| Date | 18 April 1996 |
|
|
| Judgment | Foster Wheeler Group Engineering Ltd -v- Chevron UK Ltd, 29 February 1996 |
|
|
| The Issue | The defence of abatement in professional services agreements. |
|
|
| Implication |
Confirming that the defence of abatement is not available in contracts for professional services. |
printThe distinction between the defence of abatement and equitable set-off is an important one. The right to abate or reduce sums otherwise payable may consist merely of asserting that the sum claimed has not been earned and may not necessarily require a breach of contract to be established. The issue of abatement was closely examined in 1992 in the case of Raymond Slater -v- C A Duquemin Ltd. The case concerned an appeal from an arbitrator's interim award. Duquemin as contractor entered into a contract with Slater for the refurbishment and extension of Haviland Hall in St Andrews, Guernsey. The works overran and the relations between the parties deteriorated. Eventually the employer barred the contractor from site preventing them from carrying out further work. The arbitrator decided that the employer had repudiated the contract and that the contractor was entitled to payment for the work it had carried out up to the date of repudiation. He held that payment should be made even for defective work since repudiation of the contract had prevented the contractor from carrying out its contractual obligations in respect of remedial works. At appeal the court found that the arbitrator was wrong to hold in this way. Since the defects were patent, there could be no liability on the employer to pay for work that was not properly executed. The court relied upon the case of Mondel -v- Steel (1841) in which it was held that a ship builder could obtain deduction from the price because the ship had not been built in accordance with the specification. The deduction did not require to be set-off, in other words a cross-claim for the amount of damages that had been sustained by the employer as a result of the breach of contract, but instead simply as a defence by showing how much less the subject matter was worth. This was referred to as an abatement. In the recent case of Foster Wheeler Group Engineering Ltd -v- Chevron (UK) Ltd delivered on 29 February 1996, the court once again looked closely at the question of abatement. One issue was whether abatement as a defence could properly be raised in contracts for the provision of professional services rather than for work and labour. Foster Wheeler argued that the defence of abatement was not open to Chevron as the contract was for professional services. Counsel for Foster Wheeler accepted that there was no rational justification for the position that the defence of abatement was not available against a claim for the value of professional services, but submitted that the law was as stated in Hutchinson. The judge also found this rule difficult to understand, nevertheless, he held that the weight of opinion in the court of appeal cited in Hutchinson made it clear that that is the law which he must apply. The question therefore was whether the contract between Foster Wheeler and Chevron was indeed one for professional services or rather one for work and labour. Chevron was the operator of oil platforms in the Ninian field which were to be modified so that they could receive and process fluids from nearby fields. Foster Wheeler were engaged to design the modifications and to provide support services during the installation of the revised facilities to allow the use of the platforms by third parties. He found that Foster Wheeler were not engaged as consultants in the ordinary sense but as mechanical, electrical and electronic engineering contractors over the border between consultancy and contracting. Accordingly, the contract for the purpose of legal categorisation was a contract for work and labour and thus the defence of abatement was available to Chevron.
CJ-0637
|
|||
|
© Brewer Consulting |
|||
 |
|||