Supposed agreement to settle arbitration of building contract dispute–Document signed by owner, but held subject to a condition by which it was not to come into operation if called off in time–Action by builder to restrain arbitration dismissed with costs
This was a
claim by Savid Developments Ltd, of Arnox House, High Street, Rayleigh, Essex,
against Mr Andrew Gibbs and his wife, Mrs Vivienne Doreen Gibbs, of 25
Bryanston Road, Tilbury, Essex, for a declaration that a written agreement of
December 19 1973 constituted a binding settlement of a dispute between the
parties relating to damage by subsidence, and for an injunction to restrain the
defendants from taking the matter to arbitration. The proposed arbitrator, Mr
Alan Pipe, of Sandon, Essex, was joined as a defendant, but took no part in the
proceedings.
Mr M Pearson
(instructed by Collyer-Bristow & Co, agents for Cunnington, Son &
Orfeur, of Braintree) appeared for the plaintiffs, and Mr P Sheridan
(instructed by Ingledew, Brown, Bennison & Garrett) represented the
defendants.
Giving
judgment, JUDGE FAY said that the plaintiffs, a firm of builders, developed a
housing estate at Tilbury in 1969 and sold one of the terraced houses, 25
Bryanston Road, to Mr and Mrs Gibbs. The purchase was accompanied by the normal
agreement between builder and purchaser. Before long, defects appeared in the
house, apparently due to subsidence, and led to questions as to whether the
concrete foundation raft had been properly built. In 1971 the defendants started
arbitration under the terms of the contract. So did the owners of the houses on
either side of 25, whose homes were also showing subsidence damage. The
arbitrator had been due to hear the Gibbs case on January 9 1974. On Wednesday,
December 19 1973, a director of Savid Developments, a Mr Davis, visited the
defendants at their home. During this visit a piece of paper was prepared
which, it was said, represented an agreement to settle the arbitration
proceedings, but this was disputed. At all events, the plaintiff company took
immediate steps to apply for an injunction restraining the arbitrator from
proceeding with the case. The defendants claimed that the agreement set up by
the plaintiffs was invalid because it was subject to an express suspensory condition
which was never fulfilled, and it therefore did not come fully into life. They
also claimed that a suspensory condition should be implied from the facts of
the case. Under the terms of the agreement they were to be given £900 by Savid
Developments, and they also expected that the company would carry out a number
of repairs, including repairs to the concrete raft. It was common ground that a
document accepting this was signed by Mr Davis and Mr Gibbs on December 19
1973. On the face of it this document settled the arbitration proceedings, but
the court had to decide whether it was signed as an immediately enforceable
contract or whether it was signed subject to a condition which had not been
fulfilled. The burden of proof of the latter proposition was on the defendants.
At some time
during the proceedings an offer had been made to all three householders of
£3,600 in full settlement of all their claims. When Mr Davis visited Mr Gibbs,
Mr Gibbs did not know that an amended offer of £5,000 had been discussed
between solicitors for the parties in the arbitration. Mr Gibbs nevertheless
thought he had a pretty cast-iron case. Mr Davis set about sowing the seeds of
doubt. He pointed out that if his company won in the arbitration proceedings
the defendants would be liable to pay the costs, which could amount to £1,000 a
day, and they (the defendants) might find themselves in the bankruptcy court.
Mr Gibbs was a £1,800-a-year assistant manager in a travel agency branch with
no capital other than his house. After three hours Mr Gibbs agreed that it
would be a good idea to settle. The agreement was made out and signed, and Mr
Davis claimed it was immediately binding with no conditions. Mr Gibbs, however,
said that he told Mr Davis he wanted to talk the matter over with his wife in
private and he wanted to speak to his solicitor in the morning. He claimed Mr
Davis told him he had to have the agreement signed that evening so that his
counsel could have it the next day to avoid more heavy legal costs. Mr Gibbs
said they agreed that 10 o’clock the next morning would be the deadline for the
agreement. If he rang before then to say the agreement was off, Mr Davis would
tear up his copy of the agreement.
The next day
Mr Gibbs called his solicitor to ask for advice and was advised not to accept
the agreement. The solicitor confirmed in evidence that Mr Gibbs called to ask
for advice about accepting, not to tell him about an already agreed settlement.
Mr Gibbs telephoned Mr Davis to call off the deal, and later that day Mrs Gibbs
took the £900 cheque to the company’s office in Rayleigh, but Mr Davis would
not accept the cheque or destroy his copy of the agreement. He (Judge Fay)
thought Mr Davis was a young man, and clearly a vigorous director of his
company, with considerable strength of character. Mr Gibbs, a young man with a
wife and baby, might find it difficult to refute arguments put forward by
someone like Mr Davis. There were inaccuracies in Mr Davis’s evidence, and he
(his Honour) was satisfied that Mr Davis had put pressure on Mr Gibbs. However,
he did not think that that pressure had deprived Mr Gibbs of all sense. He
retained sufficient wits to stipulate that he would not give consent until he
had spoken to his wife and his solicitor. He (Judge Fay) accepted Mr and Mrs Gibbs’s
evidence as true. He found that the contract was not to come into force unless
it was approved the following morning. As it was not approved, it therefore did
not come into force.
The
plaintiffs’ claim was dismissed with costs.
