Dispute Over Contract Terms and Liability Cap Resolved in CLS Civil Engineering Ltd v WJG Evans and Sons Case

Citation: [2024] EWHC 194 (TCC)
Judgment on

Introduction

In the case of CLS Civil Engineering Limited v WJG Evans and Sons, the Technology and Construction Court (TCC) of the High Court was presented with a dispute involving the interpretation of contract terms and the legal relationship between a developer and a building contractor. The court analyzed whether the engagement was subject to a Letter of Intent (LOI) and its revisions, which potentially limited the developer’s liability, and whether the proceedings were suitable for determination under Part 8 of the Civil Procedure Rules (CPR).

Key Facts

CLS Civil Engineering Limited (the Claimant) engaged WJG Evans and Sons (the Defendant) for construction work on a development. The terms of engagement were contentious, with the Claimant asserting the Defendant was engaged under a LOI that capped liability at £1.1 million. The Defendant, on the other hand, insisted that JCT terms governed the contract and that there was no such cap on liability.

The Judge had to consider whether a Part 8 claim was suitable given the disputed facts and whether WJGE’s liability was indeed capped. The Defendant claimed that substantial disputes of fact existed, making the matter unsuitable for Part 8 proceedings. Moreover, the Defendant argued for the incorporation of JCT terms and contended that the Claimant was estopped from denying this and from enforcing the liability cap.

The court applied the following legal principles:

  1. Nature of Part 8 Claims: Under CPR Part 8, the court considered the suitability of using this process for claims that do not involve substantial factual disputes, applying the procedure articulated in the case Cathay Pacific Airlines Ltd v. Lufthansa Technik [2019] EWHC 484.

  2. Objective Construction of Contracts: The court examined the communications between the parties to determine the contract terms, guided by precedents like Smith v Hughes (1870-71) LR 6 QB 597, emphasizing the importance of objective contractual interpretation.

  3. Estoppel: The Defendant’s estoppel argument, predicated on the idea that the Claimant had acted in a manner contrary to the alleged agreed terms, was evaluated against established case law such as Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311, and ING Bank NV v Ros Roca SA [2012] 1 WLR 472, where the court highlighted the unsuitability of Part 8 proceedings for estoppel claims requiring detailed factual analysis.

  4. Summary Judgment Test: The court noted that the approach to disputed facts in Part 8 claims can involve scrutiny against a summary judgment test, as shown in Gavriel v Hope [2019] EWHC 2446, where the question is whether the party has a real prospect of success.

Outcomes

The court concluded that:

  • The Defendant was bound by the cap of £1.1 million as this was expressly or impliedly agreed upon during the course of the contractual relationship and confirmed in communications.
  • The parties did not reach an agreement regarding the incorporation of JCT terms into their contract.
  • The estoppel arguments raised by the Defendant were without a real prospect of success and thus did not preclude a Part 8 determination.
  • The dispute was suitable for determination under Part 8 of the CPR as there were no substantial factual disputes that impacted the outcome.

Conclusion

The court’s meticulous analysis of the communications between the parties, refraining from considering substantial factual disputes, and disregarding the estoppel claims, led to declarations that clarified the parties’ contractual relationship. The judgment serves as a reaffirmation of objective contract interpretation principles and provides illumination on the appropriateness of using Part 8 proceedings in certain contract disputes. It underlines the courts’ willingness to enforce clear and agreed contractual caps, and to resolve disputes in a manner that adheres to the Overriding Objective, advancing the efficient administration of justice.

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