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Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] ABC.L.R. 11/22 - page 4 / 5





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Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] ABC.L.R. 11/22

  • 25.

    If one accepts that, it seems to me that it is perfectly possible that the parties would have agreed that the June FMA would apply to the short two-month period, contemplated by paragraph 5 of the August letter, rather than leaving it open to argument as to what terms, if any, were to be implied into the arrangements between them for that short period. Thus, the June FMA contained detailed provisions with regard to payment and consequences of determination, at least some of which would plainly be sensible to have implied into a contract for the provision of the "services", even for as short a period as two months.

  • 26.

    I think that point is somewhat reinforced when one bears in mind the relatively complex nature of the services, as Mr Jeremy Nicholson QC, who appears with Mr Adrian Hughes QC, for Somerfield, contends. The services were of a relatively complex nature, including over three hundred different types of operation, many of them involving specialist expertise, for instance those services extending, for instance, to lift and refrigeration systems. It appears to me more likely than not that the parties would have expected to have fairly detailed provisions, such as those contained in the June FMA, rather than virtually no express terms, as Skanska's case seems to involve, governing their relationship even under the temporary agreement.

  • 27.

    Mr Stephen Dennison QC, who appears with Miss Serena Cheng for Skanska, raises a number of further points in his excellent submissions in support of the judge's conclusion. His first point is that there are terms of the June FMA which are inconsistent with the terms of the August letter or with a two-month, as opposed to a three-year, agreement. In my opinion, the answer to that is that any such terms are simply not included in the temporary agreement. I appreciate that this conclusion can be said to involve implying something into paragraph 5 of the August letter but that causes me no concerns. It would be classic case for implication, though requirements of both obviousness and necessity are plainly satisfied. Such an approach to a corporation is supported by the House of Lords in Thomas (TW) and Co Ltd v Portsea Steam Ship [1912] AC 1, and in the Court of Appeal in Hamilton and Co v Mackie and Sons [1889] 5 Times Law Report 677 and Modern Building Wales Ltd v Limmer Trinidad Ltd [1975] 1 WLR 1281, as discussed in Lewison J's book on Interpretation of Contracts (2004), pages 66-7.

  • 28.

    I also accept that there could be arguments whether two or three of the terms of the June FMA are excluded. However, it seems to me that, apart from departing from the natural meaning of the centrally relevant words of the August letter, Skanska's interpretation would involve a requirement for implied terms which would very probably carry with it more room for argument than Somerfield's interpretation. If all that the parties had agreed was the services to be provided and prices, it appears to me almost self-evident that it would have been open house for both parties to argue about the terms to be implied, especially against the backdrop of the contractual negotiations.

  • 29.

    Mr Dennison also relies on two reasons which emerged from the evidence before the judge as to why Somerfield may not have been prepared to agree a contract on the terms of the June FMA for three years as applying equally to a two-month period. Those reasons cannot, in my view, be relied on because of the simple fact that neither of those two reasons were known to Skanska at the time. It is only fair to add that I would not have found either of the reasons convincing in any event.

  • 30.

    Mr Dennison also refers to the fact that, on the very day that Somerfield now says that the parties became bound by the June FMA, Skanska, having unlimited liability under its own indemnity therein, was saying to Somerfield that it was not prepared to have such an unlimited guarantee. This, in my view, is explained by the fact that Skanska was not prepared to take a risk for three years which it was prepared to take for two months.

  • 31.

    The written submissions put before us by each party have been fairly extensive and I found both skeleton arguments helpful and impressive. However, it does not appear to me that there are any other points of significance which bear on the issue which we have to decide. In other words, I think the judge extracted the main relevant factors and set them out in his admirably clear judgment, although I have reached a different conclusion from him in what is not a wholly easy case and which, as with many interpretation issues, is to an extent a matter of impression.

  • 32.

    Notwithstanding the benefit of all the guidance from the House of Lords and all the arguments of counsel, the natural meaning which the words in question convey to a particular reader, whether or not a judge, must inevitably play a very significant part in his or her decision as to that effect. In the end, in this case, the central point is the natural meaning of the words "you will provide the services under the terms of the contract" in paragraph 5 of the August letter. The natural meaning is reinforced by the wording of paragraph 2 of the letter and to put it at its lowest, it is not called into question by the surrounding circumstances or commercial commonsense.

  • 33.

    In the circumstances, on the assumption that Richards and Leveson LJJ agree, the right course to take would be to allow the appeal and to remit the matter back to the judge as has been suggested on behalf of Skanska. The reason for remitting it to the judge is to enable him to decide which of the terms of the June FMA do indeed apply to the temporary arrangement. Clearly, there will be some terms of the June FMA which were inconsistent with the temporary arrangement. Given that this is an appellate court, the judge anticipated he would be deciding which of the terms of the June FMA were to be incorporated into the temporary arrangement and that aspects of this issue may turn on the evidence which the judge heard, I do not think it sensible for us to decide this point.

Arbitration, Building & Construction Law Reports. Typeset by NADR. Crown Copyright reserved. [2006] EWCA Civ 1732


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