The parties had collaborated on projects for 20 years, with Orkney Builders (OB) treating Alton B. Copeland (AB) as their preferred plumbing subcontractor. As a main contractor, OB entered into formal contracts with employers, 听but with its subcontractors it formed its subcontracts on 听the basis of quotations which were accepted either during a telephone call or with a handshake. Consequently, there was little documentary evidence about the terms which had been agreed, and the court had to rely upon witness evidence with the consequence that it was difficult to reach firm conclusions on precisely what had occurred in some instances.
In February 2003, AB submitted a tender of 拢24,005.06 for plumbing works on St. Magnus Manse in Kirkwall. Despite not being the lowest tender, which was 拢20,925.63 from a company called Steven R Paterson Limited (鈥淪RP鈥�), AB was appointed as subcontractor by OB. However, in its tender to the employer OB used the rates of the lowest subcontractor tender despite listing AB as the selected subcontractor. OB alleged that during a conversation with AB鈥檚 Mr. Copland, it had been agreed that AB would undertake the works at this lower subcontract price. AB undertook the works, and the price was adjusted due to changes to the contract works. AB submitted a final valuation of 拢23,261.85. OB paid 拢19,346, which was the sum it calculated to be due under SRP鈥檚 tender for the plumbing and leadworks as altered by the subsequent changes.听
AB maintained that it was entitled to be paid what was due in accordance with its own tender as adjusted and claimed the difference. OB defended its position in two ways. Firstly it alleged that its obligation to pay under contract had been extinguished by negative prescription (limitation), and, secondly, that AB鈥檚 Mr. Copland had agreed to match SRP鈥檚 lower price.听
笔搁贰厂颁搁滨笔罢滨翱狈听
The court rejected the prescription argument. AB鈥檚 final valuation had been dated 12 December 2003; but it was not been demonstrated that the amount claimed in that valuation was enforceable as soon as AB submitted the valuation to OB. As OB鈥檚 subcontractor, AB鈥檚 practice was to submit an application for payment to OB for inclusion in OB鈥檚 application to its employer. After that, the employer鈥檚 professional advisers would confirm what in their opinion was due to be paid and a certified sum would be paid to OB, which in turn would pay AB. Counsel did not explore in evidence or in submission whether, under this contract, AB had a right to sue OB for payment at any time before the subcontract works had been certified by the employer鈥檚 advisers, or before the employer had paid OB, but the judge inferred that it did not. However, in any event, OB had not demonstrated that the obligation to pay the sum claimed in AB鈥檚 final valuation of 12 December 2003 was enforceable before 12 January 2004.听
AB鈥橲 ENTITLEMENT TO PAYMENT听
It was clear that OB had operated the contract on the basis that the subcontractor was entitled to the sums stated in the SRP tender, subject to variations. AB on the other hand had submitted a final valuation in December 2003 which was based on its tender and was not consistent with its acceptance of an arrangement to match SRP鈥檚 prices. Each party had thus acted consistently with what it now asserted was the agreement.听
The judge accepted that OB鈥檚 directors had acted at the time in the belief that SRP鈥檚 prices had governed the subcontract, but the judge was not satisfied that OB had proved that AB鈥檚 Mr. Copland had accepted the arrangement to subcontract on SRP鈥檚 prices. The parties鈥� relationship had proceeded on the basis of trust and their arrangements were not formally recorded. There appears to have been a misunderstanding between them. In the absence of any proof to the contrary, AB鈥檚 tender, as adjusted, must govern the subcontract.听
顿滨厂颁翱鲍狈罢厂听
During the course of their dealings, it was not unusual for AB to offer OB a main contractor discount of between 1% and 2.5%. It was not disputed that AB had offered OB a 4% discount on its tender in respect of the Dounby Care Home. The issue between the parties was whether allowing this unusual level of discount had been conditional upon OB making prompt, monthly payments to AB under the subcontract.听
A discount of 4% was unusually high, and AB鈥檚 Mr. Copland said that he had expected to be paid promptly in exchange. It was unclear what he had actually said to OB when he had offered the discount. In subsequent correspondence Mr. Copland had complained about OB鈥檚 failure to make prompt payment and withdrew its offer of the 4% discount. Ultimately, AB had threatened to withdraw its labour from the Dounby project and demanded payment of 拢23,221.52, which he described as 鈥渢he 4% discount we offered for prompt and regular payments which has not been adhered to.鈥� OB鈥檚 Mr. Kemp denied that he had made any such arrangement with Mr. Copland.听
The judge was satisfied that AB had made the offer of the discount but not that OB had agreed to the conditions attached to it. This view was supported by the fact that there was uncertainty as to the mechanism by which the parties would assess the performance of the supposed contractual obligation. There was no evidence to show that the parties had agreed such a mechanism to give the needed clarity to the uncertain obligation to pay 鈥減romptly鈥� or 鈥渞egularly鈥� or 鈥渕onthly鈥�.听
Alton B. Copeland Ltd. v Orkney Builders (Contractors) Ltd., [2010] CSOH 135
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