Rowles-Davies & Ors v Call 24 7 Ltd

A signed commercial document may have contractual force where its language, structure, financial significance and commercial purpose show an intention to create legal relations. Where an interim subcontract expressly mirrors the termination provisions of an upstream interim arrangement, the incorporated notice period applies until a formal contract is made. A purported pay-when-paid term will not be implied or treated as express where it contradicts the written payment obligations and lacks adequate evidential support. Statutory interest on fixed contractual debts may apply without an invoice, but the court may remit the rate where justice requires because of delay in pursuing the claim.

The claimants sought payments and damages arising from an arrangement under which Claims Support Ltd provided audit services to Call 24-7 Ltd in connection with the run-off of The Accident Group business. The claimants relied on a signed Heads of Agreement, alleged that it required payment for a three-year period or after longer notice, and contended that rights had been assigned or novated to RDA Solicitors Ltd.

The defendant argued that the Heads of Agreement was non-contractual, that termination was available on two weeks’ notice, that payment was conditional on receipt of payment from stakeholders, and that RDA had no contractual right of action. The court determined the construction, termination, payment, assignment and statutory-interest issues.

1. Contractual force. The Heads of Agreement was binding. It was signed, contained no reservation of contractual intention, concerned substantial sums, included provisions for termination and loss-of-profit compensation, and served the commercial purpose of protecting the defendant in its subcontracting arrangements.
2. Construction and termination. The arrangement was an interim agreement pending a formal contract. Clause 7 required it to mirror the stakeholders’ interim arrangements. The applicable termination period was therefore two weeks’ notice, and no minimum 18-month period had to elapse before notice could be given. The defendant’s notice of 19 August 2004 brought the agreement to an end on expiry of that period.
3. Payment. The agreement did not contain a pay-and-be-paid term. Such a term had not been pleaded as an implied term, was prima facie inconsistent with the express payment provisions, lacked convincing documentary support, and was not accepted on the evidence. The defendant remained primarily liable for the additional £10,416.67 specified in the amended agreement.
4. RDA’s standing. The arrangement between CSL and RDA was a subcontract for services, not an assignment of CSL’s contractual rights. There was no evidence of novation. RDA therefore had no right of action against the defendant. CSL’s rights remained with CSL, subject to the assignment relied upon by the first and second claimants.
5. Interest and outcome. The Late Payment of Commercial Debts (Interest) Act 1998 applied to the contract. An invoice was not a prerequisite because the debts were fixed sums payable on specified dates. The statutory rate was remitted to 4 per cent above the official bank rate until 30 days after receipt of the Letter of Claim, and applied thereafter at 8 per cent until judgment was satisfied. The claim succeeded only to the extent of sums due to CSL and applicable interest.