DRL Ltd v Wincanton Group Ltd

A contract for logistical services must be construed as a whole. A detailed contractual allocation of risk will generally prevent a court from treating one service as a condition precedent to payment unless the contract clearly requires that result. A signed proof of delivery is not conclusive unless the agreement makes it so, although the 2007 agreement in this case did make a clean signed proof conclusive for its contractual allocation of responsibility. Contractual time bars may be displaced by inconsistent bespoke procedures, but the one-year bar here remained effective. A reasonable-endeavours obligation to assist with transition had contractual effect. Improper withholding of stock was a breach, but was not repudiatory on the facts.

DRL supplied electrical goods to customers using logistical services provided initially by Lane Group plc and later by Wincanton. The parties entered agreements in 2005, 2007 and 2008 covering delivery, storage, damage, invoicing, failed deliveries, liens and termination. DRL brought numerous claims concerning damaged or lost goods, delivery charges, compensation, transition assistance, alleged repudiatory breach and the effect of the Road Haulage Association conditions. Wincanton advanced counterclaims for unpaid invoices, interest and storage.

The trial was confined to liability and issues of principle. Quantification and specimen transactions were left for later determination.

1. Rectification and incorporation. The evidence did not establish a common continuing intention that the RHA conditions should apply only to major incidents. The rectification claim therefore failed. The RHA conditions were incorporated by express reference, and the services were fundamentally delivery services, so the RHA conditions were the relevant incorporated terms.
2. Unpack and inspect. The contractual obligation required delivery drivers to take reasonable steps to obtain agreement to unpacking, inspect the product, invite the customer to inspect it, and take reasonable steps to persuade the customer to do so. The zero-tolerance procedure was an operational procedure and did not vary the contract. Compliance was not a condition precedent to payment.
3. Proof of delivery and damage. Under the 2005 agreement a signed clean proof of delivery was strong evidence but could be challenged. Under the 2007 agreement clause 13 created a self-contained allocation of responsibility for failed deliveries and disposals, so a clean signed proof was conclusive for that allocation. A separate damages claim could nevertheless arise if breach of the unpack-and-inspect obligation caused the benefit of a clean proof to be obtained and thereby altered the contractual financial consequences.
4. RHA time limits and liability. The bespoke invoicing and self-certification procedures were inconsistent with the notification requirements in clause 13(1) RHA for specified loss and damage claims. The one-year time bar in clause 13(2) RHA remained applicable and ran from issue of the claim form. Clause 11(2) RHA applied to other losses, subject to the distinctions drawn between physical damage, consequential loss and damage to customers’ property.
5. Estoppel and lien. Silence and failure to rely on the RHA conditions did not establish estoppel because neither party had formed or communicated a common assumption. During the 2008 agreement Wincanton could not rely on pre-19 January 2008 invoices as monies due for the purpose of exercising a lien.
6. Other contractual issues. The obligation to assist with transition meant an obligation to use reasonable endeavours, including making excess stock available for transfer. Non-compliant invoices did not prevent payment altogether, but DRL could raise bona fide disputes and contractual contra-charges. Wincanton could charge for failed connections where the agreement so provided, but could not recover positive storage charges for goods retained under a lien on the pleaded basis.
7. Termination. Wincanton breached the 2008 agreement by withholding excess stock to secure payment of disputed earlier invoices. That breach was not repudiatory. DRL’s refusal to pay the invoice due on 28 February 2008 was itself a repudiatory renunciation which Wincanton validly accepted.

First-instance decision. The judgment determined liability issues and principles, leaving quantification and specimen transactions for later determination.