The Gazette 1991

g a z e t t e

a p r i l 1991

by three out of the five.

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".

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",

Lord Diplock stated

that it must be in "clear unequi-

vocal words",

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".

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."

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".

Yet another view

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

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

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."

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:-

James Nash

f.s.s. di

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