Ruttle Plant Hire Ltd v Secretary of State for Environment, Food and Rural Affairs (No. 3)

Reasonableness of contractual plant rates is assessed by reference to the circumstances when the contract was made. Later use of a rate in a different contract is relevant but carries little weight. Rates invoiced and paid at the time are relevant evidence, but do not prevent a later assessment of reasonableness. A properly supported calculation or back-calculation is normally required.

An implied off-hire notice must be written, clear and unambiguous, and identify the particular plant. Where the plant was already idle, payment in lieu of the missing notice is at the contractual idle-time rate. Transportation costs are distinct from plant hire and attract no implied off-hire charge.

Ruttle supplied plant, labour and materials to DEFRA during the classical swine fever outbreak under a contract formed in August 2000. Earlier preliminary issues had established that the August 2000 plant rates governed and that a reasonable rate had to be agreed for items not covered by those rates.

This judgment determined a second round of preliminary issues concerning disputed star rates, alleged seven-day off-hire charges, transportation, specific-purpose hire, substituted plant and interest. The court also considered the effect of the Late Payment of Commercial Debts (Interest) Act 1998 and section 35A of the Supreme Court Act 1981.

1. Star rates. The relevant date for assessing reasonableness was August 2000. The later FMD contract involved different scale, circumstances and commercial arrangements, so its rates had little evidential weight. Rates invoiced and paid under the CSF contract were relevant, but did not conclusively establish reasonableness. The preferable approach was evidence of how the rate was calculated, or an independent back-calculation using market rates, published daywork rates, overheads and profit. The court therefore adopted the supported reasonable rates identified in the evidence.
2. Off-hire notice. The implied seven-day term required written notice from DEFRA to Ruttle which clearly and unambiguously identified the particular item of plant. Job request forms and licences for movement did not satisfy that requirement. Ruttle had to provide contemporaneous evidence identifying each item for which an off-hire charge was claimed, after which DEFRA had to check its own records.
3. Rate during the notice period. If notice had been given while plant was being used, the full rate would have applied. Ruttle’s actual claim assumed that notice was notionally given only after the plant became idle. On that basis the contractual idle-time rate of two-thirds of the full rate applied.
4. Transportation and exceptions. The CPA conditions distinguished plant hire from transportation, which was governed by clause 31. No express or implied term required DEFRA to pay seven days’ transportation charges in lieu of notice. The seven-day term also did not apply where plant was clearly hired for a specific task for a finite period or until a specified date. Replaced or substituted plant did not attract the charge.
5. Interest. Under section 4(5) of the Late Payment of Commercial Debts (Interest) Act 1998, notice of the amount claimed was required. Knowledge of contractual rates, or supporting records showing more work than invoiced, was insufficient. Interest on the unclaimed 35 per cent and under-claims therefore ran only after the relevant claim was first made. The appropriate rate, under the statutory and discretionary regimes considered, was two per cent over base. Other pleaded or insufficiently defined discretionary issues were not decided.

• High Court (Technology and Construction Court): Jackson J determined the first preliminary issues in [2006] EWHC 3426 (TCC), holding that the August 2000 rates governed. Jackson J later permitted amendments in [2007] EWHC 1773 (TCC).
• Court of Appeal: The amendment decision was upheld in [2007] EWCA Civ 1267.
• High Court (Technology and Construction Court): The present judgment determined the further preliminary issues.