YJL London Ltd v Roswin Estates LLP

An agreed final account may complete the contractual final-account process where the documents objectively record the parties’ agreed final figure. The absence of an arithmetical balance in the document does not prevent payment where the agreed contract sum and payments already made establish the balance by calculation.

Clear full-and-final-settlement wording ordinarily bars claims concerning patent defects known, or reasonably discoverable, when the settlement was made. Whether latent defects are also released depends on the agreement’s language and need not be decided where no such defects are pleaded. A party cannot rely on its own contractual omission to avoid payment.

YJL London Ltd, a building contractor, claimed £136,395.60 from Roswin Estates LLP under an agreed final account following refurbishment works. The parties had recorded a final account figure of £3,144,045 in December 2008.

Roswin contended that the contractual final-account procedure had not been completed, that no balance was payable, and that it could rely on alleged defects by set-off or counterclaim. The court also considered a late contention that the claim had been compromised for £130,000 and an alleged company dissolution. The preliminary issues concerned the effect of the final-account agreement, the release of defect claims, and the payment due.

1. Final-account process. The December 2008 documents were intended to complete, and did complete, the process under clause 30.5 of the JCT contract. Their language, commercial purpose and context showed that £3,144,045 was the agreed Final Statement. The court relied on business common sense, applying Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, and, in any event, construed ambiguity against Roswin because its agent had prepared the documents, applying Lexi Holdings v Stainforth [2006] EWCA Civ 988.
2. Payment. The agreement acknowledged payment of the agreed contract sum. Although it omitted the amount previously paid, that was an administrative omission by Roswin’s agent. Roswin could not rely on its own breach or omission to defeat the claim, consistently with Alghussein Establishment v Eton College [1988] 1 WLR 587. The agreed sum and payments already made established the balance of £136,395.60, which was due and payable.
3. Defects and settlement. The Final Account Agreement and Final Summary constituted a full and final settlement of claims and cross-claims. They released claims concerning defects known, or reasonably capable of identification, by December 2008. The defects pleaded by Roswin were patent and fell within the settlement. The court left open whether latent defects were also released, since none had been pleaded.
4. Orders. The pleaded defect defence and counterclaim disclosed no arguable set-off and were liable to be struck out. Summary judgment for the full sum was not entered because Roswin had raised an unresolved compromise defence for £130,000. An interim payment of £130,000 was ordered under Civil Procedure Rules 1998, r 25.7(1)(a) and (c), payable within 14 days.

First-instance decision. No appellate history is stated in the judgment.