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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Stent Foundations Ltd v. M J Gleeson Group Plc [2000] EWHC Technology 66 (9th August, 2000) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2000/66.html Cite as: [2000] EWHC Technology 66 |
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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
BEFORE: HIS HONOUR JUDGE BOWSHER Q.C.
BETWEEN:
STENT FOUNDATIONS LIMITED
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Claimants
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and
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M J GLEESON GROUP PLC
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Defendants
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Case number: HT 00 81
Date of Trial: 26 July, 2000
Date of Judgment: 9 August, 2000
James Medd for the claimants (Solicitors: Wedlake Bell)
Charles Samek for the defendants (Solicitors: Kershaw Abbott)
JUDGMENT
I direct that no further note or transcript be made of this judgment.
The text of the Judgment of His Honour Judge Bowsher Q.C. is as follows:
JUDGMENT
Introduction
"(1) Assuming the facts stated in the Amended Particulars of Claim are true, and subject to any argument Stent may have under the Unfair Contract Terms Act 1977, do Gleeson's standard terms and conditions provide Gleeson with a complete Defence to Stent's claim?
(2) Does the Unfair Contract Terms Act 1977 apply to condition 2.04 of Gleeson's standard terms and conditions or any other condition relied upon by Gleeson as providing it with a complete Defence."
"The Sub-Contractor shall be responsible for and indemnify the Contractor against any claims in respect of plant or tools of the Sub-Contractor or his workmen which may be lost or damaged by fire or any other cause and also be responsible for and indemnify the Contractor against any claims by the workmen of the Sub-Contractor in respect of the risks he is required to insure against under Clause 2.01 hereof".
Clause 2.01 of those terms reads:
"The Sub-Contractor shall maintain insurance and indemnify the Contractor against the risks commonly insured against arising out of the Sub-Contract Works in respect of workmen, third parties
and adjoining propertyand shall maintain or procure the taking out of such insurance in respect of self-employed workmen brought in by the Sub-Contractor, and upon demand produce to the Contractor his policies of insurance and premium receipts, and the Contractor may register its interest with the insurance companies concerned, if he so desires, and in the event of failure by the Sub-Contractor to comply with the provision of this clause, the Contractor may himself insure and deduct the cost of the premiums so incurred from any monies becoming due to the Sub-Contractor."
"It was a term to be implied into the Sub-Contract by operation of law that Gleeson would not by themselves, their servants or agents, hinder or prevent Stent from carrying out its obligations in accordance with the terms of the Sub-Contract or from executing the Sub-Contract works in a regular and orderly manner."
I take the view that the implied term does not help the claimants' case because damages flowing from breach of that term would be different in kind from the damages claimed in this action. However, for the purpose of this trial of preliminary issues, I will assume that I am wrong about that and that the damages claimed do flow from the assumed breach of the implied term.
Construction of the sub-contract
"and also be responsible for and indemnify the Contractor against any claims by the workmen of the Sub-Contractor in respect of the risks he is required to insure against under Clause 2.01 hereof".
"The Sub-Contractor shall be responsible for and indemnify the Contractor against any claims in respect of plant or tools of the Sub-Contractor or his workmen which may be lost or damaged by fire or any other cause."
"It is however a fundamental consideration in the construction of contracts of this kind that it is inherently improbable that one party to a contract would intend to absolve the other party to the contract from the consequences of the latter's own negligence. The intention to do so must therefore be made perfectly clear, for otherwise the court will conclude that the exempted party was only to be free from liability in respect of damage occasioned by causes other than negligence for which he is answerable."
"The principle is that in the absence of clear words the parties to a contract are not to be taken to have intended that an exemption or indemnity clause should apply to the consequences of a party's negligence."
At page 232, Hobhouse J. added:
"The parties to commercial contracts must be taken to know the principles of contractual construction and to have drafted their contract taking them into account. When the suggested result could have been easily obtained by an appropriate use of language but the parties instead only use general language, the result of the general principle is that the parties will not be taken to have intended to include the consequences of a party's negligence."
In the same case, in the Court of Appeal, Steyn L.J. elaborated on the same theme [1994] 1WLR 1515 at 1523:
"The printed conditions in the agreement in this case were plainly drafted by a lawyer. Why was an express reference to negligence not inserted? Similar questions have been posed on a number of occasions. Why do draftsmen not take note of the impact of a clear and consistent line of judicial decisions? For my part I have no doubt that the draftsman on the Underground to whom such a question was addressed would say "one does not want to frighten off one or other of the parties." Omissions of express reference to negligence tend to be deliberate."
"The principles may be summarised as follows:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749
(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:
"If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."
"Thus, if an exemption clause of the kind we are considering excludes liability for negligence expressly, then the Courts will give effect to the exemption. If it does not do so expressly, but its wording is clear and wide enough to do so by implication, then the question becomes whether the contracting parties so intended. If the only head of liability upon which the clause can bite in the circumstances of a given case is negligence, and the parties did or must be deemed to have applied their minds to this eventuality, then clearly it is not difficult for a Court to hold that this was what the parties intended – that this is its proper construction. Indeed to hold other wise would be contrary to commonsense. On the other hand if there is a head of liability upon which the clause could bite in addition to negligence then, because it is more unlikely than not that a party will be ready to excuse his other contracting party from the consequences of the latter's negligence, the clause will generally be construed as not covering negligence. If the parties did or must be deemed to have applied their minds to the potential alternative head of liability at the time the contract was made then, in the absence of any express reference to negligence, the Courts can sensibly only conclude that the relevant clause was not intended to cover negligence and will refuse so to construe it. In other words, the Court asks itself what in all the relevant circumstances the parties intended the alleged exemption clause to mean."
"From the cases the following general conclusions in my opinion emerge.
1. Since it is inherently improbable that one party to a contract should intend to absolve the other party from the consequences of the latter's own negligence, the court will presume a clause not to have that effect unless the contrary is plainly shown by clear words or by implication.
2. Statements made in one case may assist in deciding another but cannot literally determine the decision, since in each case the task is one of construction to ascertain the actual or imputed intention of the parties to the contract in question.
3. In carrying out that task of construction, the court should not treat commercial parties as if they were law students (see The Raphael at 46 per Donaldson J.). Often the test of what would be understood or intended by the ordinarily literate and sensible person will be appropriate (see Hollier's Case [1972] 2 QB 71 at 78 per Salmon L.J. and The Raphael at 51 per Stephenson L.J.). Picking up these references, counsel for the owners suggested that the court should adopt the standard of the intelligent layman. I accept that this will in many cases be an appropriate standard. But where a contract is made in a specialised business by two practitioners in that business I think a somewhat different standard is indicated, approximating to that of the reasonably informed practitioner in the field in question.
4. Where the words used are wide enough to cover negligent as well as non-negligent acts or omissions but practically speaking the clause lacks substance if it is not construed as covering negligent acts or omissions, the court may in the circumstances of a given case infer that the parties intended the clause to cover negligence (as in the Raphael) but it need not do so (see Hollier's case). All depends on the proper inference to be drawn in the instant case."
"It is well established that indemnity will not lie in respect of loss due to a person's negligence or that of his servants unless adequate or clear words are used or unless the indemnity could have no reasonable meaning or application unless so applied."
and per Devlin L.J.:
"It is now well established that if a person obtains an indemnity against the consequences of certain acts, the indemnity is not to be construed so as to include the consequences of his own negligence unless those consequences are covered either expressly or by necessary implication."
"As has been said on a number of occasions (see Salmon L.J. in Hollier v. Rambler Motors (AMC) Ltd. [19721 2 Q.B. 71, 80; May L.J. in Lamport & Holt Lines v. Coubro & Scrutton (M. & I.) Ltd., (The Raphael) [1982] 2 Lloyd's Rep. 42, 49-50 and Viscount Dilhorne in South Wales Switchgear case [1978] 1 WLR 165, 168), what Lord Morton said was no more than guidance, and every contract has to be construed having regard to its own terms and context and the circumstances in which it was made. The question remains one of the construction of the contract, applying the established principles of construction. These include the principle that the parties to a contract are not to be taken to have agreed that a party shall be relieved of the consequences of its negligence without the use of clear words showing that that was the intention of the contract.
(1) If the clause contains language which expressly exempts the person in whose favour it is made (hereafter called "the proferens") from the consequence of the negligence of his own servants, effect must be given to that provision. Any doubts which existed whether this was the law in the Province of Quebec were removed by the decision of the Supreme Court of Canada in The Glengoil Steamship Company v. Pilkington."
(2) If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens in accordance with article 1019 of the Civil Code of Lower Canada: " In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation."
(3) If the words used are wide enough for the above purpose, the court must then consider whether "the head of damage may be based on some ground other than that of negligence," to quote again Lord Greene in the Alderslade case. The "other ground" must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it; but subject to this qualification, which is no doubt to be implied from Lord Greene's words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are prima facie wide enough to cover negligence on the part of his servants.
Conclusion
Coda