The Gazette 1991

a p r i l 1991

g a z e t t e

The majority were unable to find any ambiguity and were satisfied that the contract expressly pre- served the right of set-off. Lord Morris, while agreeing that the Con t r act in Git&6$*Asb preserved that right of set-off, took an entirely different view of Dakvheys; he said: — "The decision óf the Court of appeal in that case turned upon the meaning of the particular words there in question, it cannot guide decisions in the present case. Leave to appeal was refused by the Court of Appeal and a subsequent petition for leave to appeal was dismissed. Had the case come up for review I consider as at present advised, that an appeal ought to have failed." 13 On the face of it this means that the clause in Dawnays which seemed to reserve the right of set- off, in fact excluded it: an idea wh i ch Lord Diplock f ound "astonishing". 14 Yet another view of Dawnays was taken by Lord Reid: stressing that the relevant passage of Lord Denning's judgment could apply equally to employer/contractor agreements, or as in Gilbert-Ash and Dawnays an agreement between main and sub- con t r ac t o r s, he stated t hat Dawnays might well be correct in regard to the former type of contract, but not the latter. In so finding he appeared to ignore the clear language of the clause in Dawnays and a judgment in which the "right conclusion" has no rele- vance to the facts is surely in the same position as one which was wrongly decided. From this welter of conflicting views it is hard to find a ratio. The most one can safely say is that a majority held that a building contract, either between employer and main contractor or between main and sub-contractors does not by its nature exclude a right of set- off; the question is whether the contract itself contains such an exclusion, though even here the majority did not agree on whether the exclusion could be implied or must be explicit. Further, while they had the advantage of dealing with a clause expressly preserving set- off, their intrepretation of more am- biguous clauses caused difficulty

when their speeches were con- sidered by the Irish Courts. John Sisk & Son -v- Lawter Finlay P. in John Sisk stated that the question of exclusion of set-off in a building contract had not pre- viously arisen in an Irish court but claimed, perhaps over optimisti- cally, to have found considerable guidance in Gilbert-Ash ; while recognising that, not being a dispute between employer and main contractor, Gilbert-Ash was not striptly in point, he shared the disapproval of Lord Denning's view in Dawnays, but also criticised Lord Diplock's opinion that set-off must be excluded by "clear unequivocal words". Finlay P., echoing Lord Salmon in Gilbert-Ash, said: — " I believe the true test to be not whether the Common Law right of set off has by the terms of the building contract been unequi- vocally excluded, but rather as to whether all the relevant terms of the building contract are in any particular event inconsistent with the exercise in that event of such a right of set-off." 15 It is hard to quarrel with this statement, whether or not it can be reconciled with all the speeches in Gilbert-Ash. The facts of John Sisk however are in a crucial respect different from those of the English precedents: there is no clause in the R.I.A.I. Contract expressly preserving the right of set-off and Finlay P. therefore had to work out the intention of the parties from clauses which said nothing about the point at issue. In finding that set-off was excluded, he relied on three provisions:- w James Nash f.s.s. di p .

by three out of the five. 9 In the view of the majority, Building Contracts are in no way distinct from other contracts for goods sold or work done; in the words of Lord Salmon: — "When a claim is made for the price of goods sold or delivered or work and labour done, the Defendant is entitled to set-off or set up against the amount claimed any damages which he had suffered as a result of the Plaintiff's breach of contract under which the goods were sold and delivered or the work and labour were done". 10 The majority agreed that the parties to the contract can ex- tinguish the right of set-off by agreement: however, while Lord Salmon stated that the exclusion could be "expressly or by clear implication", 11 Lord Diplock stated that it must be in "clear unequi- vocal words", 12 while Viscount Dilhorne did not elaborate on the "The majority [of the House of Lords] agreed that the parties to the contract can extinguish the right of set-off by agreement. . meaning of "exclusion". Consider- ing first the contract in Dawnayp which provided inter alia: — " T he contractor shall not- withstanding anything in the sub-contract be entitled to deduct from or set-off against any money due from him to the sub-contractor . . . any sum or sums which the sub-contractor is liable to pay to the contractors under this sub-contract". It is very hard to quarrel with the majority view that this clause expressly preserved the right of set- off and that the Court of Appeal had simply ignored the agreement actually made. Turning to the contract in Gilbert-Ash, it provided (inter alia): — "The contractor also reserves the right to deduct from any payments certified as due to the sub-contractor and/or otherwise to recover the amount of any bona fide contra accounts and/ or other claims which he, the contractor, may have against the sub-contractor in connect- ion wi th this or any other contract".

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