A Word To The Wise: How The Court Will Determine The Contents Of Unrecorded Oral Conversations
Published date | 02 February 2022 |
Subject Matter | Real Estate and Construction, Construction & Planning |
Law Firm | Gatehouse Chambers |
Author | Ms Katie Lee |
Introduction
The TCC's recent decision in Mansion Place Ltd v Fox Industrial Services Ltd [2021] EWHC 2972 (TCC) illustrates the approach which the court may take when determining the contents of an unrecorded oral conversation, and whether the contents of that conversation constituted a binding agreement.
Where parties differ on the contents of a conversation, which one party asserts amounted to a binding agreement, the court may consider whether a finding can be made as to the "gist of the conversation" on the balance of probabilities. If the court is satisfied that it can make this finding, and after making the finding, they can consider the effect of the conversation when viewed objectively.
The Facts
Mansion Place Ltd ("the Claimant") was the developer for student accommodation in Nottingham. Fox Industrial Services Ltd ("the Defendant") was the construction contractor engaged under an amended JCT Design and Build Contract (2016 Edition).
There were delays in the progress of the construction works, which the Defendants asserted was owing to COVID-19 and the Claimant's failure to give timely possession of the site. The Claimant, in turn, alleged that the Defendants had failed to progress works and commit labour and resources to them.
When the Claimant served a Pay Less Notice and notices of intention to deduct liquidated damages, the Defendant disputed the deduction and referred the matter to adjudication.
Crucially, on 14th October 2020 there had been a phone conversation between a director of the Claimant's company, Mr Ramanathan, and the Managing Director of the Defendant contractor, Mr Kite. The Defendant asserted that the conversation of 14th October resulted in a binding agreement that the Claimant would waive its entitlement to liquidated damages in return for the Defendant agreeing to forego any right to payment for loss and expense because of the delays in the works.
The Claimant asserted that there was no such agreement during the conversation, or alternatively, that any reference to liquidated damages in the conversation was a waiver which it was entitled to, and did, revoke.
The issues
The key issue was whether the conversation on 14th October resulted in a binding agreement, and if so, whether it was in terms which prevented the Claimant was seeking liquidated damages. The Claimant argued that there was no agreement in the conversation, or even any mention of dropping the liquidated damages claim. The Defendants argued that an agreement...
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