Trade Indemnity Company Ltd v Workington Harbour and Dock Board

JurisdictionUK Non-devolved
JudgeLord Atkin,Lord Russell of Killowen,Lord Macmillan,Lord Roche
Judgment Date11 February 1936
Judgment citation (vLex)[1936] UKHL J0211-1
Date11 February 1936
CourtHouse of Lords
Trade Indemnity Company, Limited
and
Workington Harbour and Dock Board.

[1936] UKHL J0211-1

Lord Atkin.

Lord Thankerton.

Lord Russell of Killowen.

Lord Macmillan.

Lord Roche.

House of Lords

After hearing Counsel as well on Thursday the 5th, Friday the 6th, Monday the 9th and Tuesday the 10th, days of December last, as on Monday the 13th, Tuesday the 14th, Thursday the 16th and Friday the 17th, days of January last, upon the Petition and Appeal of Trade Indemnity Company, Limited, whose registered office is situate at 51-54, Gracechurch Street, in the City of London, praying, That the matter of the Orders set forth in the Schedule thereto, namely, two Orders of His Majesty's Court of Appeal, of the 4th of October and the 3d of December 1934, respectively, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Orders might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of the Workington Harbour and Dock Board, 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 His Majesty the King Assembled, That the said Orders of His Majesty's Court of Appeal, of the 4th day of October and the 3d day of December 1934, respectively, complained of in the said Appeal, be, and the same are hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Lawrence, of the 11th day of January 1934, be, and the same is hereby, Discharged, and that Judgment be entered for the Appellants on the Claim, and for the Respondents on the Counter-Claim: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants, the Costs incurred by them in respect of the Claim in the Courts below, and in this House: And it is further Ordered that no costs be allowed to the said Appellants in the Courts below or in this House, in respect of the issues raised by paragraphs 5, 6 and 7, of the Defence: 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 the Courts below and in this House in respect of the Counter-Claim, and in respect of the issues raised by the said paragraphs 5, 6 and 7 of the Defence, such costs to be set off against the costs payable to the said Appellants, and the amount so to be paid in respect of the said Appeal to this House to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Atkin

My Lords,

1

This is an appeal from an Order of the Court of Appeal setting aside the order of Lawrence J. at the trial, who gave judgment for the Defendants and directing judgment to be entered for the Plaintiffs. The action arises out of a contract dated 23rd October, 1922, by which a well-known firm of contractors, Kirk & Randall, Ld., agreed with the present Plaintiffs, The Workington Harbour and Dock Board, to construct a new and enlarged dock at Workington. The Dock Board required a guarantee for the performance of the work, and on 11th October, 1922, the defendant company entered into a joint and several money bond in the sum of ?50,000 conditioned for the performance by the contractors of their contract. The contractors failed to perform the contract, and the Defendants, the Indemnity Company, are now sued on the bond. Various defences were raised at the hearing which will be discussed in due course. The principal defence which involved a prolonged investigation of facts depended upon allegations of non-disclosure of material facts by the Plaintiffs. The Judge on this point found for the Defendants. He found that the Plaintiffs had innocently misled the contractors in respect of a material fact, viz., the amount of water that had to be dealt with by the contractors in course of construction, and that having so misled the contractors they could not enforce the guarantee against the Defendants. The Court of Appeal negatived the fact of the misrepresentation and further held that on the terms of the contract if made it did not bind the Dock Board. They rejected the plea of non-disclosure; they do not appear to have been in agreement as to whether there exists in general in respect of persons taking a guarantee a duty to disclose material facts which is greater than the duty to disclose in ordinary contracts, but they were all agreed that in the present case there was no duty on the Dock Board to make any such disclosure as the Defendants had alleged. I believe that all your Lordships approve the decision of the Court of Appeal on this point, and it will not be necessary to discuss in detail the facts concerning it which are set out in the notable judgment of the late Lord Justice Scrutton, apparently the last judgment which that great Judge delivered. The substance of the case is that the work of constructing the new dock involved considerable excavation of ground between the existing dock and the sea, ground which was below the high tide level. Tenders had been invited from leading contractors on plans and specifications prepared by an eminent firm of engineers, Messrs. Rendel Palmer & Tritton. The tender of Messrs. Kirk & Randall was the lowest, £284,119; the next highest tender was £326,223. The instructions to persons tendering made it perfectly plain that the Dock Board threw the whole responsibility upon the contractor for obtaining information as to the nature of the ground and any physical difficulties which he would have to meet. I will not read the whole document but must refer to a few clauses. [Read Clauses 2, 3, 4, 5, 6, 7.] The ground was in fact waterlogged: and Sir Frederick Palmer, the head of the firm of engineers, obviously formed the belief that Messrs. Kirk & Randall, whom I will hereafter call the contractors, had under-estimated the amount of water with which they would have to contend. He was an acquaintance of one of their directors, and on 1st September he took the unusual course of warning Mr. Duckham, a director of the contractors and their representative on this contract, that their estimate was too low and gave them an opportunity of withdrawing. He indicated pretty plainly that the mistake was in the price for excavating. Mr. Duckham preferred to adhere to his tender. A suggestion was made at the trial that he had been misled by a clerk of the Dock Board as to the flow of water into a trial hole which the Dock Board had caused to be made for the convenience of the persons tendering. It is plain that Mr. Duckham was not entitled to rely upon any such representation even if made and that the clerk had no authority to bind the Dock Board. The Dock Board, on the advice of the engineers, were only willing to accept the contractor's tender subject to their furnishing a guarantee of £50,000 for the performance of the contract, and on 6th September, 1922, wrote to the contractors accepting their tender on that condition. The contractors set about obtaining the required guarantee and eventually arranged with the present Defendants to enter into the contract which is the subject matter of this action, and is dated 11th October, 1922. Meanwhile the contractors appear to have had misgivings about the water, and on 20th September wrote to the engineers stating that they had based their estimate on replies to inquiries as to the rate of flow of water in the trial hole: they were dissatisfied and wished to know the true position. In Mr. Palmer's absence they were invited to meet a Mr. Darling, employed by the engineers as their chief assistant: and accordingly on 22nd September there was an interview between Mr. Darling and Mr. Duckham. There was a controversy as to what took place: Mr. Duckham alleging that the information he had received as to the slight flow of water in the trial hole was confirmed, Mr. Darling denying it. The controversy involves the further question whether the trial hole in question was or was not a closed hole at the date of the alleged flow, in which case the flow of water would of course give no information of value. It would merely be the result of leakage. It is on this point that the learned Judge found that the contractors had been misled by the engineers. It is unnecessary to consider whether the finding is correct, for it is plain that Mr. Darling had no authority to bind the Dock Board by any representations. The instruction to tenderers made plain that the only means of obtaining binding...

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3 books & journal articles
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    • Construction Law. Volume II - Third Edition
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    ...v Emmett Contractors Pty Ltd (1969) 43 aLJr 213 at 223, per Owen J [hCa]. 61 See Trade Indemnity Co Ltd v Workington Harbour & Dock Board [1937] aC 1 at 21, per Lord atkin. 670 VarIaTIONS the relevant line 100 or 200 metres away, so as to avoid the necessity of constructing a tunnel, was wi......
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