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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Rotamead Ltd v Durston Scaffolding Ltd & Ors [2020] EWHC 2738 (TCC) (27 August 2020) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2020/2738.html Cite as: [2020] EWHC 2738 (TCC) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Fetter Lane London, EC4A 1NL |
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B e f o r e :
(Sitting as a Deputy Judge of the High Court)
____________________
ROTAMEAD LIMITED |
Claimant |
|
- and - |
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(1) DURSTON SCAFFOLDING LIMITED (2) JAMIE RYAN (3) PAUL DURSTON |
Defendants and Respondents |
____________________
MR H. BAIG and MR A. LO (instructed by Rainer Hughes) appeared on behalf of the Second Defendant.
THE THIRD DEFENDANT appeared in Person and on behalf of the First Defendant.
____________________
Crown Copyright ©
MARTIN BOWDERY QC:
Date |
Event |
References |
23 Jan 2013 |
Paul Durston Limited ("PDL") incorporated. |
Bundle 2, tab 40. |
24 Jan 2013 |
PDL applies for a credit account -with C. D3 signs off the application form. The application form includes a "Personal Guarantee" section, which is separately signed by D3. |
Bundle 2, tab 40. |
10 May 2016 |
Croudace Homes limited ("Croudace") places order "Chelmsford, Channels - 020; Subcontract Order No. 020/563" for PDL to carry out and complete Scaffolding & Safety Decking - Labour, Plant & Materials at Croudace's "Channels" site in Chelmsford. |
Bundle 2, tab 50. |
24 Aug 2016 |
PDL enters into a sub-contract with Higgins Construction Pic ("Higgins") for the hire, delivery, erection and dismantling of scaffolding on Higgins' Sutherland Road project. |
Bundle 2, tab 52. |
17 Feb 2017 |
D1 incorporated. Initially, D3 is the only director and person with significant control. On 27 Feb 2017, he is replaced with D2 in both capacities. |
Bundle 2, tab 54. |
21 Mar 2017 |
A meeting is held between Barry Norfolk of C and D3 at which D3 informed Mr Norfolk of PDL's impending insolvency. |
|
28 Mar 2017 |
Barry Norfolk meets with D3. D3 applies for a credit account on behalf of Dl. The application form includes a "Personal Guarantee" section, which is separately signed by D3. |
Bundle 2, tab 43 |
30 Mar 2017 |
Barry Norfolk emails D2 stating that if the debt and materials were to be novated, C would require a letter from each company (being PDL and Dl) on headed paper setting out the particulars of the novation. |
Bundle 4, tab 15 |
31 Mar 2017 |
At a meeting between Barry Norfolk, and D2 and D3 where the novation is agreed. |
|
31 Mar 2017 |
Letters dated 31 March 2017 from PDL (signed by D3) and from Dl (signed by D2) written to C each confirmed that from 1 April 2017, the duties and obligations of PDL and the outstanding debt of £186,564.48 were transferred to Dl. |
Bundle 4, tabs 16 and 17. |
31 Mar 2017 |
PDL's contract in respect of "Project Ref: 020, Chelmsford, Channels - Subcontract Order Nr: 020/563" with Croudace Homes Ltd ("Croudace") novated to Dl. |
Bundle 2, tab 44. |
18 Apr 2017 |
Meeting between representatives of Higgins, Mr Norfolk of C and D2 and D3 regarding the Sutherland Road and Bramber House sites. |
|
08 May 2017 |
PDL removed from Sutherland Road and Bramber sites. |
|
24 May 2017 |
PDL enters creditors voluntary liquidation. |
Bundle 4, tab 43. |
15 Jun 2017 |
A payment arrangement agreed between C and Dl whereby Dl could delay its payment the invoices for May, June and July 2017 and make instalment payments in respect of the historic balance. |
Bundle 4, tab 52. |
15 Jun 2017 |
D2 signs the surety agreement. |
Bundle 2, tab 45. |
18 Feb 18 |
At a meeting between Barry Norfolk and D2 an agreement is reached whereby unpaid invoices for August 2017-January 2018 can be paid to a schedule from February 2018-June 2018, along with £5,000 per month in respect of the historic PDL balance. The agreement is recorded in an email from Barry Norfolk dated 19 Feb 2018. |
Bund 4, tab 69. |
16 May 2018 |
Ds raised issue with the amount of money allegedly owed to C. |
Bundle 4, tab 73 |
12 Jun 2018 |
Letter before action. |
Bundle 5, Tab 223 - 234 |
11 July 2018 |
Ds' response to the letter before action. |
Bundle 5, page 254- 260 |
29 Oct 2018 |
Claim issued. |
Bundle 1, tab 7 |
21 Jun 2019 |
CCMC. |
Bundle 1, tab 13 |
31 Jan 2020 |
PTR. |
Bundle 1, tab 17 |
2 Feb 2020 |
D3 is reappointed a director of D1 and listed as a person with significant control. |
Bundle 3, tab 94 |
The Claimant:
(1) Barry Norfolk, the managing director of Rotamead Limited. Mr Norfolk, I consider, was an impressive witness. He gave his evidence clearly and his evidence was consistent with the contemporaneous documents. Gerry Dobbs, the managing director of D & B Scaffolding Limited, in his witness statement stated that:
"I have known and done business with the Claimant for a number of years and know the Claimant's managing director, Barry Norfolk, quite well. He is a good, honest, and trustworthy man. The Claimant has a very good reputation as a result within the scaffolding industry."
Mr Dobbs was not challenged in respect of this part of his witness statement and I find that his assessment of Mr Norfolk is a fair and accurate assessment.
I should note that three documents were put to Mr Norfolk with the suggestion that each of them were not authentic. Mr Norfolk stated that such a suggestion was simply not correct. I agree. Prior to Mr Norfolk's cross –examination no suggestion had been advanced that they were not authentic No notice had been served pursuant to CPR Part 32.19. In the absence of such a notice, the Defendants are deemed to admit the authenticity of the three documents found at:
B 391
C 114
B 425.
To challenge the authenticity of these documents without any prior warning before Mr Norfolk's cross-examination I consider was unfair, unreasonable and wholly inappropriate.
(2) Robert Jones, the purchasing director of Rotamead, gave clear answers with no evasion. His evidence was not challenged to any great degree. In particular, he was not challenged in respect of the detailed and meticulous checklists he produced when 'scoring in' the return of scaffolding from the Higgins sites. The off-hire records of the scaffolding from the Higgins sites are in the Supplemental Bundle. The Defendant's by CPR Part 32.19 (1) have admitted the authenticity of these documents.
(3) David Coker is an estimator employed by D & B Scaffolding Limited. Again, his evidence was clear and robust. In particular, I accept his evidence at paragraphs 10-13 of his witness statement where he stated:
"From speaking with Paul Smith, I was made aware of the fact that the Claimant wanted its equipment back from the Sutherland Road site or wanted this paid for. Higgins needed the equipment, but did not want PDL on site. Therefore, Higgins wanted to engage D&B, on a labour only basis, to dismantle and return the equipment at the Sutherland Road site to the Claimant, as and when required.
During March/April 2017, Paul Smith attended our offices to discuss our prices for transporting the equipment and to negotiate a labour rate (for the dismantling of the equipment at the Sutherland Road site). We agreed transportation costs and a labour rate. It was confirmed, by Paul, that Higgins would be responsible for the hire charges associated with the equipment at that site. At this stage, we were not aware of the likely quantities of equipment at the Sutherland Road site.
Whilst I am unsure of the date, I know that the Claimant sent to D&B a hire note detailing the equipment which PDL believed to be at the Sutherland Road site. When I first looked at the hire note, I initially thought that the Sutherland Road site must be an extremely big job. However, this did not tie in with what I was told, by Paul Smith (who indicated to me that it was not a big job), and what we later discovered.
I am aware that Gerry went to have a look at the site to see what was there, in terms of equipment. The Sutherland Road site consisted of four apartment blocks with four or five storeys and the equipment was already up and erected. Gerry informed me that the site was not very big and that the quantity of the equipment, that we had been told to expect was there, could not have possibly have been there. I understand that Gerry did in fact call Barry Norfolk (Managing Director of the Claimant) on 25 April 2017 to inform him of this."
(4) Gerry Dobbs, the managing director at D & B Scaffolding Limited, explained D & B's involvement in removing the Claimant's scaffolding equipment from the Sutherland Road site. As stated earlier, I accept his assessment of Mr Norfolk being a good, honest, and trustworthy man, and his evidence at paragraph 19 of his witness statement that:
"On 25 April 2017, I spoke to the Claimant's managing director Barry Norfolk and confirmed that I did not believe that the equipment at the Sutherland Road site amounted to the quantities as outlined in the hire note as supplied by the Claimant."
(5) Gary Sargeant was the commercial manager of Higgins Construction PLC and gave helpful assistance to the court. His evidence regarding the meeting held on 18 April 2017 was robustly challenged in cross-examination but I accept his evidence as to what was discussed at the meeting on 18 April 2017 and what happened thereafter, and particularly his evidence in paragraphs 13-20 of his witness statement where he stated:
"13. A meeting took place at Higgins' head office in Loughton on 18 April 2017. The meeting was arranged to discuss an amicable solution to PDL's poor performance and the breakdown of the working relationship between Higgins and PDL. I do recall that at a minimum, the Third Defendant, Barry Norfolk (Managing Director of the Claimant) and I were all in attendance at this meeting. I cannot recall whether anyone else was in attendance."
14. I also recall discussing the mechanics of how the remaining erected scaffolding could be quantified as this was exceedingly difficult to do in its erected state. Therefore, it was subsequently agreed, following Higgins' agreement to take over hire of the equipment at the Sutherland Road site, to only pay hire charges for the equipment as dismantled and returned to the Claimant (which Higgins and the Claimant would keep a record of).
15. Contrary to what is stated in PDL's letter dated 18 April 2017, Higgins did not accept that the schedule of materials, as produced at the meeting on 18 April 2017, was necessarily an accurate reflection of the scaffolding equipment left at the Sutherland Road site (or the Bramber House site). Barry also doubted the Third Defendant's position in this regard.
"16. 1 do recall that in addition to the hire note, as produced by Barry, the Third Defendant also brought along with him to the meeting a table of the equipment he alleged to have been at the Sutherland Road site. I do not recall that it was any different to the hire note as produced by Barry (and as attached to Higgins' letter to the Claimant dated 9 May 2017).
17. Further, Higgins did not accept the notion, as put forward by the Third Defendant, that it was (or should be) responsible for any shortfalls between the amount of equipment the Third Defendant claimed should be at the Sutherland Road site and what was in fact there.
18. At this meeting on 18 April 2017 (which followed various discussions between Higgins and PBL), Higgins and PDL agreed to a mutual termination with an agreed final subcontractor sum (this was subsequently confirmed in a letter from Higgins to PDL dated 19 April 2017 which was intended to supersede PDL's letter dated 18 April 2017 — which was not a true reflection of what was agreed) [pages 12-14 of GS1].
19. By email dated 20 April 2017, the Third Defendant again requested that Higgins accepted that the quantities of equipment as stated in the schedule, as supplied at the meeting on 18 April 2017, were present at the Sutherland Road site (and I believe this also included the equipment at the Bramber House site) and that Higgins would agree to being solely liable to the Claimant for any shortages [pages 15«20 of GS1].
20. However, Higgins would not agree nor would it confirm the quantities of equipment as alleged to have been present at either the Sutherland Road and/or Bramber House. It was not possible to quantify what exactly was at those sites until the equipment was dismantled, estimated and returned to the Claimant (who undertook the final count). Further, Higgins certainly never agreed that any shortages or shortfall would be its responsibility. (This was subsequently confirmed in an email from me to the Third Defendant on 10 May 2017)"
This evidence is consistent with the contemporaneous documentation but is also consistent with Mr Norfolk's evidence at paragraphs 65-68 of his witness statement where he stated:-
"The Third Defendant put a lot of pressure on Higgins to confirm that the equipment at the Sutherland Road site was in the quantities as stated on the hire invoice supplied by me on April 2017.
However, Higgins would not confirm this. Higgins is not m the scaffolding game and would not have been able to have said, looking at the site, what should and should not have been present in terms of scaffolding equipment.
However, it was quite clear to all parties that the equipment the Third Defendant alleged to have been present at the Sutherland Road and Bramber House sites was simply not in the quantities as alleged.
Gerry (Managing Director of D&B) confirmed to me, during our telephone call on 25 April 2017, that "in no way is the gear [equipment] there'' in the quantities as suggested by the Third Defendant."
The Second Defendant:
(1) Jamie Ryan said in his witness statement that he had been a director of the First Defendant since 17 February 2017. Mr Ryan was, I found, a difficult witness who was keen to argue his version of events rather than give direct answers to the direct questions which he was asked. He came across as a man with strong views and great determination, and not the sort of person who would be easily bullied into signing agreements he did not agree with.
(2) Mr Paul Winston is a chartered accountant and who acted for the First Defendant since August 2017. His evidence was somewhat disappointing. He believed or thought that Rotamead Limited had written off the historic debt of the novated balance in the 2017 accounts when that belief was based upon, at best, speculation based upon similar numbers at 31 July 2016 and 31 May 2018. It is common ground that the novated account as at 31 March 2017 was £186,564.48. By 31 May 2018, the figure was now £99,500.84. It could not be the same £99,500 that appeared on the balance sheet dated July 2016. This flight of fancy was unimpressive and was a point not pleaded or pursued in any cross-examination of the Claimant's witnesses.
Furthermore and perhaps more importantly, his own Witness Statement does not support the suggestion made in paragraph 5(9) of the Skeleton Argument of the First and Second Defendants which stated that:
"Subsequently, the Second Defendant and Mr Paul Winston, who was engaged by the First Defendant as its accountant, carried out a reconciliation exercise and discovered that the First Defendant was in fact in a position of overpayment."
What his Witness Statement stated is that: -
"Mr Ryan gave me in about May 2018 a one page schedule of invoices and payments, a copy of which is at [page 3]. This was an attempt by Mr Ryan to reconcile the invoices received by DSL in respect of scaffolding and related equipment hired to DSL, from Rotamead from April 2017. It will be seen that the schedule suggests that DSL had overpaid Rotamead in respect of their invoices by £17,000 or so."
(3) Martin Chappell the First Defendant's Contract Manager, chose for unidentified personal reasons not to attend court to be cross- examined. The very serious allegations he made in his witness statement regarding Barry Norfolk's son was not put to Barry Norfolk or any of the Claimant's witnesses but those allegations were never withdrawn. He also shared the strange views adopted by Mr Ryan and Mr Durston that it is somehow wrong for suppliers to ask for its equipment to be returned when the hire fees have not been paid. In all the circumstances, I attach no weight to Martin Chappel's evidence.
The First and Third Defendants:
(1) Mr Durston gave evidence for himself and the First Defendant. I found Mr Durston a somewhat naive witness and who seems somewhat out of control as events unfolded. An illustration of his naivety is set out in the closing written submissions when he stated:
"I would like to explain here why I believe I should not be asked to pay the £511,064.81 claimed by Rotamead.
As you know, I have enjoyed a good working relationship with Barry. PDL has been his client from around 2013. We socialised together and were good friends. While PDL and Rotamead were working together, PDL was behind on payment sometimes, but we always paid in the end.
However, after Daniel Bell stole more than £300,000 from PDL in 2016, PDL was in serious trouble. There was no way that we could have continued to pay the hire costs. In the end, the company went into liquidation on 24th May
I would like to think of myself as someone with a sense of responsibility. I do not like leaving people in the lurch, whether it was Barry or the clients PDL was working with and were relying on us to provide them with a service. I wanted some way to make sure that PDL's customers are not left holding the bag when PDL went under. So, I worked with Jamie to set up DSL, hoping that this new company could carry on serving PDL's customers."
THE FACTUAL BACKGROUND
The First period is prior to the incorporation of DSL on 17 February 2017
"Q. It was a joint venture from the start because that is what you say. You say "Go into business together."
A. Yeah."
"Q. And the vehicle for that business venture, that joint business venture, was to be DSL.
A. Correct."
The Second Period is March 2017
"Morning Paul, if the debt and materials currently on hire are to be novated to a different company, we will require two separate letters on headed notepaper for the company, stating:
Paul Durston Limited trading as Durston Scaffolding:
(1) As from 27 March 2017, Paul Durston Scaffolding Limited trading as Durston Scaffolding, transfers all hire duties and obligations as detailed on hire invoice numbers H29872 and H29873, and monies owed £186,564.48, to Durston Scaffolding Limited;
Durston Scaffolding Limited:
(2) As from 27 March 2017, Durston Scaffolding Limited accepts all hire duties and obligations and agree the hire material quantities as detailed in hire invoices number H29872 and H29873 and accepts the outstanding debt of £186,564.48 from Paul Durston Limited trading as Durston Scaffolding.
Kind regards, Barry."
"Re: Outstanding Debt 31st March 2017
Further to our meeting on Tuesday 21st March 2017, we write to confirm that as of 1st April 2017, Paul Durston Limited T/A Scaffolding transfers all hire duties and obligations (as detailed on hire invoice Nr's H29872 and H29873) and the outstanding debt of £186,554.48 to Durston Scaffolding Limited.
We trust the above is satisfactory.
Yours sincerely
Paul Durston"
(1) DSL could not use the scaffolding on hire to PDL without the agreement of Rotamead Limited;
(2) Rotamead Limited was not prepared to write off the historic debt from PDL of £186,561.48. Indeed, I question why should they?
Mr Norfolk's evidence is that PDL was obliged to pay that sum at the date of novation and that evidence was not challenged.
The Third Period is the meeting of the 18 April 2017
"It is also it is also agreed that Higgins Construction, as at 18 April 2017, would enter into a formal agreement/contract with Rotamead Limited for the hire of the remaining scaffolding that is currently on site at Sutherland Road, Walthamstow. At the meeting, Barry Norfolk of Rotamead Limited issued a schedule of materials that are currently on hire at the above-mentioned project which was accepted by Higgins Construction. It was also agreed that the liability of any shortages should be the liability of Higgins Construction. A copy of this schedule is enclosed for your information and retention."
-1. The Pleadings: -
On the basis of the pleadings, the Defence of the Defendants states only that in early to mid-April 2017 it was agreed in respect of both the Bramber House and Sutherland Road sites that:
"(a) Higgins would release PDL of its above contracts with it; and
(b) Higgins would then enter into new contracts with Rotamead taking over liability for hire and return."
This can be found in the Defence of the Second Defendant at A53 of the bundle at paragraph 39, and at A71 at paragraph 39 of the Defence of the third Defendant.
- 2. The Witness Evidence
-3 Contemporaneous Correspondence
"Paul
We acknowledge the schedule and believe that this list of materials is not exclusively for materials at Sutherland road. We confirm have undertaken with Rotamead to honour ongoing hire of materials at Sutherland Road as of 18/4/17; Material at Bramber house remains your responsibility whilst you are in contract."
The Fourth Period in June 2017
"Dear Jamie,
Further to our telephone conversations and in light of your proposal to fully repay the total outstanding account balance by the 30th September 2017 from the sale of Mr Paul Durston's property. (Daniels Farm, Wash Road, Basildon Essex, SS15 4AZ), please find below Rotamead's agreement to a short term amendment to our payment terms.
- The May 2017 hire invoices totalling £23,207.21 are to be paid by the 7th July 2017.
- The June 2017 hire invoices are to be paid by the 7th August 2017
- The July 2017 hire invoices are to be paid by the 7th September 2017
In addition a minimum monthly payment of £5,000.00 is to be paid by the 7th July 2017, 7th August 2017, and 7th September 2017.
The account will revert back to your current terms of payment (30 days net monthly) on the 30th September 2017.
This agreement is subject to the completion of a credit application form and continuing guarantee.
Yours sincerely"
"In consideration of your agreeing to grant credit facilities to the company or limited liability partnership described above ("the company"). I hereby unconditionally guarantee as both-Guarantor and Principal Debtor the due and punctual performance and observation by the company of it's obligations herein and under your General Terms and Conditions of Supply overleaf and agree to indemnify and keep you indemnified against any breach or non-observance thereof by the company and I further agree that the extent of my liability under the guarantee shall not be limited by any credit limit Imposed on the company or in any other way."
On the back of that form were the General Terms and Conditions of Supply, which included the following clauses:-
"2.4.7 The Customer grants to the Company an irrevocable licence to enter upon the land occupied or used by the Customer in connection with the tasks for which the Equipment is bought or hired as the case may be. The Customer warrants that he is able to grant such a licence mid chat any party whose consent is also required has agreed to be bound by such a licence.
3.4 Payment In all cases for approved accounts is due within thirty days from the date of the Company's invoice. In all other cases, payment in full is required before the Equipment will be despatched or collected. All sums paid late are liable to Interest at the rate of the higher of 1.75% above the base rate of Barclays Bank Plc or the rate allowed from time to time by the Late Payment of Commercial Debts (Interest) Act 1998 or any replacement or modification thereof.
5.2 The Customer will at all times during the period of hire:
(i) keep the Equipment In his custody and control.
(ii) ensure that the Equipment is erected and dismantled in a proper manner and only by those persons having the appropriate qualifications and experience to erect and dismantle the Equipment and in accordance with any instructions given out by the Company.
(iii) ensure that the Equipment Is used ONLY within its designed load limits and other requirements. The Customer warrants that he is aware of all such limits and requirements.
(iv) take proper care of the Equipment and ensure that It Is safely and properly stored.
(v) retain possession and control of the Equipment at all times and not sell, loan, charge or part with possession of It
(vi) return the Equipment In good order to the place of hire and to ensure that the Equipment Is clean, fully usable and loaded in such a manner that unloading may be carried out by forklift. The Customer will be responsible for the Cost of repair and cleaning and any missing or damaged Equipment will be charged at the list price subject to any applicable Customer discount. The Company may In Its absolute discretion decline to sell any damaged item to the Customer,
6. If the Customer shall default in making punctual payment of any sum due to the Company under the Contract or these Conditions or shall fail to observe and perform any of the terms of the Contract or these conditions or shall go into liquidation or bankruptcy or so or cause to be done or allow any act or thing to be done whereby the Company's rights in the Equipment may be prejudiced then the Company may treat this Contract and the Conditions as bring repudiated by the Customer and the Company may without any notice or other requirement on its part re-take possession of the Equipment and for that purpose the Company may enter into and upon any premises or sites at which the Equipment may be and remove it from any land and buildings (the Customer being responsible for any damage caused thereby) but without prejudice to any pre-existing right of the Company against the Customer for recovery of monies due or any other breach of the Contract or these Conditions."
(a) The employment of illegitimate pressure;
(b) a causal nexus between the illegitimate pressure employed and the decision to acquiesce;
(c) In the event of refusal, consequences of such severity that the innocent party is left with no alternative but to comply.
THE DEFENDANT'S CASE
"a. The Rotamead procured Mr Ryan's consent for DSL assuming responsibility for PDL's Historic Debt on 31 March 2017, and to enter into a personal guarantee on 15 June 2017, through the use of economic duress. These agreements should be regarded as void.
b. If the Court is not persuaded by the economic duress argument, Mr Ryan submits that:
i. On a proper construction of either his 31 March letter, or the terms set out in his personal guarantee, he cannot be held personally liable for either the Historic Debt or any debt incurred by DSL prior to 15 June 2017.
ii. During the meeting of 18 April 2017, in which PDL, Rotamead and Higgins entered into a trilateral agreement to execute a further agreement for the release of PDL from its Sutherland Road subcontract and the novation of the relevant hire responsibilities to Higgins, Higgins had accepted that the quantities of material deployed at its sites amounted to 469,028 feet, as set out in the Schedule presented by Mr Norfolk.
iii. In the course of the same meeting, Higgins had accepted sole liability for any shortages.
iv. Given the fact that only some 19,936 feet of tubing was subsequently found at Bramber House, and considering the fact that Higgins had accepted the total figure of 469,028 feet for its sites, the balance between these two figures must be regarded as 'shortages' for the purposes of the 18 April trilateral agreement, for which Higgins was solely liable. The fact that, according to rough estimates, the amount of tubing at Sutherland Road might be lower than originally envisaged is irrelevant - no estimation after the event can alter the three parties' agreement on 18 April 2017.
v. Rotamead has therefore wrongly invoiced DSL for equipment which ought to have been novated to Higgins subsequent to 18 April 2017. The total value of these sums is [£x], which must be excluded from the claim.
c. Even if the court is not persuaded as to the contractual argument set out above, and holds that all invoices issued by Rotamead to DSL are valid, then upon a proper Consideration of the reconciled accounts exhibited, DSL is in overpayment in the amount of £17,123.90.
d. The total value of DSL's counterclaim is [£X]"
"The elements of economic duress
6. The First and Second Defendants aver that, in the Claimant's efforts to induce the Second Defendant to:
(a) Agree, on behalf of the First defendant, for the novation of PDL's historic debt to the First Defendant; and
(b) Enter into a personal guarantee in respect of the First Defendant's liabilities to the Claimant;
The Claimant had done so through the use of economic duress. This rendered these agreements unenforceable vis-a-vis these two parties.
7. As set out above, in order to compel the Defendants to acquiesce to the above, the Claimant threatened to attend the site and to dismantle all equipment originating from the Claimant."
- Firstly, the Defendant had no right to exclude Rotamead from the sites. That right belonged to the main contractors or the employers in each case. Under clause 2.4.7 of the General Terms, PDL granted Rotamead a license to enter the site so long as it had the right to do so.
- Secondly, it is common ground Mr Norfolk did make arrangements with Higgins in respect of their sites. Nothing was suggested he would not have made proper arrangements with the main contractors or employers on the other sites in order to take possession of equipment. It was not put to him that he would not have done so.
- Thirdly, the Defendants had no entitlement to the scaffolding. Only PDL could have claimed to have the right to prevent Rotamead taking possession and PDL did not make such a claim and could not have done so in any event. Even if as suggested by Counsel that PDL owned some of the scaffolding, Rotamead was entitled to take its share from the mix of scaffolding.
"Contract - Validity - Economic duress - Contract entered into following exercise of lawful pressure in good faith - Whether contract voidable on grounds duress
The claimant travel agency, whose business was almost exclusively the sale of flight tickets for travel to and from Pakistan, was very largely dependent on its ability to sell tickets with the defendant airline, which, was the only airline operating direct flights between the United Kingdom and Pakistan. When a number of the defendant's agents brought proceedings to recover substantial sums said to be due by way of commission, the defendant-terminated existing agency contracts, offering each a new contract on terms that it included a waiver of the agent's claim for unpaid commission. The claimant was one of the agents which accepted those terms. Subsequently the claimant brought proceedings to recover the commission and other payments which it said were due under its previous contract. The judge allowed the claim, holding that the claimant was entitled to avoid the new contract on the grounds that it had been procured by economic duress, even though the defendant's actions had been entirely lawful.
On the defendant's appeal –
Held, allowing the appeal, that where A used lawful pressure to induce B to concede a demand to which A did not bona fide believe itself to be entitled, B's agreement would be voidable on the grounds of economic duress, but the doctrine of economic duress would not apply where A believed in good faith that he was entitled to the demand, whether or not, objectively speaking, he had reasonable grounds for that belief; and that, accordingly, since the judge had found on the facts that the claimant had failed to establish bad faith on the part of the defendant, the claimant had not been entitled to avoid the contract (post, paras 62, 70, 105-107, 113-115, 116, 117).
CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714, CA applied.
Dicta of Leggatt LJ in Al Nehayan v Kent [2018] EWHC 333 (Comm) at [187]—[188] not applied.
Decision of Warren J [2017] EWHC 1367 (Ch) reversed."
Dear Sirs,
RE: Rotamead Limited Outstanding Debt of £202,778.70 (inclusive of VAT| from Paul Durston Limited
"Further to various meetings and your agreement with Rotamead Limited to repay the above outstanding balance in full by the 30th September 2017 from the sale of the property at the above mentioned address, you also give you full agreement to personally fully indemnify Durston Scaffolding Limited and it's Directors against the above stated sum of £202,778.70 should the sale of the above mentioned property not proceed or raise sufficient funds to settle the debt in full.
Any future payments due to Rotamead Limited from 1" May 2017 will be the liability of Durston Scaffolding Limited with payment being arranged between Durston Scaffolding Limited and Rotamead Limited.
It has also been agreed that in "good faith" Durston Scaffolding Limited will make an additional payment to Rotamead Limited of a minimum of £5,000.00 (inclusive of VAT) monthly until the balance is settled in full from the sale of the above mentioned property or other means. The total of this amount will be an interest free loan from Durston Scaffolding Limited to Mr Paul Durston Limited and is repayable in full on demand.
Yours sincerely
Mr Paul Durston
Mr Jamie Ryan
Director
Durston Scaffolding Limited"
"During the meeting of 18 April 2017, in which PDL, Rotamead and Higgins entered into a trilateral agreement to execute a further agreement for the release of PDL from its Sutherland Road subcontract and the novation of the relevant hire responsibilities to Higgins, Higgins had accepted that the quantities of material deployed at its sites amounted to 469,028 feet, as set out in the Schedule presented by Mr Norfolk."
"MR SMITH: Mr Ryan, you are copied into this letter C62 dated 2 April and at no point do you respond saying "hang on, we have got a binding agreement"?
A. For all intents and purposes, it is not my battle.
Q. You are relying on that binding agreement now; you did not respond and say you had a binding agreement then?
A. As we established earlier, that has nothing to do with DSL, it is PDL.
Q. Is it your case that whatever was agreed between PDL and DSL, and Higgins and Rotamead, DSL's obligations are unchanged; is that your case?
A. Those agreements are not DSL's concern.
Q. I am going to go through them to make sure that we understand we are coming from the same position because your barrister has put very hard that there is a binding agreement that DSL is able to take advantage of and I do not want it to be said that I am making you abandon your case in cross-examination so I will continue. We looked at the email at the bottom of 62 where Mr Durston asked to confirm. He then chases on 4 May (bottom of C61). You have dropped off the address list in a moment, but we will see in a moment it does get forwarded on to you. Then on 10 May, at the bottom of C61, there is an email from Mr Sergeant to Mr Durston, which says they believe that the schedule is not exclusively for materials at Sutherland Road. This email again you are not on, but it is forwarded to you on 18 May, we see at the top of the page. There is no response from you saying, "hang on, that is the schedule I have accepted and that means DSL does not have any hire charges to pay"?
A. Again, the contract — DSL is not part of that contract so it is not my concern. That contract is between PDL, D&B Scaffolding, Higgins and Rotamead,"
Description |
Ex VAT |
VAT |
Gross |
Hire charges up to 21/8/2020 |
£322,019.81 |
£64,403.96 |
£386,423.77 |
Daily hire fees |
£205.95 |
£41.19 |
£247.14 |
Value of equipment |
£181,409.35 |
£36,281.87 |
£217,691.22 |
The interest calculated at the contractual rate is at the date of judgment £65,816.92.
"The correct procedure for Rotamead to follow was to write off the unpaid invoices sent to PDL, recover the VAT from HMRC, and to issue new invoices for the relevant amounts to the First Defendant."
IT IS ORDERED THAT:
AND IT IS DECLARED THAT:
AND IT IS FURTHER ORDERED THAT:
(a) £387,906.61 in respect of unpaid hire charges (£323,255.51 + VAT);
(b) £65,816.92 interest; and
(c) £45,372.35 pursuant to CPR Rule 36.17(4)(d).
(a) 215,962 feet of Type 4 galvanised scaffold tube;
(b) 16,584 double couplers; and
(c) 21,003 single couplers.
30th September 2020
MARTIN BOWDERY Q.C.
(Sitting as a Deputy Judge of the High Court)