North Sea Ventilation Ltd v Consafe Engineering (UK) Ltd

Permission to appeal may exceptionally be granted in a fact-sensitive building contract dispute where the evidence arguably supports a different conclusion from that reached below. A party seeking to establish that written contractual procedures were dispensed with by agreement or by a course of conduct bears a heavy burden of proof. The party must also persuade the appellate court that the first-instance judge reached the wrong conclusion. A finding that one party later insisted on written proposals does not necessarily prevent an argument that subsequent conduct continued to dispense with strict contractual compliance. Delay and disruption may provide some supporting evidence, but ordinarily carry limited weight.

Consafe Engineering (UK) Ltd subcontracted heating, ventilation and air-conditioning work to North Sea Ventilation Ltd under a fixed-price contract incorporating clause GC35, headed “Changes”.

North Sea claimed payment for additional work. It argued that GC35 had been varied, or that Consafe’s conduct created a Hughes v Metropolitan Railway estoppel. The alleged course of dealing included oral instructions, informal variation orders, substantial payments and an admission that a further sum was due, subject to unrelated set-off claims.

HHJ Cockcroft decided preliminary issues for Consafe. North Sea renewed its application for permission to appeal, challenging the legal threshold applied and the judge’s assessment of the evidence.

1. Permission granted. Although the proposed appeal was substantially factual, the evidence was sufficient to justify permission. It included a course of informal dealing concerning additional work, substantial payments, an admission that a further sum was due, and witness evidence supporting North Sea’s case.

2. The claimant bore a burden of proof which could properly be described as heavy. It had to persuade the appellate court that the parties agreed, through their course of conduct, that the written GC35 procedure would not apply, and also that the first-instance judge had reached a wrong conclusion.

3. The finding that, after 24 October 2001, Consafe insisted that future proposals should be in writing was not itself challenged. Nevertheless, North Sea remained entitled to argue that subsequent conduct continued to dispense with strict compliance with GC35.

4. Delay and disruption supplied, at most, limited additional evidence that the parties did not intend to apply GC35’s strict requirements.

5. The procedural complaint concerning the judge’s treatment of the submission of no case to answer was not shut out at the permission stage. North Sea could advance that argument at the substantive appeal if so advised.

Fresh skeleton argument and clarified grounds of appeal were directed. The court also urged participation in its Mediation System.

• High Court, Technology & Construction Court, Leeds District Registry: HHJ Cockcroft decided preliminary issues in favour of Consafe Engineering (UK) Ltd.
• Court of Appeal (Civil Division): Lord Justice Longmore granted North Sea Ventilation Ltd’s renewed application for permission to appeal. The merits were not determined in this judgment.