Carillion Construction Limited (t/a Crown House Engineering) v Ballast Plc [2001] EWCA Civ 1098

Thursday July 12th, 2001
Neutral Citation Number: [2001] EWCA Civ 1098
Case No: A1/2000/0411

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISION
HIS HONOUR JUDGE FAULKS QC (SITTING AS A
DEPUTY JUDGE OF THE QUEEN’S BENCH DIVISION)

Royal Courts of Justice
Strand, London, WC2A 2LL
Thursday 12th July 2001

B e f o r e :

LORD JUSTICE ALDOUS
LORD JUSTICE WALLER
and
LADY JUSTICE HALE

____________________

Carillion Construction Limited (trading as Crown House Engineering)
Respondent/Claimant
- v -
Ballast Plc (Formerly Ballast Wiltshier Plc)
Appellant/Defendant

____________________

(Transcript of the Handed Down Judgment of
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____________________

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    ALDOUS LJ:

  1. Early in 1996 Ballast Plc, formerly called Ballast Wiltshier Plc, entered into a contract to build a new football stadium for Sunderland AFC. Carillion Construction Ltd, trading as Crown House Engineering, were engaged by Ballast to carry out the design and installation of the mechanical and electrical services. No formal contract was signed and disputes arose between Ballast and Crown House about payment claimed by Crown House for work done. Those disputes resulted in Crown House issuing proceedings for damages on 18th November 1998.
  2. The statement of claim alleged that the works carried out by Crown House for Ballast were executed pursuant to a contract contained in and/or evidence by the documents passing between the parties between 19th July 1996 and 22nd October 1996. Thus the subcontract was concluded on 22nd October 1996. The pleading went on to set out the terms of the contract and the breaches relied on.
  3. On 21st April 1999 Ballast served a defence and counterclaim. It alleged that the contract between Ballast and Crown House was concluded at a meeting on 8th November 1996. They disputed the alleged breaches of contract and counterclaimed for damages for breach of that contract.
  4. On 29th July 1999 the court, with the consent and encouragement of the parties, ordered that there be a trial of preliminary issues. That trial came before His Honour Judge Faulks QC sitting as a deputy judge of the Queen’s Bench Division at the end of 1999. The actual issues which he was asked to decide were:

    “1. When was the Sub-contract made? In particular, was it:

    1.1. when the Defendant wrote to the Claimant on 22nd October 1996 accepting the offer made by the Claimant in its letter dated 19th July 1996; or

    1.2. at the meeting on 8th November 1996; or

    1.3. at some other time, and if so, when.

    2. To what extent (if at all) was the Claimant obliged to comply with the Employer’s Requirements?

    3. Were the Main Contract Terms incorporated into the Sub-contract?”

  5. The judge concluded that the subcontract was made on 22nd October 1996 and that Crown House were only obliged to comply with the employer’s requirements in the Main Contract in respect of those works that Crown House had tendered for. He went on to conclude that the main contract terms were not incorporated into the subcontract. Against that decision Ballast appeal. They contend that the subcontract had been concluded at a meeting held on 8th November 1996 and that the employer’s requirements in the main contract were incorporated into the subcontract. They did not press the appeal against the judge’s conclusion that the main contract terms were not incorporated into the subcontract.
  6. In the notice of appeal Ballast contend that the judge had failed to give adequate reasons for the conclusions which he had reached and therefore his judgment should be set aside.
  7. The hearing before the judge took about 2 ½ days. His judgment consists of about 2 pages and it contains little reasoning. After judgment had been handed down the solicitors acting for Crown House drew to his attention Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 and invited him to give further reasons and to explain why he had not felt it necessary to provide a more detailed judgment. The judge took advantage of that opportunity and provided an affidavit. He stated that he was anxious to provide the parties with his ruling as soon as possible. With that in mind he prepared a short written judgment within days of the hearing and directed that a copy should be sent to each of the parties. His object was to deal with the matter swiftly and to save the parties the expense of returning to court for a judgment to be handed down. He went on to explain in more detail the reasons that had led him to the conclusions that he had reached.
  8. For my part, I believe that the aim of the judge was correct, but his judgment failed to set out in sufficient detail the reasons for the conclusions that he had reached. However there is no need for this Court to consider that matter in any further depth as we have had the advantages of his further reasons and have heard full argument on the issues raised.
  9. Before coming to the facts, it is necessary to set out in outline how the issues in these proceedings came about.
  10. As I have said Ballast were the main contractors to build the new stadium for Sunderland AFC. Ballast were not experts in the provision of mechanical and electrical services and therefore had to know, before entering into the main contract, what those services would cost. They therefore approached potential subcontractors. Crown House tendered. Ballast entered into the Main Contract after discussions. With the agreement of Ballast, Crown House started work. Surprisingly there was no formal written contract between Ballast and Crown House. This may have been the result of the urgency of the contract. When the contract was completed, Ballast claimed from Sunderland AFC recompense for work done which they alleged was not covered by the contract price. That claim was settled upon terms which Ballast believe did not include recompense for the sum claimed by Crown House for work done in excess of that which Crown House believed was covered by the subcontract.
  11. It is Crown House’s case that under the subcontract they were only contracted to carry out work specified in what I will refer to as the revised specification. They accept that that work had to be carried out according to the employer’s requirements. Thus Ballast have to pay for the work done by Crown House in excess of that set out in the revised specification. Ballast resist that claim. They contend that it was a term of the subcontract that Crown House would carry out all the mechanical and electrical services as required under the main contract. They go on to contend that the works in dispute were required under the main contract and therefore Crown House have no claim. It follows that it matters not to the parties as to whether the contract between them was finally concluded on 22nd October or 8th November 1996. The real issue concerns the scope of the subcontract. Did it include an obligation on Crown House to carry out all the mechanical and electrical work required under the main contract or only the work contained in the revised specification? To determine that issue it is necessary to consider the documents and evidence starting with the invitation by Ballast to Crown House to quote.
  12. On 11th January 1996 Ballast sent to Crown House a letter inviting them to quote for work which Ballast were contemplating accepting to do under the main contract. The letter stated that the quotation “must be an unqualified tender.” It went on:

    “If we accept your quotation, it will be accepted only to the extent that it is not contrary to, or inconsistent with our obligations under the main contract and our terms and conditions. A copy of the standard form of sub-contract and the main contract (except detailed prices) may be inspected at our office during normal business hours.”

  13. It went on to state that the work had to be carried on as and when required to accord with the planning and progress requirements of the main contract. It required that the tender should include completion of a schedule of quantities and sub-contractor information sheets. The time was tight in that the tender was required by 12 noon on Wednesday 7th February 1996.
  14. On 22nd February 1996 Crown House wrote to Ballast:

    “Further to your recent enquiry we now confirm our tender for the Mechanical & Electrical Services to the above mentioned project for the lump sum total of £2,233,500.00 (Two million two hundred and thirty three thousand five hundred pounds).

    Our bid is inclusive of 2½% discount for cash payment made within the terms of the contract or for payment received within 30 days of the date of our application for payment.

    As the Main Contract is to be let under the ICE form we have based our tender upon entering into a domestic sub contract on the FCEC form suitably amended to agree with the Main Contract amendments where applicable.

    In the event of us being required to carry out work on a daywork basis these would be charged under the definition of prime cost of daywork as laid down in the agreement between the RICS and the HVCA/ECA with the following percentage additions:

    a) Labour plus 120%

    b) Material plus 20%

    c) Plant plus 20%

    Enclosed for your perusal is a copy of our Tender Summary and Schedule of Exclusions and our Standard Tender Conditions ref: STC/9/JUN/95/GW upon which our tender is based.

    This bid is fixed price until April 1997 and will remain open for acceptance for a period of 30 days during which time we look forward to your further instructions.”

    Attached to that letter was the tender summary, a schedule of exclusions and their standard tender conditions.

  15. On 23rd February 1996 Crown House wrote to Ballast putting forward a revised price of £2,648,650 due to a number of revisions. The letter stated that the terms and conditions detailed in the original tender still applied, subject to those withdrawn as a result of the letter.
  16. On 1st May there was a meeting between the parties at which Ballast supplied Crown House with drawings of a revised structure for the stadium. By letter dated 2nd May 1996, Ballast asked Crown House to provide a price for the mechanical, electrical and plumbing installation based on those drawings and the employer’s requirements issued previously. Crown House put forward their proposal in a letter of 10th May 1996 from Crown House to Ballast. It stated:

    “Further to our meeting in your office on 1 May ’96, when you gave us your briefing on the proposal now being developed, together with copies of your provisional drawings, we are keen to get schemes firmed up and thus develop the design to allow scheduling for procurement of plant and equipment together with associated builders work which you will require as early as possible.

    We would like to brief our designers on the proposal and hope to do this week commencing 13 May ’96 with enough firm information from your goodselves to produce some meaningful outlines and layouts sufficient to produce plant requirements, plant room layouts, routing and builders work detail in line with your programme requirements.

    All of the above is in hand and progressing. We hope to meet with your goodselves next week, in order to turn up the architectural layout requirements. In the meantime we would be pleased to receive something from you in the form of a Letter of Intent, Instruction or Order. However, we are happy to proceed on the basis of an informal agreement.

    We understand that the cost for the project will be developed between us to meet the new proposal being developed, based upon the original employer’s requirements, the new layouts and the various tender period cost options provided.

    We are not sure exactly which cost options were eventually decided upon in the final negotiation and summarise as follows the costings we provided in the tender and post tender pre contract negotiation period.

    We hope the foregoing meets with your approval and look forward to meeting you next week.”

  17. There followed a meeting on 21st May at which the future was discussed. It seems that the design work was continuing on an informal basis of trust gained from the good relationship formed during work on previous contracts. The informal minutes of the meeting stated that Crown House were to arrange for the employer’s requirements, which had now been fixed as the contract between Ballast and Sunderland had recently been signed, to be obtained from Mr Peat of Ballast.
  18. There was another meeting on 28th June 1996. It was not minuted, however hand-written notes were taken by Mr Peat and Mr Fox. At that meeting a target figure of £2,314,856 was set. Mr Walton, the estimating manager of Crown House, accepted in cross-examination that Ballast did not want to be in the position where something was required by the employer but was not covered by such contract. However he said:

    “The impression I got was that the guidance I was given was to be clear in what we were actually pricing, and make sure that any grey areas needed to highlighted to Ballast, and where we actually tried to accommodate that was to come up with a fairly comprehensive set of proposals as the basis of our tender, and scope of works.”

  19. The result of the June meeting was a revised tender sent with a letter of 19th July. It differed from the letter of 22nd February 1996, which I have set about above, in two respects. First, the tender price was £2,320,000. Second, it was stated “the basis and extent of our works is detailed in the enclosed specification – mechanical elements 1.1 to 1.10 inclusive, electrical elements 2.1 to 2.18 inclusive and general item 2.19.” Attached to that letter was another copy of the standard tender conditions and, importantly, a specification of electrical and mechanical services. This is the document which after amendment became the revised specification. Paragraph 2.19 of that document stated:

    “21.9 GENERAL

    ONLY those systems and services described in the foregoing paragraphs have been included in our tender.”

  20. That first specification was prepared by Mr Dodds, the design manager for Crown House. It was his first involvement with the project. He was aware that the work priced by the estimators working for Crown House did not encompass all of the employer’s requirements sent to them by Ballast. Consequently the first specification did not cover the entirety of the employer’s requirements. He said that it was clear from a cursory glance at the specification that that was so as it indicated that in many areas items of work such as natural ventilation, external louvers, excavation, back-filling, rainwater disposal systems, sinks and basins, kitchen and refreshment preparation areas and lift provision and connection would be provided by “others”. He said that in order to emphasise that the specification did not include the entirety of the employer’s requirements, he had added clause 2.19 which I have set out above.
  21. It seems likely that that revised specification was not what Ballast wished in that the evidence was that Ballast wanted to make sure that the employer’s requirements were fully met. There followed a meeting on 2nd August of the mechanical and electrical design teams. It was attended by Mr Appleby of Ballast and Mr Dodds and Mr Wilkinson of Crown House. The minutes record:

    “1.00 CHE are to issue a drawing schedule, including issue dates, w/c 5.8.96 (5

    No copies of drawing to be issued to BW, 1 No to TT&H).

    2.00 All design and specifications indicated on CHE drawings will be deemed

    to be included within the contract price agreed with BW.

    3.01 RWG to issue comments regarding CHE design philosophy statement to

    CHE and BW.

    3.02 BW stated that a revised statement must be issued 6.8.96 (to include

    overflow design strategy).

    3.03 CHE to issue full details to support any departure from the client’s

    requirements.”

  22. At this stage R.W. Gregory and Partners were called in by Ballast to consider the specification. They were asked to check it against the employer’s requirements. In a letter to Ballast dated 5th August 1996, they stated “As requested, we have compared the system description for compliance with those given in the employer’s requirements. We will list below our comments on the various sections.” There followed a list, using the paragraph numbers of the first specification, which set out their views as to the differences between the first specification and the employer’s requirements.
  23. It is clear from the letter from R.W. Gregory that the parties knew that the first specification did not deal with all the employer’s requirements. It was for that purpose that R.W. Gregory, who were consulting engineers, were asked to advise Ballast. Thus if any sub-contract were to be entered into based on the first specification, it would not have been a requirement that Crown House should carry out all the works required by the employer. Crown House had made it clear that they were going to carry out the works set out in the first specification, and only those works, for the sum tendered.
  24. The letter of 5th August from R.W. Gregory was communicated to Crown House, who on 6th August set out in a fax their comments on the points raised. On 8th August, R.W. Gregory set down in a fax sent to Ballast their comments on Crown House’s fax of 6th August.
  25. On 9th August 1996 Ballast wrote to Crown House:

    “Further to the correspondence and discussions between yourselves and R W Gregory, please issue your revised outline design statement by Tuesday, 13 August 1996 in order to incorporate, in full detail, relevant items of information which depart from the Employers Requirements.”

    Crown House complied with that request on 12th August 1996. It took the form of the previous specification with a number of amendments. It contained in paragraph 2.20 the words that had been previously been in paragraph 2.19, which I have set out above. That document was the revised specification. Upon receipt, Ballast passed it on to R.W. Gregory for them to check. Ballast also had a meeting with Drivers Jonas, the employer’s representatives, so as to go through the specification. They persistently pointed out that the Crown House specification did not fully comply with the employer’s requirements. An example is the comments of Drivers Jonas of 1st October 1996 on the Crown House drawings that were sent by Ballast to Crown House on 22nd October 1996.

  26. Also on 22nd October 1996 Ballast wrote to Crown:

    “It is our intention to enter into a sub-contract with yourselves for the mechanical and electrical installation on the above project for the lump sum fixed price of £2,320,000.00. (two million, three hundred and twenty thousand pounds)

    It may take a short while to prepare the contract documentation but in the interval we should be obliged if you would take such action as may be necessary to avoid delays arising on this project.

    The sub-contract, when placed, will be subject to the condition of the main contract which are I.C.E. – DESIGN AND CONSTRUCT approved by the Federation of Civil Engineering Contractors.

    Would you please acknowledge that you are proceedings.”

    That letter, Crown House submitted, was an acceptance of the quotation sent on 12th August with the revised specification. Whatever it was it gave comfort to Crown House who either had just arrived on site or were on site around 22nd October.

  27. Crown House replied on 23rd October 1996:

    “We acknowledge receipt of and thank you for your letter reference

    DJW/FC/AD/8084 dated 22nd October 1996 informing us of your intention to enter into a Sub-Contract with ourselves for the Mechanical and Electrical Installation.

    We understand that the Sub-Contract will be let under the Form of Sub-Contract as issued by the Federation of Civil Engineering Contractors, and until such time the Sub-Contract is provided, we would be grateful if you could inform us of the ‘Specified Dates’ for the submission of the monthly value of works completed and materials delivered to site etc, in accordance with Clause 15 of the Sub-Contract.

    We feel that it would be in the best interests of both Ballast Wiltshier and ourselves, that a pre sub-contract meeting be convened as quickly as possible, to discuss programme and other matters, and confirm that we are available to attend at your convenience.”

  28. On 25th October Crown House held an internal meeting. The minutes record that they had received the Letter of Intent of 22nd October, and the programme was to be sorted out upon receipt of the order. They would meet to discuss outstanding items of design coming from R.W. Gregory. Under the heading “Contractual Situation” it was stated that Mr Hailes and Mr Fox would arrange a pre-start meeting with Ballast to clarify the contractual situation. All engineering and quantity surveying staff on the contract should attend.
  29. In October and November Drivers Jonas, on behalf of the employers were pointing out to Ballast that the revised tender did not comply with all the employer’s requirements. Their comments were communicated to Crown House. Thus on 28th October 1996 Drivers Jonas wrote to Ballast drawing their attention to clause 6.7 of the conditions of the contract. That required that the contractor must advise in writing of any variance with the requirements of the contract. This was to avoid any problems in the future and to allow Drivers Jonas to assess the validity of any proposed changes.
  30. There followed the meeting of 8th November. It is an important meeting as Ballast contend that at this meeting the contract was concluded with a term that Crown House should comply in extent with all the employer’s requirements, not only those set out in the revised specification. There are no agreed minutes, but there exist notes taken by Mr Hailes and Mr Fox on behalf of Crown House. Mr Hailes was not called to give evidence. The most comprehensive are the minutes prepared by Ballast which were sent to Crown House. Although they were not agreed, Crown House made no adverse comment. The relevant parts of those minutes are in these terms:

    “2.00 NOTICE OF COMMENCEMENT OF WORKS

    Works started in accordance with the site programme. At present working on site under a Letter of Intent, subject to finalisation of contract documentation.

    3.00 EXPLANATION OF CONTRACT & SCOPE OF WORKS

    3.01 Aspen tender enquiry.

    3.02 Subsequent correspondence.

    3.03 Discussion between BW (D Peat) and CHE (C Fox) on 28.6.96. CHE

    have agreed that their price complies with the Employer’s Requirements and the Fisec report.

    3.04 Additional works must be priced and BW will apply for a draft change order.

    ….

    5.00 AVAILABILITY OF INFORMATION (DRAWINGS, SPECIFICATIONS,

    WORKING PROCEDURE, ETC)

    5.01 CHE are to comply with the Employer’s Requirements and if they wish to

    depart from these then they must inform BW specifically in writing (note that the client may accept or reject any alternative proposals).

    .…

    11.00 ATTENDANCES

    With reference to CHE’s letter dated 19.7.96 referenced GMW/MAK/5152/008/5,

    the following items were discussed and commented upon:- …..”

  31. There followed comments on the exclusions that had been sent to Ballast by Crown House with the revised specification.
  32. Against that background, I come to the submissions of the parties upon the preliminary issues, starting with the issue as to what was the date of the contract between them.
  33. As I have said, Crown House submitted that the contract between the parties was concluded on 22nd October 1996, when they received the letter of that date. They submitted that by that time all the essential details had been concluded. The price and the extent of the work had been agreed and upon that basis they went on site. That was accepted to be the position by the judge. He held in his judgment that the letter of intent “constituted an acceptance of the claimant’s final advised tender and the purpose of the meeting on 8th November was principally for the purpose of clarification of the tender and discussion of the work programme.” In his affidavit the judge explained that he had to decide the first and second questions together. Having rejected the submission of Ballast, that the parties had agreed that all the employer’s requirements would be carried out by Crown House at the meeting of 8th November, he concluded that the contract was concluded on 22nd October, that being the date for which Crown House contended.
  34. I do not believe that the contract was entered into on 22nd October. I accept that a contractual situation arose in that the parties agreed that Crown House would go on site and start work and would be paid. However the documents and evidence do not establish that the parties had reached the stage at which they intended to enter into the final contract which would include all the terms as to the extent of the work to be done by Crown House. That is clear from the terms of the letter of 22nd October. If, as was accepted, the contract was not concluded before 22nd October, the letter does not suggest a change of intention by Ballast. It is in terms which suggest an interim arrangement. It does not purport to accept the tender as set out in the revised specification. In fact, it seems to predicate some further act by using the words “It is our intention to enter into a sub-contract with yourselves …” and “The sub-contract, when placed …”. Further, the reply of 23rd October indicates that Crown House understood the letter, not as concluding a final agreement between the parties, but as setting up an arrangement for immediate action pending entering into the contract. That is supported by the minutes of the internal meeting of Crown House. The conclusion that the parties did not intend to enter into the contract as opposed to an interim contractual arrangement is demonstrated by their conduct. They continued to try to resolve the difficulties that R.W. Gregory and Drivers Jonas saw as to the differences between the revised specification and the obligations that Ballast had entered into with the employer.
  35. As the contract was not concluded by the letter of 22nd October, I am prepared to accept the submission of Ballast that it was concluded at the meeting of 8th November as no later date was suggested by either party and no documents or other evidence was adduced to suggest otherwise.
  36. Before coming to the meeting of 8th November, I believe it is important to recall what had happened up to that time.
  37. Ballast had sought on 11th January 1996 a quotation from Crown House for the electrical and mechanical work that they would have to provide under the contract which they intended to enter into with the employer. The quotation of 22nd February 1996 was for £2,353,500 subject to certain exclusions and subject to Crown House standard terms and conditions. It was amended on 23rd February 1996 due to revision to £2,648,650. On 1st May 1996 Ballast issued drawings to Crown House showing a revised scheme. There followed on 19th July 1996 the first tender based upon a specification that was provided by Crown House. It contained the clause stating that only the systems and services described in the tender were included in the tender. It was for a price of £2,320,000. For the first time it became necessary for Ballast to find out whether that specification met with the obligations of the employer under the Main Contract, both as to quality and extent. R.W. Gregory were requested to advise and pursuant to their comments, the revised specification was provided on 12th August 1996. Ballast then consulted Drivers Jonas who were not satisfied that the revised specification did meet the employer’s requirements in extent. On or about 22nd October Crown House went on site with the letter of intent of that date providing comfort.
  38. The documents make it quite clear that as of 22nd October Crown House’s tender was based on carrying out work set out in the revised specification subject to the exclusions that they had pointed out. No doubt their work had to be carried out to the standard required under the Main Contract. However, they were not agreeing to carry out all the electrical and mechanical work required by the employers. That is clear from the terms of the revised specification and the comments of R.W. Gregory and Drivers Jonas.
  39. That being the position as of 7th November, the crucial question is whether at the meeting of 8th November, Crown House either warranted that their revised specification complied in extent with the employer’s requirements under the Main Contract or agreed to withdraw their revised specification and to carry out the employer’s requirements in extent for the same price as they had quoted for the works specified in the revised specification.
  40. I will come to the evidence as to what happened at the meeting on 8th November, but it seems improbable that Crown House would warrant that their works, set out in the revised specification, were the same in extent as that required by the employer. They knew that they were not and that Drivers Jonas had suggested that the two did not equate. Further, it seems highly unlikely that Crown House would agree to complete all the employer’s requirements for the price tendered for carrying out the works in the revised specification. The whole purpose of the revised specification was to indicate the works they would do for the price quoted. Their estimators had worked upon the basis of the revised specification and to agree to different works for the same price without detailed consideration would appear unlikely.
  41. In my view the minutes produced by Crown House of the meeting of 8th November do not suggest that Crown House either gave the warranty or agreed to the radical change for which Ballast contends. Paragraph 3.0 contains the heading “Explanation of Contract & Scope of Works .” Paragraph 3.03 and 3 04 state:

    “3.03 Discussion between BW (D Peat) and CHE (C Fox) on 28.6.96. CHE have agreed that their price complied with the Employer’s Requirements and the Fisec report.

    3.04 Additional works must be priced and BW will apply for a draft change order.”

  42. The date of 28th June 1996 in paragraph 3.03 must refer to the meeting which took place on that date which led to the quotation of 19th July 1996. That quotation was for the reduced price, but related to the works in the first specification. It therefore seems that paragraph 3.03 records that pursuant to the meeting of 28th June 1996, Crown House had agreed “their price” and that that price agreed with the employer’s requirements. Mr Darling QC, who appeared for Ballast, suggested that the paragraph should be read as a record that Crown House had agreed to comply with the employer’s requirements in extent for the price agreed at the meeting of 28th June. I disagree. The words do not bear that meaning. If such an important matter had been agreed it would have been clearly stated.
  43. Paragraph 5 of the minutes is concerned with availability of information. It therefore does not purport to deal with any warranty or change of the extent of the works to be done. Paragraph 5.01 has to be read in that light and when so read requires Crown House to comply with the employer’s requirements for the work agreed between Ballast and Crown House.
  44. Paragraph 11 of the minutes shows that the schedule of exclusions was discussed and it appears that the differences between the parties were resolved.
  45. Finally and importantly the minutes show that the revised specification was not discussed. That was the evidence of the witnesses. That is surprising if Crown House had warranted that their revised specification equated with the obligations of Ballast to the employer or had agreed to carry out work which was not included within the revised specification.
  46. Mr Peat of Ballast gave evidence. In his second written statement he said that following the meeting of 8th November he believed that the position had been reached whereby Crown were to comply strictly with the employer’s requirement. I suspect that he meant that they had to carry out the employer’s requirements in extent and quality. He maintained that view in his cross-examination and made it clear that there was no misunderstanding on his part as to what was concluded.
  47. Mr Todd of Ballast gave evidence to similar effect. In cross-examination he accepted that the revised specification was not considered at the meeting but that the exclusions were.
  48. Mr Appleby prepared the minutes. He said in his witness statements that they were an accurate record.
  49. For Crown House Mr Fox, Mr Walton and Mr Lowes gave evidence. Mr Fox said in his witness statement that prior to the meeting all the essential contract issues had been resolved. The scope of the work, other than exclusions, were never discussed at the meeting of 8th November. He said that Crown House had always made it clear that the price quoted only included the specified works. In his cross-examination he pointed out that the specification had not been considered at the meeting of 8th November because, he postulated, the Ballast team did not include a mechanical and electrical expert. Although Mr Darling specifically relied on an answer given and recorded in the transcript of 14th December at page 142, I do not understand that Mr Fox accepted that Crown House had agreed at the meeting to do work outside that set out in the revised specification nor that they had warranted that it equated in extent with the employer’s requirements in the Main Contract.
  50. Mr Walton accepted in cross-examination that Ballast wanted the obligations of Crown House to equate to those that Ballast owed under the Main Contract. However he pointed out that the discussions that had taken place were designed to identify whether the scope of the works that Crown House were to provide was adequate and suitable for what Ballast actually needed to be done.
  51. The evidence of Mr Lowes did not help as he did not have any commercial expertise or background.
  52. The oral evidence of the parties conflicts. The judge preferred the evidence of Mr Fox. He said:

    “I preferred the evidence of Mr Fox of the Claimant because having very carefully priced their tender on a specific basis, it seemed to me wholly implausible that experienced and competent businessmen such as those representing the Claimant would already alter the basis of their written tender without any corresponding alterations, or recalculation or price. I was not impressed with the evidence of Mr Peat for the Defendants on this point, which, as I have said, was repetitive on the subject of Employers’ Requirements and whose evidence smacked of the benefit of hindsight.”

  53. The judge was entitled, having seen the witnesses give evidence, to come to the conclusion he did. As I have pointed out the position had been reached by the date of the meeting that the price quoted by Crown House covered the work set out in the revised specification. Ballast had looked at the differences between that work and what they believed was needed. It would therefore be surprising if Crown House would agree to warrant that the two equated or to agree that the price would cover work exceeding that set out in the revised specification without something to that effect being clearly recorded. As I have pointed out the minutes do not record that to be the position. No doubt Mr Peat wanted the obligation upon Crown House to be the same as on Ballast under the main contract. It was therefore possible that Mr Peat had persuaded himself that that was agreed. He therefore concluded that it had been agreed at 8th November. There was good reason for the judge to conclude that such a belief was the result of hindsight. The judge was entitled to hold that that was the reason for his evidence.
  54. Although I have come to the conclusion that the contract was reached on 8th November and not on 22nd October as found by the judge, I believe, for the reasons that I have given, that he was right to conclude that there had not been agreement that Crown House were required to carry out all the employer’s requirements. They only agreed to carry out the works set out in the revised specification of 12th August 1996. I believe the judge was right to decide the essential issue between the parties in the way sought by Crown House. It follows on that important issue the appeal fails. WALLER LJ:
  55. I agree. HALE LJ:
  56. I agree, for the reasons given by Aldous LJ, that Crown House cannot be taken to have agreed to comply with the employer’s requirements in every respect but only in respect of those works which were included in their specification. In those circumstances, it matters not when the agreement concluded. For obvious reasons, both parties argue that a fixed price contract was in fact agreed, however things might appear to an outsider observer. In those circumstances, in my view, as good a case can be made for 22 October as for 8 November, but there is no need to decide between them. This case is, however, a good example of the problems of isolating such issues from the underlying issues in the case: it became apparent only in the course of the hearing that these relate principally to the scope of the works to be covered by that fixed price rather than their quality. Even on a preliminary issue, some examples of what the case is in fact about can be most helpful. ORDER: Appeal dismissed with costs here and below. (Order does not form part of approved Judgment) 

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