Mottram Consultants Ltd v Bernard Sunley & Sons Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Morris of Borth-y-Gest,Lord Hodson,Lord Wilberforce,Lord Cross of Chelsea,Lord Salmon |
| Judgment Date | 13 November 1974 |
| Judgment citation (vLex) | [1974] UKHL J1113-4 |
| Date | 13 November 1974 |
| Court | House of Lords |
[1974] UKHL J1113-4
Lord Morris of Borth-y-Gest
Lord Hodson
Lord Wilberforce
Lord Cross of Chelsea
Lord Salmon
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Mottram Consultants Limited against Bernard Sunley & Sons Limited, that the Committee had heard Counsel, as well on Monday the 1st, as on Tuesday the 2d, days of July last, upon the Petition and Appeal of Mottram Consultants Limited of Brighton House, 23-25 High Street, Ewell, Surrey, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 22d of June 1973, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Bernard Sunley & Sons Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 22d day of June 1973, in part complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
It is not often that a case reaches your Lordships' House in which the only question which arises is whether there is an issue to be tried and whether defendants who are sued have an arguable defence which they ought reasonably to be allowed to argue. Such is the present case.
The defendants (whom I will call Mottram) entered into a contract with contractors (whom I will call Sunley) pursuant to which certain building work was to be done by Sunley at Kinshasa in the Republic of Zaire in connection with the erection of a supermarket. I must later describe briefly the course of events that followed. Litigation ensued after the contract was terminated. By a writ, and specially endorsed Statement of Claim, dated the 28th September, 1972, Sunley claimed the sum of £44,991·98 from Mottram. Summary judgment was claimed on the basis that there was no defence to the claim. On the basis of various matters set out in Affidavits filed on their behalf Mottram claimed that they had a good defence.
The sequence thereafter was that on the 20th December, 1972, the Master entered summary judgment for the amount claimed. Execution was, however, stayed for 28 days to enable an appeal to be brought. On the 8th March, 1973, the learned Judge in Chambers dismissed the appeal. Mottram stated that the matters of defence upon which they relied related not to the whole claim but to the major part of it, viz., to £33,526·23. A stay of execution (for 28 days to enable an appeal to be brought) was granted as to that sum. It appears that both before the learned Master and the learned Judge the case was regarded as being within what has been called the principle in the case of Dawnays Ltd. v. F. G. Minter Ltd. & Another [1971] 1 W.L.R. 1205. A sort of spell or dominance over the proceedings seems to have been created by mention of that case. On appeal to the Court of Appeal (one of the grounds of appeal being that the learned Judge had misdirected himself as to the applicability of the principle enunciated in Dawnays case) the appeal was dismissed. That was on the 22nd June, 1973. If Mottram are entitled to leave to defend as to £33,526·23 they ask that that sum which, together with interest thereon amounting to £2,360·14 (being at the rate of nine per cent. as fixed by the Court of Appeal), they paid on the 26th June, 1973, should be repaid to them with interest at nine per cent.
In the Court of Appeal one contention advanced on behalf of Sunley was that the present case was indistinguishable in all material respects from Dawnays case which then bound the Court of Appeal. All the members of the Court held that it was indistinguishable from the principle of Dawnays case. The Court gave judgment on the 22nd June, 1973. The case of Gilbert Ash (Northern) Ltd. v. Modern Engineering (Bristol) Ltd. was then (as was known) about to be heard in this House. That case was heard just a few days later. The decision in that case was given on the 25th July, 1973. (See [1973] 3 W.L.R. 421). By a majority Dawnays' case was over-ruled. What has been regarded as the principle of Dawnays' case met with general disapproval. The Respondents (Sunley) do not now support the judgment of the Court of Appeal in the present case on the ground that this case is governed by any rule or principle set out in Dawnays' case but they contend that on other grounds the judgment can be upheld.
Under the building contract (which was made on the 7th February, 1972), the work which was included comprised the whole of the construction work for a supermarket save for certain exceptions such as those relating to specialist trades and suppliers. The work was to be done on what may be called a Cost-Plus basis. There was the prime cost to Sunley of executing the works and to that a fixed fee (which was 10 per cent of the prime cost with a certain minimum) was to be added. The contract made it clear what was to be included in prime cost. The items were classified as follows: ( a) all costs in connection with employment of labour and site staff; ( b) the cost of all materials, goods, plant, consumable stores and haulage of same where necessary; ( c) all local fees and charges properly incurred; ( d) all site accommodation, sheds, storage, etc., and other items of local expenditure properly incurred. Though the words "properly incurred" were only expressly set out in reference to the last two items they would seem to be equally apposite in reference to the first two.
The scheme of the contract in regard to payments was as follows. There were to be interim certificates issued by the Architect. For local expenditure those certificates were to be weekly. For other expenditure they were to be monthly. The certificates were to state the amount due to Sunley from Mottram. The amount due was to be the total prime cost to date together with the relative proportion of the fixed fee and any other amount which might be due under the contract. There was a special provision relating to payment in respect of materials for use in the work where such materials were being exported from the United Kingdom. There was a provision (Condition 28d) that Mottram should "within 7 days of receipt by him from the Architect of any Interim Certificate pay to the Contractor" (i.e. Sunley) "in local currency and/or Sterling as required by the contractor any amount shown therein as due to the contractor in respect of the works less only:
(i) Retention money as hereinafter described.
(ii) Any sum previously paid."
The printed form of contract had contained further words under a numbering of (iii) but those words were all deleted from the contract.
The contract contained various provisions in regard to retention money. The contract also contained an arbitration clause which in but subject to the terms of Clause 33 ( inter alia) covered any dispute or difference arising either during the progress or after the completion or abandonment of the works as to any matter arising under or in connection with the contract. An arbitrator would have very wide powers to open up review and revise any certificate opinion decision requirement or notice and to determine all matters in dispute as if none such had been given.
The affidavit evidence (which for the purpose of these proceedings must be accepted) shows that, as both parties knew, the supermarket which was being built was to be owned by an agency of the Government of Zaire known as S.G.A. Mottram were acting as developers when they made the contract with Sunley. Sunley would naturally have much local expenditure both in respect of labour and of materials and also in respect of other prime cost items. Sunley kept accounts of the amounts of their expenditure which were known as their imprest account or accounts. Sunley required the weekly payments to them to be made in local currency, i.e., in Zaires. Both parties knew, therefore, that Mottram would have to have a source of Zaires from which to meet the demands made in the weekly certificates and knew that, as Mottram had no permit to exchange Sterling into Zaires, their bank account in Kinshasa had in some way to be supplied. In fact, as both parties knew, it was supplied with funds monthly by S.G.A. This was a reasonable arrangement as S.G.A., the ultimate owners of the building, were effectively the paymasters.
Unfortunately serious difficulties developed. There were difficulties resulting from delays in making interim payments. As a consequence a new arrangement was made. But the most lamentable and alarming development in the situation, as was later discovered and as has now been established, was that Sunley paid out very considerable sums of money which ought never to have been demanded of them or paid by them. It appears to be beyond doubt that Sunley paid to sub-contractors and showed in the imprest accounts large sums to which the sub-contractors were not entitled. In some cases there were payments for goods which were never delivered. In some cases there were payments for more goods than were...
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