Case: Clancy Consulting v Derwent Holdings, Anglo International Holdings, Mardown, Cashtal Properties, Mount Murray Country Club and Cashtal Developments. Technology and Construction Court March 2010.
The defendants were separate companies, but owned and controlled by a common trust. Over the years, Clancy had acted for it as mechanical services and engineering consultant.
Kingsley Fereday Management (KFM) issued the clients’ instructions and certified payments. The majority of contracts were charged on a time basis and these often resulted in payments not being certified or paid in full.
By 23 October 2009, Clancy issued proceedings for fees on 22 contracts: £329,525 for sums certified by KFM but not paid ; £68,565 for sums not certified and not paid; £37,242 for Clancy’s management time in chasing payments.
Clancy argued that unless a lump sum fee had been agreed, it should be paid on an hourly basis. It referred to letters that confirmed fees would be charged on a time basis.
The defendants replied on 11 January 2010 by issuing a general denial without any positive defence. They claimed the time-based payments were only temporary until final fees had been agreed, that there was no binding certificate procedure, that everything was subject to final reconciliation and Clancy was only entitled to “a reasonable sum” for its work. There was no indication as to what this reasonable sum might be or why Clancy’s charges were thought to be unreasonable.
Clancy tried to obtain this information from the defendants and a judge ordered it to be provided by 17 February. On 18 February, the defendants applied for an extension to 24 February. This was granted on the proviso that if the information still did not arrive, the defence would be stuck with its 11 January submission. Nothing materialised.
Clancy applied to the court that the 11 January defence should be struck out and Clancy should be given summary judgment for its money. Application for summary judgment is a quick procedure based on convincing the judge there is no real defence to the claim. If it fails the dispute proceeds to full court hearing.
Before the hearing the defendants conceded that the certified £329,525 should be paid. But in court, they tried to attack Clancy’s claim for the non-certified sum of £68,565 by arguing the correspondence did not show that Clancy was entitled to be paid “the hourly rates in force from time to time”. The judge was unimpressed.
This was the basis, he said, on which KFM had issued its payment certificates and the repeated use of the words “on a time charge basis” reinforced this. There was no objection about the hours claimed by Clancy and no suggestion that its rates were not reasonable, so it was entitled to the summary judgment for the uncertified £68,565.
On Clancy’s management time, it had to show a proper causal link between the costs it had incurred and the alleged fault on the defendants’ part. The evidence was inconclusive, so the court could not give summary judgment for the £37,242.
A court can strike out a defence if it fails to establish reasonable grounds for defending the claim or if there is a failure to comply with court direction or order. In particular, if it is a money claim, a bare denial risks being struck out unless the defendant gives reasons or puts forward a case for an alternative claim.
The normal rule in civil court cases is that proof has to be established on the balance of probabilities. But with a summary judgment, the claimant must show that the defendant has no real prospect of defending the claim. Establishing probability is replaced by establishing an absence of reality.
So you need every fact you use must be backed up by as much information as possible.
Ann Wright FCIOB is an adjudicator and quantity surveyor.
T: 01675 466009