Tersons Ltd v Stevenage Development Corporation

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date23 October 1963
Judgment citation (vLex)[1963] EWCA Civ J1023-3
Date23 October 1963

[1963] EWCA Civ J1023-3

In The Supreme Court of Judicature

Court of Appeal



Lord Justice Willmer

Lord Justice Upjohn and

Lord Justice Pearson

In the Matter of the Arbitration Act, 1950


In the Matter of an Arbitration

Tersons Limited
Stevenage Development Corporation

Mr ROBIN H.W. DUNN, Q. C., and Mr KEITH P.GOODFELLOW (instructed by Messrs Bell Brodrick & Gray) appeared on behalf of the Appellants (Respondents).

Mr MICHAEL R.E. KERR, Q.C.,and Mr MICHAEL J. MUSTILL (instructed by Messrs Slaughter & May) appeared on behalf of the Respondents (Claimants).


In this case we have before us two appeals by leave from a Judgment of Mr Justice Roskill given on the 11th June 1963 in relation to the Award of an Arbitrator in the form of a special case dated the 21st January 1963. The first appeal is against answers given by the learned Judge to questions submitted to him by the Arbitrator for the opinion of the Court. The second appeal arises out of a motion to remit the Award to the Arbitrator. This motion is related to, and arises out of, the same dispute as is raised by one of thequestions in the special case. The Award of the Arbitrator was an Interim Award, dealing only with liability. No question of quantum arises at the present stage. In substance the Arbitrator awarded, subject to the opinion of the Court on the questions submitted, in favour of the claimants. The learned Judge, on the hearing of the special case, decided all the questions submitted by the Arbitrator in favour of the claimants, and he also dismissed the respondents' motion to remit the Award. The respondents now appeal to this Court.


The arbitration arose out of two contracts made between the respondent corporation and the claimants as contractors for the execution of certain works in connection with the laying of sewers for Stevenage New Town. Both contracts were in writing, and were called respectively S.3 and S.4, the first contract being executed on the 27th June 1951, and the second on the 20th November 1951. The work, the subject of the two contracts, has long since been carried out, but a dispute has arisen out of a claim by the claimants to be paid additional remuneration for alleged extra or additional work. Under both contracts the firm of D. Balfour & Sons were nominated as engineers. Both contracts were expressed to be made subject to the "General Conditions of Contract and Forms of Tender, Agreement and Bond for use in connection with Works of Civil Engineering Construction" (Second Edition) dated January 1950. A print of these conditions, which runs to sixty-seven clauses, has been placed before us. In the course of the hearing many of these clauses have been brought to our attention, but at the present stage I think it is necessary to refer to only two of them, namely, clauses 51 and 52. These clauses fall within a section of the conditions headed: "Alterations, Additions and Omissions". The relevant provisions of these two clauses are as follows: "51. (l) The Engineer shall make any variation of the form quality or quantity of the Works or any part thereof that may in his opinion be necessary and for that purpose or if for any other reason it shall in his opinion be desirable shall have power to order the Contractor to do andthe Contractor shall do any of the following? (a) increase or decrease the quantity of any work included in the Contract (b) omit any such work (c) change the character or quality or kind of any such work (d) change the levels lines position and dimensions of any part of the Works and (e) execute additional work of any kind necessary for the completion of the Works and no such variation shall in any way vitiate or invalidate the Contract but the value (if any) of all such variations shall be taken into account in ascertaining the amount of the Contract Price".


"52. (1) The Engineer shall determine the amount (if any)to be added to or deducted from the sum named in the Tender in respect of any extra or additional work done or work omitted by his order (2) Provided that if the nature or amount of any omission or addition relative to the nature or amount of the whole of the contract work or to any part thereof shall be such that in the opinion of the Engineer the rate or price contained in the Contract for any item of the Works is by reason of such omission or addition rendered unreasonable or inapplicable; the Engineer shall fix such other rate or price as in the circumstances he shall think reasonable and proper. Provided also that no increase of the Contract Price under sub-clause (1) of this Clause or variation of rate or price under sub-clause (2) of this Clause shall be made unless as soon after the date of the order as is practicable and in the case of extra or additional work before the commencement of the work or as soon thereafter as is practicable notice shall have been given in writing: (a) by the Contractor to the Engineer of his intention to claim extra payment or a varied rate…. (4) The Contractor shall send to the Engineer once in every month an account giving full and detailed particulars of all claims for any additional expense to which the Contractor may consider himself entitled and of all extra or additional work ordered by the Engineer which he has executed during the preceding month and no claim for payment for any such work will be considered which has not been included in such particulars. Provided alwaysthat the Engineer shall be entitled to authorise payment to be made for any such work notwithstanding the Contractor's failure to comply with this condition if the Contractor has at the earliest practicable opportunity notified the Engineer that he intends to make a claim for such workr. There is also an arbitration clause (clause 66) under which it Is accepted that the Arbitrator has power to review and revise any decision of the Engineer.


It is necessary now to set out in brief outline the history of the matter. Work on contract S.3 began on the 6th July 1951. On the 24th July 1951 the angineers wrote to the contractors enclosing a drawing, S.212, which was a section drawing showing the way in which it was desired that the pipos for the sewer should be laid. There was considerable controversy before the Arbitrator as to whether this drawing amounted to a variation of the contract. This controversy was resolved by the Arbitrator in favour of the claimants, and his finding in that respect is not now in dispute. On the 3rd December 1951 the claimants wrote a letter in the following terms: "With reference to your letter of the 24th July last, under cover of which we received drawing No.S.212 dated 24th July 1961, we shall, as you will appreciate, require reimbursement for the additional work entailed in carrying out your instructions. We assure you, however, there is no urgent need to deal with this question unless, of course, you prefer otherwise". It is the claimants' case that this constituted a valid notice under clause 52 of their intention to claim additional remuneration.


As to contract S.4, the story beging on the 15th August 1951, that is, some three months before the contract was signed, when the engineers wrote to the claimants enclosing a drawing, No.S.309, similar to drawing No.S.212, but dealing with a different part of the sewer. One of the questions raised before the Arbitrator was whether this letter constituted an engineer's instruction under the contract having regard to the fact that the contract at that date had not yet been signed. The learned Judge answered this question in favour of the claimants, and his decision in thatrespect has not been challenged on this appeal. The Arbitrator found (and it Is now accepted) that drawing No.S.309 did amount to aVariation of the contract. On the 6th February 1952 the claimants urote a letter to the engineers giving notice of their intention to claim extra payment in respect of contract S.4. The letter was similar in its terms to that sent in respect of contract S.3, and I do not pause to read it. Work on contractWork on contract S.4 commenced on the 12th March 1952. The situation is thus that both contracts have been found by the Arbitrator to havo been varied by requiring additional work as a result of drawings S.212 and S.309. The additional work "has admittedly been carried out by the claimants, but the respondents deny liability to pay for it because they say that no proper notices were ever given by the claimants pursuant to clause 52 signifying their Intention to claim additional payment. This is what has given rise to the questions of law submitted by the Arbitrator in the special case to which I must now turn.


I have already referred to one question, namely question E., which Is no longer the subject of dispute. There remain eight other questions submitted by the respondents, and one which was raised by the Arbitrator himself. The questions submitted by the respondents fall into two groups. The first group, comprising questions A.,C, F. and H., are directed to whether the letters of the 3rd December 1951 and the 6th February 1962 were proper and valid notices of intention to claim additional payment under clause 52 (2) and clause 52 (4) respectively. The second group, comprising questions B., D., fr and I., are directed to whether there was any evidence on which the Arbitrator could hold that notices of intention to claim were given in compliance with clause 52 (2) and clause 52 (4) as regards time. Question J.,which was raised by the Arbitrator himself, was whether, in stating the questions in the second group, he ought to havo appended to the case a transcript of the relevant evidenco of witnesses.


I deal first with the questions in group 1. As to these the Arbitrator made the following findings; I read from paragraphs K. and I. of the special case. "...

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