Lancaster -v- Bird

On a renewed application for leave to appeal, the Court of Appeal held that the inclusion or exclusion of VAT from a building contract price depends on the terms of the particular contract. A construction-industry custom may be relevant, but it must be established on the evidence and cannot automatically be implied in every transaction. Failure to complete work by an agreed or reasonable time does not, by itself, amount to repudiation. Repudiation may arise where the contractor makes clear that he will not complete without payments exceeding the contractual price. An appellate court will not interfere readily with factual findings based on evidence heard at trial or with a costs discretion absent legal or discretionary error.

The defendant builder applied for renewed leave to appeal against an order made by an assistant recorder sitting as a deputy judge in the Carlisle County Court. The order gave judgment for the plaintiff, an accountant and part-time farmer, for £4,367.42 including interest, and dismissed the defendant’s counterclaim.

The dispute concerned the construction of an agricultural shed, a stable block and concrete yards. The proposed appeal challenged findings about contractual extras, completion within a reasonable time, repudiation, VAT, and costs. The central question was whether any of those grounds had a realistic prospect of success.

1. Application refused. The Court of Appeal, in the judgment of Lord Justice Chadwick agreed with by Lord Justice Roch, held that none of the proposed grounds had a realistic prospect of success.
2. The trial judge was entitled, on the evidence, to find that drainage was included in the quoted price for the stables and yard. The question whether a quotation was sufficiently certain and whether particular work formed part of the agreed price was substantially factual in this case. The appellate court had no proper basis to interfere.
3. The judge was also entitled to find that the cattle shed was to be completed within a reasonable time and that, in the circumstances known to the parties, that period would not extend into the winter months. The finding that completion was required before the land became too wet for the cattle to remain outside was a factual conclusion open to the judge.
4. Delay alone does not necessarily constitute repudiation. Here, however, the judge found that the defendant had made clear that he would not complete the shed without further payments exceeding the quoted or contractual price. That finding was sufficient in law to support the conclusion that the defendant had repudiated his contractual obligations.
5. Whether VAT was payable in addition to a quoted building-contract price depended on the particular contract. The statutory obligation under the Value Added Tax Act 1994 for a builder to account for VAT did not establish a contractual entitlement to charge VAT on top of the price. Although a construction-industry custom might support such a term, no such custom was established for this transaction.
6. The award of costs on County Court scale 2 was a matter within the trial judge’s discretion. No error in principle or improper exercise of discretion was shown.

The renewed application for leave to appeal was refused.

• Carlisle County Court: An assistant recorder sitting as a deputy judge gave judgment for the plaintiff in the sum of £4,367.42 including interest and dismissed the defendant’s counterclaim.
• Court of Appeal (Civil Division): Renewed application for leave to appeal refused.