Sydenhams (Timber Engineering) Ltd v CHG Holdings Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 03 May 2007 |
| Neutral Citation | [2007] EWHC 1129 (TCC) |
| Docket Number | No HT-06–236 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 03 May 2007 |
[2007] EWHC 1129 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURTS
St Dunstan's House
133–137 Fetter Lane
London EC4A 1HD
HHJ Coulson QC
No HT-06–236
MR J SELBY (instructed by Steele Raymond LLP) appeared on behalf of the claimant/part 20 defendant.
MS K LEE (instructed by Berwin Leighton Paisner) appeared on behalf of the defendant/part 20 claimant.
APPROVED JUDGMENT
JUDGE PETER COULSON QC:
A. Introduction.
This case arises out of the development and construction of a hotel at 43 Christchurch Road in Bournemouth in 2003/2004, (“the property”). The developer was the defendant, CHG Holdings Limited (“CHG”). A considerable part of the design and construction work, including the timber frame, the windows and the internal joinery was carried out by the claimant, Sydenhams Timber Engineering Limited (“Sydenhams”). In these proceedings, Sydenhams claim from CHG the sum of £136,863.83 in respect of the unpaid element of their work at the property, together with interest. In response, CHG contend that there was never a direct contract between themselves and Sydenhams and that, in fact and in law, Sydenhams were subcontractors to the main contractors, Rybarn Limited (“Rybarn”). Thus, say CHG, it is Rybarn and not themselves who are liable to Sydenhams.
As is sadly all too common in the UK construction industry, Rybarn are in administration and are simply not in a position to make any payments to anybody. Thus the outcome of the dispute that has arisen between Sydenhams and CHG has potentially serious consequences for the losing party. If Sydenhams are right, and there was a direct contract or contracts between themselves and CHG, then CHG will be liable for the sums claimed, despite their suggestion that they have already paid these sums to Rybarn. And if CHG are right, and Sydenhams were only ever subcontractors to Rybarn, Sydenhams will not be paid for a major element of the work at the property which has long since been completed.
Accordingly, the principal issue with which I must deal is whether or not there was a direct contract or contracts between CHG and Sydenhams which gives rise to a liability on the part of CHG to pay to Sydenhams the sums sought in these proceedings. That, in turn, depends on my analysis of the factual background and, much more importantly, the documents relied on by Sydenhams as setting out the various contracts between the parties. In consequence I propose to set out below my assessment of the factual position up to the end of December 2003 ( section B); from January to 23rd April 2004, ( section C); and thereafter ( section D). I then go on in section E of this Judgment to analyse the contractual disputes and set out my conclusions on those issues. At section F I deal with the issues that arise out of the deed of warranty. The remaining issues are then addressed in section G before a short summary of my conclusions at section H below.
Before embarking on this exercise, I should do two things. First I must acknowledge the considerable assistance I have received from both counsel, whose clear presentation of the many points that arise in this case has enabled me to give this oral Judgment the day after their closing submissions. Secondly, I should make one general observation on the evidence which I heard on Monday and Tuesday of this week. Sydenhams called four witnesses: Mr Fairweather, their estimator; Miss Blamire, their office manager; Mr Orchard, their managing director; and Mr Pride, their finance director. I considered that each was a clear witness with a reasonably good recollection of the specific events with which they were concerned. CHG called two witnesses, Mr White of the architects, Trinick Warr, whose evidence was not of any particular relevance save on one point, and Mr Leslie Pink, a director of CHG. In the round I have concluded that Mr Pink's recollection was less reliable than those of the Sydenhams witnesses, doubtless because he was dealing with all aspects of the development of the property rather than the limited issues that arose out of the timber frame. In particular, as to the critical events between February and April 2004 ( section C below), I am in no doubt that Mr Pride's recollection is to be preferred. I should also say that, on occasions during his cross-examination, I felt that Mr Pink was arguing his case, rather than the answering of the questions that were being put to him.
B. Factual Position up to end of December 2003.
CHG obtained conditional planning permission for the development of the property on 4th June 2001. In February 2002, Mr Pink met Mr Orchard and asked him to quote for the design, supply and erection of the timber frame for the property. The quotation was sent on 11th February 2002. Nothing further of any significance happened until October 2002, when Mr Pink provided Sydenhams with further information and sought an updated quotation. This was divided into a number of different work packages, including package 6, the external joinery, which included windows, doorframes and doors.
It was CHG's case that, from the outset of their dealings with Sydenhams in 2002 and thereafter, it was clear to Sydenhams that they would ultimately be engaged as a subcontractor employed by a main contractor, rather than being in a direct contractual relationship with CHG. When pressed on this in his cross-examination Mr Pink said that this was “common knowledge”, and that “billing was always going to be through Rybarn because they were the main contractor”. It was unclear if he could recall ever referring directly to this possibility. The difficulty with this case was that there was absolutely no indication of it in the contemporaneous documentation. Although Mr Pink's witness statement suggested that the main contractor/subcontractor point was made clear in a number of the documents to which he there made express reference, even a quick perusal of those references demonstrated that he was quite wrong, and that there was in truth no reference at all in those documents to the position for which he contended. As both Mr Fairweather and Mr Orchard observed in their own evidence, it was just as likely that Mr Pink would self-manage the development of the property and engage and pay Sydenhams direct. They denied that, at any time in 2002 or early 2003, any mention was made of a main contractor, much less that Mr Pink had said that the main contractor was going to be Rybarn.
I have concluded on the evidence that Mr Pink made no mention of the involvement of a main contractor, much less Rybarn, during 2002 and the first part of 2003. Had he done so, I am confident that there would have been a reference to such a possible arrangement in the contemporaneous documentation; there is not, as Mr Pink was obliged to accept in cross-examination. In addition, for the reasons explained in paragraph 27 below, if Rybarn had been mentioned, then Sydenhams might have baulked at any further involvement in the development, given their longstanding concerns as to Rybarn's financial stability.
Turning back to the 28th November 2002 documentation, it is worth perhaps taking a moment to consider the component parts of that material. At that date, Sydenhams prepared four separate documents:
(a) A Quotation.
This was in letter form and sent to Mr Pink. It identified the total cost, in this case £507,014.06. Although Sydenhams' standard terms and conditions appeared on the back of the first page of the quotation, the second page of this quotation letter stated that the terms were “to be agreed”.
(b) A Customer Schedule.
This document, enclosed with the quotation letter, set out what would be supplied under each package, and included specific comments about some of the materials. It also included what was called a standard erection specification.
(c) A Pricing Schedule.
This document, which was not sent to Mr Pink, was an internal record kept by Sydenhams to demonstrate the build-up of their various prices.
(d) An Order for Manufacture (“OFM”).
This was designed to operate as a sort of standard form acceptance document. One copy was to be retained by the customer, the other was to be signed and sent back to Sydenhams. This particular OFM stated:
“I hereby instruct Sydenhams Timber Engineering to proceed with manufacture at the quoted prices.”
The different packages, each with a price, were then set out in the OFM, which concluded with the words: “This quotation is not subject to any future main contractor's discounts”.
Following a meeting in late November/early December 2002, Mr Pink completed the OFM by putting a tick against packages 1 to 4 and 8 and the erection price, and then signed and returned the OFM to Sydenhams. Under his signature he added the words “CHG Holdings Limited”.
This was the first of a number of OFMs signed by Mr Pink between December 2002 and August 2003 which are not said by either party to give rise to (or evidence) a contract between CHG and Sydenhams. However, I regard the fact that Mr Pink was prepared to sign this and other similar documents on behalf of CHG as consistent with my earlier finding that, at least at this stage, there had been no mention of a main contractor or Sydenhams' possible role as a subcontractor. The legal significance, if any, of these earlier OFMs is dealt with in section E2 (paragraphs 58–70) below.
During the early part of 2003 the design was developed, but on 24th April 2003 Mr Pink signed a second OFM entitled “Rev...
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