Hurst Stores and Interiors Ltd v ML Europe Property Ltd
Citation: EWCA Civ 490; [2004] B.L.R. 249; 94 Con. L.R. 66
Nature of case:
ML Europe Property engaged Hurst Stores as contractors to carry out the fitting of toilet blocks at Merrill Lynch’s new European Headquarters. The terms of that engagement included a requirement for Hurst to submit an “interim statement of accounts” each month on a form provided by Mace limited, who were charged with co-ordinating and administering the contract. Over the course of the project, extensive additional works were ordered, which delayed the works and increased the contract sum by around £1m.
Six months prior to completion, and after many of these variations had been completed, Mace provided a variant of their usual form, which was identified as a “final statement of accounts”, which included a provision that Hurst “hereby agree that payment to us of THE FINAL PAYMENT will be accepted by us in full and final settlement of all our claims … arising out of or in connection with the Trade Contract Works which have accrued up to and including the date of this statement”. Hurst’s project manager, after a cursory glance, and not noticing this change, signed the document.
Following practical completion, Hurst prepared a “final account”, which included £2.5m for disruption caused by the variations that Hurst had been ordered to carry out. Mace refused to accept this part of the final account, pointing to the provision in the “final statement of accounts” signed six months earlier. Hurst sought, and was granted by the judge in the TCC, declarations that the 27 April 2001 document was entered into on the basis of unilateral mistake, and that Hurst’s project manager did not have authority to make a binding compromise in the terms of that document. ML Europe Property appealed against that ruling.
Dismissing the appeal, the Court of Appeal held that:
- No grounds were established to support the contention that Hurst’s project manager was not mistaken, the use of the term “final statement of accounts” not being dispostive;
- The judge’s finding that Mace new of Hurst’s mistake was not open to challenge, there being sufficient evidence to justify it; and
- The judge was entitled to find that Hurst’s project manager had not authority to convert an interim account into full and final settlement.