A1 2003/1523
Neutral Citation Number: [2003] EWCA Civ 1420
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TECHNOLOGY AND CONSTRUCTION COURT
(MR RECORDER REESE QC)
Royal Courts of Justice
Strand
London, WC2
Monday, 29 September 2003
B E F O R E:
LORD JUSTICE SCHIEMANN
LORD JUSTICE RIX
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ML EUROPE PROPERTY LIMITED
Applicant
-v-
HURST STORES AND INTERIORS LIMITED
Respondent
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(Computer-Aided Transcript of the Stenograph Notes of
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
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MR P DARLING QC (instructed by Messrs Wragg & Co) appeared on behalf of the Applicant
THE DEFENDANT WAS NOT REPRESENTED AND DID NOT ATTEND
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J U D G M E N T
(As Approved by the Court)
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Judgment
1. LORD JUSTICE RIX: This is a renewed application for permission to appeal by ML Europe Property Limited from a judgment in the Technology and Construction Court of Mr Recorder Colin Reese QC. It arises out of a contract dated 18 October 2000 between ML Europe and Hurst Stores and Interiors Limited for the outfitting of toilets throughout a large office development. The original contract sum was about £2.4 million, but by the end of the contract the contractor, Hurst Stores, was claiming a sum in the order of £6.5 million. A critical document was a final statement of account dated 27 April 2001 signed by Hurst Stores' project manager, a Mr Mell, which set out a final sum of some £3.4 million, speaking from memory, and which also contained provisions to the effect that this was the final sum due under the contract in exclusion of any other claims. It was described as a final settlement.
2. The document reflected provisions in the contract for both immediate statements and such a final statement contained in clauses 23.6.4 dealing with interim statements and 23.6.5 dealing with a final statement of account. The contract said at the conclusion of that sub-clause that signature of such a final statement of account:
"Shall be conclusive evidence that the amounts shown therein are accepted by him [the contractor] in full and final settlement of the amount of the trade contract sum."
3. The other important clause which I should refer to is clause 20.3 headed, "Provisos on variations or instructions", which sets out a code as to how variations of the contract should be priced, both by reference to their v alue (20.3.1), but also by reference to the time for the execution of the valuation (20.3.2), by reference to the extension of time to which the contractor might be entitled under clause 17, that is the extension of time to the contract as a whole (20.3.3), and by reference to an assessment of the amount of any direct disruption of costs to which the contractor might be entitled (20.3.4).
4. The judge held that Mr Mell, the project manager, who is described in an organisation chart as being "the team leader and chief point of contact with Mace", that is to say with the organisation conducting the project on behalf of the employer, ML Europe, nevertheless lacked authority to sign the final statement of account. The judge drew a distinction for these purposes at paragraph 22 of his judgment between Mr Mell's authority in respect of financial and payment matters required by the terms of the contract, where he accepted Mr Mel had authority, and other matters involving variation of the contract. In this respect he referred to a decision of Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597, in particular at 605. It seems to me that the distinction drawn by the judge may arguably be a difficult and delicate distinction to deal with. After all, for relevant purposes it appears to divide up different aspects of the valuation of variations.
5. It seems also to be arguable that Sharpe is a different kind of case. There the employer's engineer was held only authorised to deal only with matters related to work provided for by the contract but not authorised to deal with variations of such work. In this contract, however, it is accepted that the project manager was entitled to deal with the valuation of variations to the work under clause 20.3, and the issue is whether, by omitting to take into account certain aspects of disruption and loss and expense in such valuation of variations, he was authorised to sign away the contractor's claim under the final statement of account.
6. It seems to me that it is arguable not only that the distinction in Mr Mell's authority drawn by the judge is erroneous but also that, even if one was to apply the judge's distinction, the effect of clause 20.3 is expressly to clothe the project manager with the necessary authority under the contract to agree upon all the relevant aspects of a variation to the works.
7. There is another point in the case dealing with a unilateral mistake which the judge found that Mr Mell had made when signing the final statement and in respect of which he held Hurst Stores were entitled to rectification. The judge himself would have been willing to give permission to appeal if that had been the only point in the case. So would Sedley LJ who considered this application paper. For my part, I would be willing to grant permission to appeal over both points -- not only the question of unilateral mistake, but also the scope of Mr Mell's authority: on the basis that there is a realistic prospect of success on each of them.
8. LORD JUSTICE SCHIEMANN: I agree.
Order: Application Allowed