, in the period leading up to Rok's entry into administration, Zurich began to make payments directly to the claimant; this is uncertain.
The claimant had begun issuing mandates to insured householders before the expiry of the framework agreement; Miss Turner's is such a case. The reason for issuing the mandates is not, I think, material. In fact, Mr Jones' evidence was that they were used not because of the risk of Rok's insolvency—far less the risk of Zurich's insolvency—but so that, if a householder raised unmeritorious complaints about the claimant's workmanship that persuaded the insurer to withhold payment, the claimant need not become involved in a dispute with the insurer but could press for payment directly from the insured.
I shall set out briefly the facts specifically relating to the three cases. There are two main points of difference among them. First, it is Miss Turner's case that she asked for and was given by the claimant an explanation of the mandate and that she signed it on the strength of that explanation. Second, the mandate signed by Mrs Munday was in slightly different terms from that signed by Miss Turner and Mr Dalling.
Miss Turner's case
Miss Turner suffered an insured loss on 20 April 2009, when her dining room flooded after a leak from her bathroom. She promptly notified her insurer, Zurich, and made a claim on her policy of property insurance. Zurich told her that she would be contacted by a surveyor, who would arrange to visit the property to assess the damage and to propose a scheme of remedial works.
Very shortly afterwards, Miss Turner was contacted by Rok, who arranged for their surveyor to attend at the property on 22 April 2009. On that day a Rok surveyor carried out an inspection of Miss Turner's home, pursuant to instructions from Zurich, and assessed the necessary remedial works. The results of the inspection were entered on an Appraisal Form, which Miss Turner signed. The Appraisal Form was a pre-printed form, to be completed in manuscript. The logo at the top of each page described Rok as "The Nation's Local Builder". Miss Turner's evidence, which I accept, is that she understood that Rok would report to Zurich, and that the surveyor told her that he would arrange for workmen to attend to carry out the necessary works.
On 8 May 2009 Rok issued a request to the claimant to carry out sub-contract works subject to the terms and conditions of the framework agreement. Rok also sent to the claimant a form headed "Sub-contract Order (Insurance)"; it had already been signed on behalf of Rok (described as "the Contractor") and was later signed by an employee on behalf of the claimant (described as "the Sub-Contractor").
The claimant provided the mandate to Miss Turner under cover of a letter dated Monday 11 May 2009, which was the first contact between them. Also enclosed with the letter was a document setting out the scope of the works.
The terms of the letter of 11 May 2009 were as follows:
"Having discussed your claim with your insurers we are pleased to inform you that they have approved the restoration works required at your property.
We enclose a copy of the work to be carried out, and a mandate. Please read carefully, sign where applicable and return. On receipt of your authorisation forms, we will be in touch with you to schedule the work required.
Please can you notify us if you have any objection to our operatives using your facilities, such as toilets, as if you are not content with this we will be required to place a Portaloo at the place of work.
Please return the signed information forms in the Freepost Envelope provided."
The document setting out the scope of the works was dated 8 May 2009. Next to the words "Sub Total", "Net Total", "Vat" and "Grand Total" was written, "met by insurer"; no figures were shown.
The mandate was on the claimant's headed paper. It stated the claim number, and it showed Miss Turner as "customer/employer" and the claimant as "contractor". Its text was as follows (I add paragraph numbers for ease of reference):
"[1] I/We herby (sic) agree to employ AJ Building & Plastering Ltd to undertake the works as detailed in their estimate/schedule of works.
[2] I/We authorise our insurance company to make payment direct to AJ Building & Plastering Ltd upon completion.
[3] I/We understand that I/we remain responsible for payment of any policy excess or any monies due for work authorised by me/us, which is not paid by my/our insurer.
[4] Whilst every care will be taken, I/we understand that AJ Building & Plastering Ltd cannot accept liability for furnishings/personal belongings left on...
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