Ruttle Plant Hire Ltd v The secretary of state for environment, food and Rural Affairs

MR JUSTICE JACKSON: This judgment is in 18 parts, namely:

Classical swine fever ("CSF") is a highly contagious disease of pigs. It is caused by an enveloped RNA virus which belongs to the genus Pestivirus. The main natural route of infection is oronasal by direct or indirect contact with infected pigs or by feeding of virus-contaminated feed. In areas with a high density of pigs, the virus spreads easily between neighbouring pig holdings. CSF usually causes death within one month. It generates a variety of symptoms. One general symptom is fever.

CSF was first confirmed in Great Britain in 1864. It persisted for many years until it was finally eradicated in 1966. Since then there have been occasional sporadic outbreaks. It is government policy, for good reason, that any outbreaks of CSF should be firmly controlled and suppressed.

The present action concerns an outbreak of CSF which occurred in East Anglia during August 2000. The Ministry of Agriculture, Fisheries and Food ("MAFF") engaged Ruttle Plant Hire Limited ("Ruttle") to provide plant and labour for the purpose of controlling the outbreak.

Ruttle provided plant and labour for that purpose between August 2000 and June 2001. During that period MAFF made payments to Ruttle totalling £4,130,393.67. Ruttle contends that substantial further payments are due, which it quantifies at £5,743,971.70. Ruttle claims payment of that sum from the Department for Environment, Food and Rural Affairs ("DEFRA").

DEFRA is the government department which has replaced MAFF since 8th June 2001. All of MAFF's rights and obligations have been transferred to DEFRA.

DEFRA contends that Ruttle was overpaid for the plant and labour which it provided. Accordingly, DEFRA counterclaims for the amount which was overpaid.

The present trial, which is now drawing to a conclusion, is the trial of preliminary issues. The parties and their advisers believe that with the assistance of this court's decisions on the preliminary issues, they will be able to calculate what further sums are owed to Ruttle or DEFRA, as the case may be, and they will thereby be enabled to finalise the account on the CSF contract.

Ruttle, which is claimant in these proceedings, is a substantial plant hire company based at Chorley in Lancashire. Ruttle has associated companies called Ruttle Plant Limited and Ruttle Contracting Limited. All three companies are wholly or substantially owned by Ruttle Plant Holdings Limited (to which I shall refer as "Holdings"). Members of the Ruttle family own Holdings. I shall refer collectively to Holdings and its subsidiaries companies as "the Ruttle Group".

The Ruttle family also owns another company, which is called Readyplant Limited ("Readyplant"). Readyplant is not part of the Ruttle Group. However, the shareholders and directors of Readyplant are the same as the shareholders and directors of Holdings. When I use the phrase the "Ruttle companies", this is a compendious reference to both the Ruttle Group and Readyplant.

Mr George Henry Ruttle is the managing director of Ruttle. I shall refer to him as "Mr Ruttle". Mr Ruttle has a son who played an active part in the work to control CSF in East Anglia. I shall refer to the son as "Mr G Ruttle".

Mr Michael Carrol is group development director for the Ruttle Group. Mr Seamus O'Connor is a quantity surveyor and is employed as the commercial director of Ruttle.

Let me now turn to MAFF. In August 2000, Mr Alasdair Christie was employed by MAFF as the divisional veterinary officer for Norfolk, Suffolk and Cambridgeshire. Mr Christie was based in Bury St Edmunds. Mr Henry Hurn was employed by MAFF as the senior animal health officer based at MAFF's office in Bury St Edmunds.

At all material times both MAFF and DEFRA have maintained a detailed manual setting out how to deal with any outbreaks of animal diseases which may occur. The full title of this manual is "Veterinary Instruction Procedures Emergency Rules". This is generally abbreviated to "VIPER".

Chapter 3 of VIPER sets out procedures for dealing with foot and mouth disease ("FMD"). Chapter 10 of VIPER sets out procedures for dealing with CSF. These procedures involve three stages. First, all pigs on the relevant farm are slaughtered. Secondly, primary cleansing and disinfection are carried out. Finally, secondary cleansing and disinfection are carried out. The process of secondary cleansing and disinfection is an arduous one. It takes weeks rather than days to accomplish.

Section M of chapter 3 of VIPER is entitled "Employment of labour and hire of plant". This section is stated to apply both to FMD and to CSF.

In the course of their evidence, the witnesses from MAFF/DEFRA referred to the guidance given in the various chapters of VIPER as "the Guidelines". I shall adopt the same terminology.

For many years, a set of model conditions for the hiring of plant has been in use within the construction industry. These conditions have been negotiated between and published by the Contractors' Plant Association ("CPA") and the Federation of Civil Engineering Contractors ("FCEC"). These conditions are referred to as "the CPA conditions". Any reference in this judgment to the CPA conditions is a reference to the version which was current in August 2000.

The FCEC has published and updated from time to time a set of daywork rates. I shall refer to these as "the FCEC rates".

The FCEC rates published in 1990 were entitled "Schedules of Dayworks Carried Out Incidental to Contract Work". That document begins with a set of notes relating to labour materials and plant. The first part of the notes relating to plant reads as follows:

After the notes, the document contains many pages of schedules. These schedules are divided into sections. For example, section 1 is entitled "Access platforms", section 2 is entitled "Asphalt equipment" and so forth. Within each section all the commonly used items of plant are specified and a hire rate is stated for each of those items.

In January 1992 the FCEC published amendments to the FCEC rates of 1990. The effect of these amendments was that all rates for plant hire should be increased by 12.5%.

In 1998 the Civil Engineering Contractors Association ("CECA") was formed. CECA replaced the FCEC. On 1st July 1998 CECA published a set of daywork rates. I shall refer to these as "the CECA rates".

After these introductory remarks I must now turn to the facts of the present case.

In August 2000 an outbreak of CSF occurred in East Anglia. It became the function of the MAFF officials based at Bury St Edmunds in Suffolk to control that outbreak. No local contractor could be found with sufficient resources to deal with cleansing and disinfecting the farms. Accordingly, MAFF contacted Ruttle, a substantial plant hire company, which was based in Chorley and which was MAFF's preferred contractor in Lancashire.

On the morning of 15th August 2000, a meeting took place at MAFF's office in Bury St Edmunds between Mr Carrol of Ruttle and Messrs Christie and Hurn of MAFF.

Either before, during or after that meeting a letter was typed up on MAFF notepaper setting out the terms on which Ruttle would provide labour and plant for MAFF.

That letter reads as follows:

A second letter was also signed by Mr Christie and Mr Carrol on 15th August. This letter was typed up on Ruttle's notepaper. It set out certain additional terms governing third party liability and insurance.

I shall refer to the 15th August letter typed up on MAFF notepaper as "the MAFF letter". I shall refer to the 15th August letter typed up on Ruttle notepaper as "the Ruttle letter". These terms are used solely for ease of reference. They do not imply that a particular party was the author of either letter.

There is a further document which is dated in manuscript 15th August 2000. This document is headed "Classical Swine Fever". It comprises extracts from section M of chapter 3 of VIPER. This section of VIPER is applicable both to FMD and CSF. It sets out procedures for employing labour and hiring plant in order to combat outbreaks of those diseases.

Mr Carrol asserts that he was given the document headed "Classical Swine Fever" at the meeting on 15th August and that it was he who wrote on it the date of 15th August. Mr Christie and Mr Hurn cannot recall handing over the document but do not dispute that they might have done. It is clear from the evidence as a whole that this document was indeed given to Mr Carrol on 15th August. I shall refer to this document as "the CSF document".

The CSF document contains the following passage:

Following the meeting on 15th August, MAFF's staff at Bury St Edmunds sought and obtained head office approval for the agreement which they had reached with Ruttle. In the meantime Ruttle commenced work. Ruttle provided plant and labour on a number of farms in East Anglia. Ruttle's teams carried out the cleansing and disinfecting work which was necessary after the slaughter of pigs on those farms.

On 21st August 2000, Mr O'Connor, Ruttle's commercial director, sent a fax to Mr Hurn of MAFF in the following terms:

The second page of this fax was headed "Plant rates excluding drivers and/or operators". On the left-hand side of this page there is a description of various items of plant. In the middle column of this page there is a rate set out either per hour or per day for each item of plant and on the right-hand side there is a column headed "Reference". The references given are to various sections of the FCEC schedules in order to show how the rate is derived. In one case there is a reference to star rate. That is intended to be a reasonable rate fixed, having regard to other rates set out in the FCEC schedules. In two instances there is reference to pro rata and then an item in FCEC. That is a rate which is put forward by way of extrapolation from the rates shown in the FCEC schedules. I shall refer to the second page of Mr O'Connor's fax dated 21st August 2000 as "the 21st August plant list".

On the 31st August 2000 Mr O'Connor sent a further fax to MAFF. The first page of that fax reads as follows:

The second page of this fax again contains a list of plant types. This includes both the plant types listed previously and some further plant types which had not been mentioned in the earlier fax. In respect of each plant type a rate is shown and again in respect of each rate there is also given a reference to the FCEC schedules, where applicable, and in some instances either a star rate or a pro rata rate is shown. Towards the right-hand side of this schedule there is a column headed "Deduct 35%" and to the right of that there is a column headed "Proposed rate". The entries in the column headed "Proposed rate" are all 65% of the figures shown in the column which is headed "Rate". I shall refer to the second page of Mr O'Connor's fax dated 31st August as "the 31st August plant list".

Also on 31st August Mr O'Connor sent by post to MAFF in Bury St Edmunds Ruttle's first application for payment together with invoices and back-up documents. In respect of labour, Mr O'Connor added a 5% charge for administration. In respect of plant, Mr O'Connor made a 35% deduction from the full rates shown on the 21st August and 31st August plants lists.

MAFF duly paid the sums for which Ruttle had applied. Thereafter work proceeded. Ruttle rendered further invoices on the same basis as before, which MAFF duly paid.

As CSF spread from farm to farm in East Anglia, Ruttle's involvement progressively increased. During October and November Ruttle had an average of about 70 or 80 men working in East Anglia each week. On one day the number even reached 100.

On 16th October 2000, Mr Walsh of MAFF sent the following letter to Mr Carrol of Ruttle:

In view of the speed with which arrangements had been made following the outbreak of CSF, it is perhaps unsurprising that contractual issues arose between the parties. Ruttle made a claim for mid-week overtime which MAFF did not accept. MAFF took the view that the administration charges which they had been paying were inappropriate.

In those circumstances, very sensibly, each party took steps to meet the concerns expressed by the other party pending resolution of the disputes. Ruttle issued credit notes in respect of the administration charges which MAFF did not accept. MAFF made an on-account payment of £500,000 in respect of Ruttle's claim for mid-week overtime.

By December 2000 the outbreak of CSF had been brought under control. This is to the credit of MAFF, Ruttle and certain other contractors, who had all worked long hours under difficult circumstances. One should not lose sight of what the parties have achieved, just because there is now a dispute about money.

Over the Christmas/New Year period, Ruttle's men took a well-deserved holiday. Work stopped between Saturday 23rd December and Sunday 7th January.

The number of men whom Ruttle had working on farms in East Anglia reduced gradually during December, January and February.

On 4th January 2001, Mr O'Connor of Ruttle attended a meeting in Bury St Edmunds with representatives of MAFF in order to discuss payment issues. No note of that meeting survives. The oral evidence about that meeting will be summarised in parts 4 and 5 of this judgment.

On 4th January 2001, following the meeting earlier in the day, Mr O'Connor sent two letters to MAFF. In the first letter of 4th January Mr O'Connor wrote as follows:

In the second letter of 4th January Mr O'Connor wrote as follows to MAFF:

Attached to this letter was a synopsis setting out the history of events from Ruttle's point of view.

On 20th January 2001 Mr Tony Potter, a senior animal health officer employed by MAFF, sent a memo to his colleagues concerning possible anomalies in Ruttle's invoices. Paragraph 7 of that memo reads as follows:

On the 31st January Mr O'Connor wrote to MAFF about payments which were outstanding. He also requested a response to his letter of 4th January concerning administration charges. MAFF never did send a response to that letter. Nevertheless, MAFF continued to review Ruttle's invoices and raised a number queries concerning those invoices.

By the end of February, Ruttle's work in relation to CSF was almost complete. It can be seen from the records that from then on Ruttle had very few men assigned to this project, although work did not end completely until 23rd June 2001.

There was, however, a new development which coincided with the drop-off of CSF work. This was the outbreak of FMD. This outbreak occurred in February 2001 and necessitated work on a massive scale across the country. MAFF once more looked to Ruttle for assistance. Ruttle was engaged to provide labour and plant on numerous farms around the country.

In those circumstances, Ruttle did not have the resources to continue invoicing in respect of CSF work. Accordingly, Ruttle stopped sending invoices to MAFF's office in Bury St Edmunds. The final accounting in respect of CSF was postponed to a later date.

On 4th June 2001, a meeting took place at Manchester Airport Hilton Hotel between representatives of MAFF and Mr Ruttle and Mr Carrol. Both FMD and CSF were discussed during the meeting.

Paragraph 3 of the minutes of that meeting includes the following passage:

Four days after that meeting MAFF ceased to exist and DEFRA was established in its place.

On 25th February 2002 Mr O'Connor wrote to DEFRA (as MAFF had now become) as follows:

DEFRA acknowledged receipt of that letter but never sent any response to it.

In March 2002 Ruttle submitted invoices for the final months of CSF work (which had not previously been invoiced) using plant rates agreed in the FMD contract. DEFRA made no payment in respect of those invoices.

On the 29th and 30th October 2002 Eversheds, who are DEFRA's solicitors, wrote to Ruttle requesting information and documents in support of Ruttle's invoices. Ruttle did not send any substantive response to this letter during 2002 or 2003. It appears that Ruttle's efforts and resources during this period were concentrated on preparing for and then conducting litigation against DEFRA in respect of FMD.

Ruttle's action against DEFRA in respect of FMD was brought in the Technology and Construction Court. Proceedings were issued on 28th January 2003. There was a trial of preliminary issues before His Honour Judge Thornton QC which began on Wednesday 21st April 2004 and ended on Friday 30th April 2004. Whilst the parties were awaiting judgment on the preliminary issues they worked on the DECC by DECC valuation exercise. On 30th September 2004, judgment was handed down in respect of the preliminary issues.

After receiving that judgment, the parties still had much work to do in order to quantify the sums due to Ruttle in the light of the court's decision on the preliminary issues. Also a protocol had to be prepared between the date when judgment was handed down and a directions hearing fixed for mid-November 2004. That protocol would regulate the future conduct of DECC by DECC exercises.

Thus it can be seen that during 2004 both parties were focusing on disputes concerning the FMD account. Nevertheless, the outstanding issues concerning CSF were not ignored.

On 30th January 2004 Eversheds wrote to Ruttle asserting that MAFF had overpaid Ruttle on the CSF contract by £659,325. Accordingly, on behalf of DEFRA, Eversheds intimated a claim for that sum. Eversheds also asked Ruttle to provide the information and documents which had previously been requested in October 2002. Eversheds annexed a schedule of deductions to their letter dated 30th January 2004. The schedule of deductions included the following items:

These three items in Ruttle's invoices had not previously been challenged.

On 20th February 2004, Yates Barnes, who are Ruttle's solicitors, replied to Eversheds letter of 30th January as follows:

On 19th May Yates Barnes wrote to Eversheds stating that there was no prospect of Ruttle making any repayment to DEFRA in respect of CSF. On the contrary, DEFRA was substantially indebted to Ruttle. On 28th May Yates Barnes wrote to Eversheds stating that DEFRA's indebtedness to Ruttle in respect of CSF exceeded £3 million and that they were going to take the opinion of leading counsel on the matter.

In the summer of 2004 Ruttle embarked upon a substantial re-invoicing exercise. Mr O'Connor and his team prepared a fresh set of invoices in respect of all CSF work which had been invoiced up to February 2001. These new invoices charged for plant hire at CECA rates. The new invoices all had the prefix "A" in order to differentiate them from the original invoices issued in respect of the period August 2000 to February 2001. The A invoices were issued to DEFRA in December 2004 and January 2005.

On the 11th February 2005 Yates Barnes sent a detailed letter to Eversheds in respect of the sums due to Ruttle for work on CSF. This letter also constituted Yates Barnes response to Eversheds' letter dated 30th January 2004. On the second page of this letter Yates Barnes made the following proposal to resolve the dispute about overtime:

By letter dated 18th May 2005 Eversheds agreed to resolve the overtime issue on the basis suggested, provided that travelling time for labourers was reduced from two hours to one hour per day. Yates Barnes agreed to that adjustment by a letter dated 26th May 2005.

Thereafter the solicitors continued to correspond, but there were many issues which they were unable to resolve. In those circumstances, in order to recover the outstanding sums due in respect of CSF, Ruttle commenced the present proceedings.

By a claim form issued in the Technology and Construction Court on 26th January 2006, Ruttle claimed against the Secretary of State for the Environment, Food and Rural Affairs £5,743,971.70 as representing the outstanding balance due in respect of the CSF contract. This sum was the difference between the total value of Ruttle's invoices and the total amount paid by MAFF in respect of CSF.

In its particulars of claim served with the claim form, Ruttle asserted that plant hire rates were agreed between the parties in or soon after August 2000. Over the next few weeks Ruttle had second thoughts on this matter. By an amended particulars of claim served on 26th April 2006 Ruttle asserted that no agreement was reached on plant hire rates and that accordingly Ruttle was entitled to be paid a reasonable rate in respect of plant hire.

I will not trace the history of the pleadings in this action, interesting though that exercise would be. Suffice it to say that DEFRA disputes Ruttle's claims on a variety of grounds. DEFRA counterclaims for such sum as this Court may hold to have been overpaid to Ruttle on the CSF contract.

At a case management conference held on 21st March 2006, Mr Justice Ramsey made an order for the trial of preliminary issues to commence on 11th December 2006, with a time estimate of eight days. Thereafter solicitors and counsel on both sides drew up a list of proposed preliminary issues, which are crucial to the dispute between the parties. It is believed that once these issues have been resolved, the parties and their advisers will be able to agree precisely what sum is due to whom in respect of the CSF contract.

Unsurprisingly, some issues have dropped out of the list as matters became agreed. Other issues have been inserted into the list, as their significance became appreciated. For ease of cross-reference, the number of each surviving issue must remain unchanged even if this leads to some untidiness in the numbering sequence.

The final list of questions which the Court is asked to determine as preliminary issues reads as follows:

Pursuant to section 5 of the Late Payment of Commercial Debts (Interest) Act 1998, should any interest be paid on any sums due to the claimant for the period from 30th May 2004 to 11th February 2005 and, if so, how much?"

Some may say that this is a formidable examination paper.

The trial of the preliminary issues commenced last week on Monday, 11th December 2006. Mr Andrew Spink QC and Mr Robert Temmink appear as counsel for Ruttle. Mr Jonathan Acton-Davis QC and Ms Kassie Smith appear as counsel for DEFRA. In the course of the trial Ruttle has called two factual witnesses. DEFRA has called seven factual witnesses and has relied upon the written statements of three other factual witnesses whom Mr Spink does not require to cross-examine. Each party has also called one quantity surveyor as expert witness. The oral evidence was completed by the end of last week. Written closing submissions were delivered by both parties on Monday of this week. Oral closing speeches were delivered on Tuesday of this week, that is the day before yesterday.

That completes my outline of the present proceedings. Before addressing the preliminary issues, I must first summarise the evidence which has been adduced at this trial.

In this part of the judgment I shall summarise the claimant's evidence. In doing so, I shall weave together the gist of each witness' written statement and oral evidence.

Mr Carrol is a civil engineer and the group development director of the Ruttle Group of companies. The Ruttle Group and its associated companies own over 2,500 items of plant and have over 400 regular clients.

The Ruttle Group has provided services to MAFF over the years and Mr Carrol has spoken on health and safety issues at MAFF conferences.

On 11th August 200 Ruttle sent a round robin letter to MAFF setting out terms for the emergency provision of plant and labour over the coming year.

On 14th August 2000 Mr Carrol received a telephone call from Mr Hurn at MAFF's Bury St Edmunds office, asking whether Ruttle could assist with the control and eradication of an outbreak of swine fever.

Mr Carrol immediately started to organise the despatch of equipment requested by MAFF. Later that day he drove to MAFF's Bury St Edmunds office. He took with him a copy of Ruttle's 11th August letter, on which he had made some manuscript additions for the purposes of the anticipated new contract with MAFF. One manuscript addition read "Hire rates for equipment as CPA conditions to be notified". By this he intended that the hire rates should be notified to MAFF, rather than negotiated.

A meeting was arranged for 8.00 a.m. the following morning (15th August) between Mr Carrol on behalf of Ruttle and Mr Christie and other officials on behalf of MAFF. Before the start of this meeting, MAFF had typed up (on MAFF notepaper) a letter drafted by Mr Carrol, which was based upon Ruttle's letter dated 11th August. The letter as typed up by MAFF was dated 15th August 2000 and has been read out in Part 2 of this judgment.

During the meeting on 15th August Mr Carrol's letter typed up on MAFF notepaper was discussed. Also MAFF produced a document headed "Classical Swine Fever" (containing extracts from MAFF'S Manual). Mr Carrol noted the reference in this document to FCEC rates for the hire of plant and knew that those rates would be acceptable to Ruttle. In fact by that time CECA had replaced FCEC, but the two terms were interchangeable. Mr Carrol was not then aware that there was any difference between CECA rates and the most recent FCEC rates.

Everyone at the meeting was anxious to get to work. So they all set off to Old Hall Farm, where the outbreak had begun. Protective measures were taken and MAFF gave instructions about how the work should be done. In essence, the pigs had to be slaughtered; the farm had to be cleansed and disinfected.

A few days after the meeting Mr Carrol reported back to Mr Ruttle that FCEC rates had been agreed, and that the rates were to be notified to MAFF. Mr Carrol added that FCEC was now CECA.

The disease spread rapidly from farm to farm. As soon as an outbreak occurred on a farm, MAFF officials and Mr Carrol visited the farm and discussed the work which was required. Mr Carrol gave appropriate instructions to Ruttle's men who were to work on that farm.

During this period Mr Carrol was extremely busy. He may or may not have seen the fax which Mr O'Connor sent to MAFF on 21st August. In any event, Mr Carrol would not have reacted to that fax. The fax was a notification of rates and it was consistent with the discussion which Mr Carrol had had with MAFF officials at the 15th August meeting.

Ruttle obtained some of their labour through agencies. One such agency was Acer Recruitment ("Acer"). A letter from Acer dated 25th August 2000 sets out the rates which Acer was charging Ruttle.

As work developed, the need for plant and machinery increased rapidly. Sometimes when plant was no longer needed at one farm, it could be moved to another farm. On other occasions plant had to be stored for a period. After discussion with MAFF officials, Mr Carrol rented a field for the storage of plant.

Local plant hire companies were unwilling for their plant to be seen on infected farms. It was important to MAFF that Ruttle's plant was available locally. If that plant went back to Lancashire, there would be an effective turnaround time of several days.

Mr Carrol did not know that on 1st October 2000 Ruttle Plant Hire Ltd disposed of its plant to Holdings and to Readyplant. Mr Carrol always assumed that Ruttle Plant Hire owned the Ruttle plant. But this was not something that he needed to know about.

Ruttle's men generally worked 12 hours per day on Mondays to Saturdays and 11 hours on Sundays. A foreman was appointed on each farm. One of the foreman's tasks was to keep daily record sheets. These sheets recorded the names of the men, the hours that each man worked and the plant which was utilised each day. Mr Carrol ensured that record sheets were properly kept and that these were provided to MAFF.

Ruttle organised accommodation for the men. For the most part they stayed in bed and breakfast accommodation. The landladies provided packed lunches for the men. On some of the farms Ruttle procured canteens where Ruttle's men, MAFF employees and any others involved could take their meal breaks. MAFF requested the provision of those canteens either by formal request sheets or by less formal documents. Sometimes a driver was sent out to purchase refreshments. During the working day, Ruttle's men could not leave the farms where they were working because of bio-security measures.

The men generally took a half-hour lunch break each day. This was required by the Working Rule Agreement, promulgated by the Construction Industry Joint Council. Ruttle tried to comply with this Working Rule Agreement.

There were four working foremen, who had administrative duties. These were G. Ruttle (son of Mr Ruttle, the managing director), B. Bell, K. Garrow and Mr Carrol himself.

On 10th October 2000 Mr Carrol had a meeting with Mr Walsh, a MAFF official. They discussed health and safety issues. MAFF wanted to know when Ruttle would finish. They discussed the fact that the contract between MAFF and Ruttle had been drawn up hurriedly. Mr Walsh mentioned the possibility of amending the terms of the contract, but Mr Carrol made it clear that there was little chance of that.

There was an occasion when Mr Carrol asked Mrs Cooper to agree that MAFF would pay a 5 per cent administration charge. She said that she would speak to her colleagues about this. Mrs Cooper never came back to Mr Carrol about this or agreed to pay such a charge.

Ruttle's work proceeded through the winter. Mr Carrol recalls Ruttle purchasing some of the items listed in paragraph 106 of the defence. Some of these items were purchased on the instructions of MAFF for MAFF'S use or consumption. Some were needed by Ruttle, in order to carry out the work upon which Ruttle was engaged.

MAFF's need for plant decreased significantly in late February and in March 2001. Whenever plant could be released from CSF work, it was cleansed, disinfected and returned to Chorley. At Chorley the plant was serviced and then very often it was utilised by MAFF for FMD work. The decline in CSF work coincided with the outbreak of FMD.

On 4th June 2001 Mr Carrol attended a meeting with MAFF at Manchester Airport Hotel. Paragraph 3(d) of the minutes [which has been read out in Part 2 above] refers to two different schedules for plant costs. Mr Carrol is not sure whether the first schedule referred to is the one faxed on 21st August. The second schedule referred to may well be the one faxed on 31st August, because that schedule made a 35 per cent discount. Ruttles may have been saying that the actual rates were those set out in the middle column of that schedule.

Some time later there was correspondence between solicitors, about which Mr Carrol was taxed in cross-examination. Mr Carrol's dealings with Yates Barnes were limited. He believes that Yates Barnes based most of their correspondence on what was in the files.

Mr Carrol was probably involved in the preparation of the original particulars of claim, but he did not see the final draft of that pleading.

Mr O'Connor is a quantity surveyor by profession and is the commercial director of Ruttle Plant Hire Ltd. He works for the other Ruttle companies as well.

Mr O'Connor was not involved in the CSF contract at the outset. However, he recollects that when MAFF's request came in, it was very much a "hire" contract, expected to last for a week or two and to involve a modest amount of men and plant.

Mr O'Connor did not attend the initial meeting on 15th August 2000. Soon after that meeting, however, Mr Ruttle asked Mr O'Connor to send the plant rates to MAFF. Mr Ruttle may have told Mr O'Connor to go to the FCEC rates.

Mr O'Connor knew that CECA had superseded FCEC, but he assumed that FCEC's last published rates would be the same as the current CECA rates. On 21st August Mr O'Connor faxed a list of plant and rates to MAFF. He gleaned from the timesheets coming in from Bury St Edmunds what plant was being provided. Mr O'Connor then took the plant rates from the FCEC schedules. The FCEC revision of 1992 added 12.5 per cent to the rates set out in the FCEC schedules of 1990. It can be seen from the plant list that in some instances Mr O'Connor took the FCEC 1990 rates, but in other instances he added on 12.5 per cent in accordance with the FCEC 1992 revision. Mr O'Connor cannot now remember why he did this. It was probably a mistake, namely that he added 12.5 per cent in some instances but forgot to do so in other instances.

On 31st August 2000 Mr O'Connor sent another list of rates to MAFF. This included some additional items of plant, which had not featured in the earlier list. These items first appeared on record sheets after 21st August. Mr O'Connor priced these new items by reference to the FCEC rates in the same way as he had priced the previous items. The third column in this schedule shows the full rate for each item. The fifth column, headed "Proposed rate", shows the full rate minus 35 per cent. This 35 per cent deduction was being made for cashflow purposes. In other words, these were the rates which were to be paid at the present time. However, the full rates which Mr O'Connor was notifying to MAFF were those set out in column 3.

It is fairly common practice in the industry to charge an interim rate (discounted by about one third) pending agreement of the final rate. This is in order to generate cashflow.

Thereafter Ruttle invoiced MAFF for plant in accordance with the discounted rates set out in Mr O'Connor's 31st August fax. For a period MAFF paid Ruttle's invoices. The payments made by MAFF are set out in appendix 4 to the particulars of claim. Some, but not all, of these payments were also recorded on BACS sheets.

Ruttle's invoices included charges for canteens on certain farms and for lavatory and washing accommodation on certain farms. Packed lunches provided by the bed and breakfast landladies to the workmen were also invoiced.

Ruttle's invoices also included a 5 per cent administration charge. This was paid initially by MAFF, but subsequently disputed. Mr O'Connor considers that this charge was justified, because the extent and duration of the CSF work required was far greater than what had originally been anticipated (viz six to twelve labourers for two to three weeks). Sourcing of labour was done through agencies, such as Acer. But there was still work involved for Ruttle, such as telephone calls.

On 1st October 2000 plant belonging to Ruttle Plant Hire was transferred to Holdings and/or Readyplant. Mr O'Connor was not involved in the decision-making about this. It can be seen that from 1st October Holdings and Readyplant invoiced Ruttle for the hire of plant. Mr O'Connor does not know how the figures shown on these invoices were sourced.

Movement licences were required before plant could be moved on from infected premises. It was Ruttle's practice to charge for such plant if it was moved on to another farm, but not if the plant was returned to depot. It was also Ruttle's practice to charge for plant which was stored in the field (i.e. the field which Ruttle had rented in East Anglia). Mr O'Connor did not investigate in respect of each item of plant in the field whether that item was required for MAFF's purposes. He relied on the sheets signed by the foremen in this regard. Mr O'Connor's understanding was that if plant was stored in the field, it was still on hire. MAFF did not complain about Ruttle charging for plant in the field. Ruttle did not double-charge for that plant.

During December Mr O'Connor corresponded with Mr Walsh about matters in dispute. The headline issue then was mid-week overtime.

At the meeting on 4th January a number of matters in dispute were discussed, in particular midweek overtime and Ruttle's administration charge. Mr O'Connor agreed to put Ruttle's arguments on these two matters into writing (which he duly did after the meeting). Pending resolution of those two issues, Mr O'Connor agreed to issue credit notes in respect of the administration charge and the midweek overtime charge which had featured in previous invoices.

Plant rates were also raised at the meeting on 4th January. Mr O'Connor does not think that he gave the impression that plant rates were agreed. At the meeting he referred to the fact that plant was still being invoiced on the basis of interim rates. Mr O'Connor did not put this matter into the letters which he wrote after the meeting, because the MAFF people said that they did not have authority to discuss plant rates, but would come back to him on that. They never did so. Mr O'Connor did not write and say that MAFF had not come back to him on this matter. He now appreciates that he should have done so. At about that time, however, the FMD outbreak occurred.

At no time did MAFF write to Ruttle either accepting the rates which Mr O'Connor had notified, or making counter-proposals.

The outbreak of FMD which occurred in February 2001 was on a massive scale. Ruttle was engaged by MAFF to provide labour, plant and materials on numerous farms around the country, which were affected by FMD. In those circumstances Mr O'Connor and his colleagues did not have the time or resources to continue invoicing for CSF work. Fortunately, by this time CSF had been brought under control. By the end of March Ruttle's manning levels for CSF work were significantly reduced. The table of manning levels annexed to Mr O'Connor's statement show that work progressively diminished through the spring of 2001 and ended in June 2001.

In June 2001 contractual terms were agreed for FMD work, with retrospective effect. One of those terms was that plant would be hired to MAFF at CECA rates. Another term was that MAFF would pay an administration charge of 3 per cent in respect of labour. This recognised that Ruttle was organising a large migrant labour force.

On 25th February 2002 Mr O'Connor wrote to MAFF proposing that the FMD contract should be applied to the swine fever account. MAFF never responded to this proposal.

In March 2002 Ruttle submitted invoices for the final months of CSF work (which had not previously been invoiced) at FMD plant rates. This was not a try on. MAFF may have agreed. Mr O'Connor did not know.

By late 2002 Mr O'Connor was heavily involved in preparing for Ruttle's litigation against MAFF/DEFRA in respect of the FMD work. Therefore the CSF dispute was put on one side by both parties.

During 2004 Mr O'Connor and his team prepared a fresh set of invoices in respect of all CSF work which had been invoiced in the period up to February 2001. These new invoices charged for plant at CECA rates, in accordance with the FMD contract. The new invoices all had the prefix A. The preparation of the "A" invoices involved a great deal of intensive work during 2004. The "A" invoices were issued to DEFRA in two batches, the first in December 2004 and the second in January 2005.

Mr O'Connor does not accept that there was culpable delay in dealing with Eversheds' correspondence in 2004. The FMD preliminary issues trial ended in April 2004. While the parties were awaiting the FMD judgment, they were trying to agree valuation issues, starting with the Leeds area. Also it was thought that the FMD judgment would resolve some of the issues in the CSF dispute. The FMD judgment was handed down in draft on 30th September 2004. Ruttle had much work to do arising out of that judgment, both before and after the directions hearing in November 2004.

In 2005 the parties' solicitors resolved the midweek overtime issue by agreeing an overall rate of £17.70 per hour for all labour and foremen. Mr O'Connor considers that this overall rate should be paid irrespective of any meal breaks taken.

Mr O'Connor did not see the original particulars of claim in the present litigation. However, he signed the statements of truth in the amended and re-amended particulars of claim.

More recently Mr O'Connor has read the expert reports. He does not agree with the experts that two additional people would have been sufficient to organise the labour force that had to be accommodated in East Anglia and transported to their various sites. He also puts forward an alternative calculation, in the event that the Court finds that two notional administrators would have been sufficient. The working foremen in East Anglia and the personnel at Ruttle's head office had to work extremely long hours. Mr O'Connor was paid overtime for working at weekends. He does not know if the directors and other staff were paid overtime.

In this part of the judgment I shall summarise the defendant's evidence. In doing so, I shall weave together the gist of each witness' written statement and oral evidence.

Mrs Atwell is an animal health officer employed by DEFRA. During the CSF outbreak she was assigned to Bury St Edmunds and was part of a cleansing and disinfection team. Mrs Atwell was based at Trees Farm for a period of two weeks commencing on 30th September 2000, the day of slaughter.

Mrs Atwell kept a detailed log, recording all events on site. According to her log the men did not take a lunch break on 30th September, but they did take a half-hour lunch break on 1st October. There was not a portacabin or a mess cabin on site. So the men would have taken their break either in the open or in a farm structure.

On the 8th October Mrs Atwell contacted Bob Bell of Ruttle, but she cannot now remember what he did or whether he came to site.

Mr Christie was employed by MAFF/DEFRA as divisional veterinary manager ("DVM") until he retired two years ago.

In August 2000 he was DVM for Norfolk, Suffolk and Cambridgeshire. In that month there was an outbreak of CSF, which began at Old Hall Farm. CSF is a highly contagious disease of pigs. Old Hall Farm supplied other farms. So there was a strong possibility of the disease spreading. Nevertheless Mr Christie did not know at the outset how many farms would be infected. In the event CSF was confirmed on 16 premises in East Anglia. 55 other farms were affected because of dangerous contacts. So there were 71 affected premises in all. The pigs on all 71 farms which were affected had to be slaughtered. A total of 74,793 pigs were slaughtered.

Mr Christie, accompanied by Mr Hurn, attended a meeting with Mr Carrol of Ruttle in Bury St Edmunds on 15th August 2000. A letter sent by Ruttle to MAFF's Preston office dated 11th August 2000 was used as a basis for the discussion. After the meeting a letter dated 15th August 2000 was drawn up, summarising the discussion, which Mr Christie and Mr Carrol both signed.

The document headed "Classical Swine Fever" looks as if it comes from MAFF's Guidelines. These set out how to deal with outbreaks of animal diseases. It is likely that Mr Christie would have wanted Ruttle to have some knowledge of the Guidelines. It might have been logical to give a copy of this document to Mr Carrol. If Mr Christie did so, he would have been saying, in effect, that this was how MAFF did business.

Mr Christie does not now recall the discussion at the 15th August meeting.

There was no discussion about an administration charge at that meeting. If Ruttle had proposed an administration charge, Mr Christie would have asked for justification and would have asked whether this was standard. He would have probably then consulted his head office.

Mr Christie does not remember whether Mr Carrol went to Old Hall Farm after the meeting, but it would have been logical to do so, if Ruttle were instructed to work there.

After the meeting, in accordance with normal practice, Mr Christie sought head office approval for the agreement reached with Ruttle. He sent a fax to Richard Drummond at head office seeking such approval. Mr Drummond responded by telephone on the same day. He said something like "it seems all right to me". Mr Hurn made a note of Mr Drummond's approval on the fax. Mr Christie expects that Mr Drummond would have consulted the Guidelines.

The 15th August document which Mr Christie and Mr Carrol signed includes the words "Hire rates for equipment as CPA conditions to be notified". Mr Christie believed that the CPA conditions were conditions for agricultural work. He expected that Ruttle's hire rates would be "notified" by means of future invoices. He believed that the rates would be in accordance with national agreements. That would be acceptable to MAFF.

Mr Christie would not have regarded it as satisfactory if Mr Carrol had said that certain plant not owned by Ruttle would be charged at unknown or arbitrary rates. Mr Christie would expect consistency in respect of rates.

If the rates "notified" by Ruttle after 15th August were unsatisfactory, then Mr Christie believed that it would be open to MAFF to revert to Ruttle and say that their rates were not appropriate.

Mr Christie has no recollection of seeing the plant list with rates faxed to MAFF on 21st August. If he had seen it, however, he would not have been surprised, since Ruttle had said that they would notify the plant hire rates.

Mr Christie does not remember seeing the plant list with rates faxed on 31st August.

Mr Hurn is now retired and is a casual animal health officer. He is not a vet. In August 2000 he was the senior animal health officer at Bury St Edmunds. Mr Hurn reported to Mr Christie.

CSF broke out in August 2000. MAFF had to respond following the procedures set out in chapter 10 of the Guidelines. This chapter set out the procedures for cleansing and disinfecting to be carried out, following slaughter. Mr Hurn was broadly familiar with the procedures, having dealt with an outbreak of FMD on the Isle of Wight in 1981.

MAFF faced significant difficulties in locating a suitable contractor to carry out the necessary cleansing and disinfecting work on the infected farms. Another difficulty was that in the early stages no-one had any idea what the extent or duration of the outbreak might be.

Mr Hurn had met Mr Carrol of Ruttle at a MAFF health and safety conference, where Mr Carrol had given a talk. Mr Hurn also knew that MAFF's Preston office had used Ruttle for cleansing and disinfection work. On 14th August Mr Hurn (with the help of his colleague in Preston) contacted Mr Carrol and sought Ruttle's assistance in dealing with the outbreak. Mr Carrol agreed to come to Bury St Edmunds that day, ready for a meeting on 15th August.

On 15th August 2000 Mr Hurn and Mr Christie had a meeting with Mr Carrol. They used a letter from Ruttle to MAFF's Preston branch as a basis for discussion. The document headed "Classical Swine Fever" appears to comprise extracts from MAFF's Guidelines. Mr Hurn does not recall giving a copy of this document to Mr Carrol at the meeting, but he does not dispute that he may have done. This document contains reference to the FCEC schedules. That meant nothing to Mr Hurn. However, he does remember Mr Carrol saying that the plant rates would be standard industry rates; that these were based on a civil engineers group list and that Ruttle was a member of the relevant group. Mr Ruttle said that he would provide a list of plant rates. Mr Hurn thought that these were likely to be acceptable.

Agreement was reached on Ruttle's terms of engagement. (All that was left was the pounds, shillings and pence for the plant hire rates.) The agreement was typed up on MAFF headed notepaper and signed by Mr Christie and Mr Carrol.

Mr Carrol did not suggest during the meeting that there should be an administration charge. If such matters had been raised, they would have been referred to head office. Head office would no doubt have had regard to the Guidelines.

Mr Hurn does not recall Mr Carrol going to Old Hall Farm after the meeting. However, it would be logical for Mr Carrol to go to any farm where Ruttle was being asked to work.

The agreement signed on 15th August was faxed to Richard Drummond at head office for approval. Mr Drummond gave his approval by telephone to Mr Christie and Mr Hurn made a note of that on the fax.

Mr Hurn expected that following the meeting MAFF would be notified by Ruttle of the most up to date plant rates. If those rates turned out to be unacceptable, there would have to be discussion with Ruttle. The agreement reached on 15th August did not give Mr Carrol carte blanche to notify any rates of his choosing, so that they would automatically be binding upon MAFF.

Mr O'Connor's fax of 21st August, sending plant rates to MAFF for "consideration and approval", was in line with the discussion on 15th August. Mr Hurn does not recall anyone from MAFF telling Ruttle that those rates were approved. Mr Hurn does not recall sending the rates to Mr Drummond for approval.

Looking at those rates, Mr Hurn would not know if they were appropriate. It would have been sensible for someone with experience to look at the rates. Mr Hurn cannot remember if that happened. Mr Hurn could have gone back to Ruttle, if he thought that the plant hire rates were unreasonable. He did not do so.

For Mr Hurn contractual negotiations had a lesser priority. Mr Hurn, although based in his office, was heavily involved with organising the work on the ground. It is unlikely that Mr Hurn would have paid much attention to the list of plant rates, since Mr Carrol had previously indicated that these were standard industry rates. Mr Hurn continued to call off plant after the 21st August 2000.

Nevertheless Mr Hurn does recall comparing the 21st August plant list with the rates quoted by BQP, another contractor. BQP's rates were very similar to those quoted by Ruttle. From these two documents Mr Hurn prepared a composite list of rates. That composite list (now lost) was used as the basis of payment for other contractors.

Mr Hurn does not recall ever seeing Mr O'Connor's fax of 31st August enclosing another plant list with rates. This fax seems to indicate that plant rates were not agreed, but this fax was never drawn to Mr Hurn's attention. Mr Hurn was not aware that Ruttle's invoices were based on this list.

Mr Hurn visited a few farms on which Ruttle were working and he was aware of the general conditions on site. It was a very wet winter. It may be correct that in the early days there were no mess cabins on site, but these were brought in later. Where farms did not provide toilet facilities, portaloos were brought on site as soon as they could be organised.

Mr Hurn had a fair amount of contact both with Mr Ruttle and Mr Bell. Mr Bell spent a lot of time on the road, visiting sites. Mr Hurn does not know what Mr Bell did on those sites.

Mr Hurn recalls that Ruttle plant was stored in a field. That was happening at MAFF's request. The alternative was that plant went back to Lancashire. If plant was signed off and sent to Lancashire, it would have taken a long while to get that plant back to East Anglia. With reference to paragraph 7 of Mr Potter's memo dated 20th January 2001, Mr Hurn is not aware of any occasion when Ruttle charged for such plant twice (i.e. on farm and in the field).

In relation to paragraph 106 of the defence, Mr Hurn considers that MAFF should only pay for items that were the subject of a job request form.

Mr Anderson is a higher executive officer employed by DEFRA, based in Bury St Edmunds.

Mr Anderson was on annual leave at the time of the CSF outbreak. He returned on 20th August 2000 and was asked to run the accommodation aspects of dealing with CSF.

In early October Mr Anderson was asked to take responsibility for the finance department, which had been set up to deal with the CSF outbreak. Both the 21st August plant list and the 31st August plant list were on file. However, it was the later document that Mr Anderson's department was working to. Invoices were coming in from Ruttle at the rates discounted by 35 per cent shown on the right had side of that document. Mr Anderson assumed that these were the agreed rates and that a discount of 35 per cent had been agreed with Ruttle. Accordingly, Ruttle's invoices were validated against this list of discounted rates. If an item of plant did not appear on the list, Mr Anderson's team looked for a similar item or, failing that, asked for local judgment.

Mr Anderson noted that subsistence was charged on Ruttle's invoices. He thought that this was part of the agreement.

Mr Anderson does not recall ever seeing the fax cover sheet which had accompanied the 31st August plant list. He was not aware that Ruttle's invoices were being put forward on an interim basis.

Mr Anderson never discussed plant rates with Mr Hurn. Mr Anderson never saw invoices rendered by Ruttle before October 2000.

At a later date Mr de Kock, an accountant, was reviewing both the CSF and the FMD expenditure. Mr Anderson told Mr de Kock that the discounted rates in the 31st August plant list were the rates being used. Mr de Kock made a manuscript note on the document "confirmed by Alec Anderson -- Edmund St Bury that these are the rates being used".

An issue was raised about Ruttle's charge for administration. Mr Anderson discovered that on a number of occasions this charge had been made by Ruttle and paid by MAFF. Mr Anderson asked his team to request credit notes in respect of these payments. Ruttle duly provided such credit notes.

In and after March 2001 Mr Anderson and others at MAFF undertook a review of Ruttle's account. They were unaware that the 35 per cent discount from invoices was payable to Ruttle, and would have been very surprised to learn this.

The letters which Mr Anderson wrote during this period are in the bundle. He ceased to be involved in dealing with Ruttle's account in March 2002.

Mr Walsh is employed by DEFRA. In September 2000 he was a senior executive officer employed by MAFF. Between 24th September 2000 and end February 2001 Mr Walsh was based at Bury St Edmunds. He was in charge of finance, personnel, accommodation and general administration.

Mr Walsh was not involved in the original negotiations with Ruttle.

After 24th September Mr Walsh dealt with Ruttle in relation to invoicing. He managed the review of Ruttle's invoices and the cross-checking of them against underlying documents.

Mr Walsh remembers seeing Ruttle's 21st August plant list on file. He does not recall seeing the 31st August plant list or the fax cover sheet of that date. However, Mr Walsh does not dispute Mr Anderson's evidence that everyone was working to the 31st August plant list. Mr Walsh was working at a more senior level.

Mr Walsh attended a meeting with Mr Carrol on 10th October 2000. Mr Walsh expressed his concerns that the agreement between MAFF and Ruttle had been hurriedly drawn up. Mr Carrol indicated that there was little prospect of the terms being amended. Mr Carrol indicated that Ruttle was working to standard industry rates.

Mr Walsh does not have a strong recollection about the plant which Ruttle stored in the field. He does not recall any instances of Ruttle double charging in respect of that (i.e. charging for the same plant on farm and on field).

Mr Walsh had a number of concerns about Ruttle's invoices, in particular mid-week overtime. MAFF made an "on account" payment of £500,000 to Ruttle pending resolution of this issue.

Mr Walsh had a meeting with Mr O'Connor on 4th January 2001. They discussed mid-week overtime. There was some discussion about plant rates at the meeting. Mr Walsh had seen the list of plant rates [i.e. the 21st August list] and assumed that these were agreed. However, one of Mr Walsh's colleagues might have said that they would come back to Ruttle about plant rates.

Prior to 4th January 2001 Mr Walsh had told Norma Cooper to reject Ruttle's request to be paid an administration charge. On 4th January, after the meeting, Mr O'Connor sent a letter to Mr Walsh setting out Ruttle's case for a 5 per cent administration charge. Mr Walsh never responded to this letter, despite receiving a subsequent chasing letter from Mr O'Connor. Mr Walsh took the view that the payments being made to Ruttle were sufficient.

Mr O'Connor never said that Ruttle had taken on additional staff to deal with CSF administration. Nor was any evidence of that ever provided to Mr Walsh.

Mr Walsh's correspondence of 2001 and 2002 can be seen in the bundle. On the 5th March 2002 Mr Walsh sent a letter to Ruttle stating that their letter of 25th February 2002 was receiving attention. Mr Walsh did not in fact give that letter attention or discuss it with his colleagues.

In relation to paragraph 106 of the defence, Mr Walsh accepts that if MAFF instructed Ruttle to buy an item, then that must be paid for. The issue is whether such instructions were given.

Mr Williams is a senior animal health officer employed by DEFRA, formerly MAFF. He was posted to Bury St Edmunds from 4th September 2000 to 2nd February 2001.

The initial slaughter and disinfection was the most urgent matter on any farm. Secondary cleansing and disinfection starts after that. This process took between two weeks and several weeks.

Mr Williams oversaw the secondary cleansing and disinfecting work on about eight farms at any one time. He had colleagues who were overseeing work on other farms in a similar way. Ruttle were the contractors on approximately 75 per cent of the farms which Mr Williams oversaw.

This was a time of pretty intensive activity. MAFF did not know when the next farm would come up. There was a burst of activity, whenever that happened.

There was uncertainty and a lot of pressure for a period of about two months.

Mr Williams had a lot of contact with Mr Carrol and Mr Bell. They were initially based in MAFF's main building, but subsequently had their offices in a portacabin nearby. Mr Carrol spent a lot of time out visiting sites during the initial period. Later on he was either in the office or travelling to Preston. He did valuable work. Mr Bell visited sites, although most of his time was spent in the office.

Mr Carrol and Mr Bell organised labour and plant, and generally made sure that things ran smoothly. There was good teamwork between Ruttle and MAFF.

Ruttle's assistance was particularly valuable on Friends Farm, where there were a number of issues with the farmer.

There were issues on other farms as well. In respect of each farm, Mr Williams discussed matters of plant and labour with Mr Bell. Mr Bell was Mr Williams' point of contact. But there were other more specific site matters (cleansing procedures et cetera) which Mr Williams discussed with the foremen on individual farms.

Portacabins were provided on sites for health and safety reasons. These were where workmen and staff could take meal breaks.

Mr Williams was aware that some of Ruttle's plant was hired in, because it did not have Ruttle's logo on it. It appeared to Mr Williams that approximately half of the plant did not bear Ruttle's logo. But he did not know whether that plant had been bought by Ruttle. He recalls that Ruttle hired in some pressure washers from a firm in Norwich.

Mr Williams recalls occasions when Ruttle's plant was left on farms longer than necessary. He instructed Ruttle to remove that plant when it came to his attention. He does not know whether such plant went to the field or back to Chorley.

Mr Potter is a senior executive officer employed by DEFRA, formerly MAFF. At the time of the CSF outbreak he was a senior animal health officer. He was sent to Bury St Edmunds in late October 2000, in order to manage the cleansing and disinfecting process at farm sites.

Secondary cleansing and disinfection can start 24 hours after primary disinfection. Indeed secondary cleansing and disinfection ought to start soon after primary cleansing, but this was not always achieved.

By the time Mr Potter arrived, there were no further outbreaks of CSF. There were staff working on about 70 farm premises. There was not much movement of labour between farms where work was progressing. But when work was finished on a farm, the men were either moved to another farm or demobilised and sent back.

On 15th December Mr Potter wrote to Ruttle to thank them for their co-operation on Hill Farm. This was a farm where Mr Potter had changed the method of operation.

When MAFF hired plant from farmers, they only paid for it while it was being used. The arrangement with Ruttle was different, although Mr Anderson did not know the terms of the contract between MAFF and Ruttle.

Mr Anderson was aware that Ruttle's plant was being stored on a field for MAFF's use. This field was part of Hill Farm and Ruttle rented it. In paragraph 7 of his memo dated 20th January Mr Potter expressed concern that MAFF should not pay for plant in the field twice over.

On occasions Mr Potter saw plant standing idle on farms and he told the foremen to remove it. For example, on 30th January 2001 he signed a request form requiring the removal of two bowsers from Watchhouse Farm. These two bowsers could have been removed earlier (if appropriate measures had been taken to deal with the dirty water in them), but Mr Potter does not suggest that there was any earlier request form requiring this. It was Mr Potters' belief that those two bowsers would be taken off hire altogether (i.e. go to Chorley, not to the field), but he did not specify this in the request form.

Mr Potter does not know what happened to individual pieces of plant after they left the site. He does not know what discussions Ruttle had with other MAFF officials. Mr Potter's concern was with getting the job done, not with charging arrangements.

Mr Potter also had concerns about delays in the removal of skips from farms. He was not aware that there was a single one off charge for skips until such time as they were removed.

In relation to paragraph 106 of the defence, Mr Potter expected to pay for electrical work carried out on behalf of MAFF, but not for electrical work which was carried out for Ruttle. Mr Potter does not know what the terms of the contract between MAFF and Ruttle were in this regard.

Mr Baines is a senior animal health officer employed by DEFRA, formerly MAFF. In August 2000 he was based in Preston.

Ruttle was MAFF's preferred contractor for the Lancashire region. Mr Baines knew Mr Carrol. On 23rd November 1999 Mr Carrol spoke at a MAFF conference in Southport. Mr Carrol's topic was health and safety on infected premises. Mr Hurn from Bury St Edmunds attended the conference and met Mr Carrol.

Following the CSF outbreak in East Anglia in August 2000 Mr Hurn contacted Mr Baines. Mr Baines put Mr Hurn in touch with Mr Carrol.

Ms Bennett is a partner in Eversheds and has conduct of this action on behalf of DEFRA. She produces the correspondence referred to in the particulars of claim. It was her aim in that correspondence to set out DEFRA's case.

Mr Clifford is an animal health officer employed by DEFRA, formerly MAFF. In August 2000 he was based in Norwich.

Following the CSF outbreak, Mr Clifford attended the slaughter at the first six or seven farms. Following that Mr Clifford supervised the cleansing and disinfecting process undertaken by Ruttle at several farms.

Ruttle's men took three meal breaks during the day: one for breakfast, one for lunch and one in the afternoon. These breaks were never protracted. If Mr Clifford felt that the gang should start work again, Ruttle's workers were never reluctant to do so.

The claimant's expert witness is Mr Keith Elliott, who is a senior associate director of Trett Consulting. The defendant's expert witness is Mr Richard Walmsley, who is a director of Gardiner & Theobald Fairway. Both experts are chartered quantity surveyors of long experience and with impressive curricula vitae. I shall refer to them collectively as "the experts".

The experts were asked by their respective instructing solicitors to consider four of the preliminary issues, namely numbers 2, 3, 8 and 10. The experts have helpfully set out their views in a single joint statement, which I shall refer to as "the report". The report records matters on which the experts are agreed and it also records their respective views where they diverge.

Both experts have approached their task in a responsible and professional manner. They have both made concessions, where they deemed it appropriate, even though such concessions were not to their clients' liking. Their report is a model of its kind and I commend both experts.

Both experts have attended for cross-examination and have duly taken their medicine. Neither was inclined to make further concessions beyond those set out in the report.

I shall now briefly summarise their evidence, weaving together the gist of the report and their respective oral evidence.

The experts are agreed that it is industry custom and practice for both labour and working foremen to take a meal break of at least 30 minutes. This is in accordance with rule WR 3.1 of the Working Rule Agreement. It is also industry custom and practice that no charge is made for the period of this meal break.

Mr Elliott makes the further point that it would be open to the parties expressly to agree the contrary. In other words the parties to any given contract may agree that payment will be made for the period of the meal break.

The experts are agreed that an administration charge expressed as a percentage is inappropriate, subject to any agreement made between the parties. They consider that two administrators, each at a salary of £20,000, would be required to organise Ruttle's labour force in East Anglia. After allowing for national insurance, pensions and medical benefits, this amounts to a total figure of £47,200. This figure could be converted to a percentage, but the percentage will vary according to what the final figure for labour turns out to be.

Both experts add their own comments on the allowance for overheads which is built into labour rates.

Mr Elliott comments that he does not know what allowance is included for head office overheads in the labour rate agreed between Ruttle and MAFF. Within the construction industry it is not unusual for head office overheads to fall within the range 4 per cent to 8 per cent. If the labour rate in this case did not contain a sufficient allowance for overheads, then a 3 per cent uplift may be reasonable.

Mr Elliott does not know whether Ruttle in fact took on additional staff or paid extra wages, in order to deal with the CSF administration. However, he does not regard that fact as relevant. Any allowance made for administration in the contract should be a reasonable figure for the commercial risk, not the actual cost as subsequently ascertained.

Mr Walmsley comments that administration costs would normally be recovered through the hourly rate for labour, rather than as a separate charge. Accordingly the substantial increase in labour required for the CSF work should not result in the necessity for a separate charge to recoup administration costs.

The figure of £47,200, which he and Mr Elliott calculated, assumes that all administration was done at head office in Chorley.

If the labour rate in this contract did not allow for the administration done in East Anglia, then it would be reasonable for Ruttle to recover those costs by some means. Mr Walmsley does not know to what extent, if at all, those costs were built into Ruttle's labour rate. However, looking at (a) the rates for labour which Acer was charging Ruttle and (b) the rate of £17.70 per hour agreed between DEFRA and Ruttle, Mr Walmsley thinks it more than likely that there is sufficient allowance for administration costs.

The experts have considered what would be reasonable rates, in the event that the Court finds no rates to have been agreed between the parties. They are agreed that a reasonable starting point would be the rates set out in the CECA Schedules of Dayworks Carried Out Incidental to Contract Work, dated 1st July 1998. They differ in their views as to how those schedules should be applied.

Mr Elliott considers that CECA rates without any adjustment constitute reasonable rates in the context of this case. He points out that CECA rates are substantially lower than the former FCEC rates, once those rates are adjusted for inflation. Mr Elliott also regards it as relevant that the parties agreed to use CECA rates for the FMD contract.

Mr Elliott does not consider that CECA rates should be discounted and he thinks it illogical to do so after the end of the first month. He points out that Ruttle was instructed to deal with an emergency and that the full extent of the work required was not known until later.

Mr Walmsley considers that CECA rates would be reasonable for the first month, but thereafter 65 per cent of CECA rates would be appropriate. His reasoning is that daywork rates are higher than the normal rates which are applicable when there is continuity of working. After the first month of the CSF contract there was continuity of working and a discount of 35 per cent would be appropriate to reflect that.

Mr Walmsley regards CECA rates as appropriate for emergency works and a discounted rate (by 35 per cent) as appropriate for continuous works. Mr Walmsley bases this opinion on his experience of negotiating contracts and on his knowledge of plant hire costs from external hirers.

Mr Walmsley's knowledge of the circumstances of this case is derived from reading (a) the pleadings and (b) the transcript of the oral evidence given Mr Carrol and Mr O'Connor on the first two days of trial. He agrees that the situation on the CSF contract was not static. If men were moved from one farm to another, that was like beginning a new job. Nevertheless this does not affect his view that CECA rates discounted by 35 per cent would be appropriate after the first month.

The experts agree that the custom and practice of the industry is as follows:

Mr Walmsley additionally comments that contractors' sites and offices are normally closed for around two weeks over the Christmas/ New Year holiday. During the CSF contract the holiday period would have run from Saturday 23rd December to Sunday 7th January.

Mr Walmsley also comments that if plant was on hire but not working over the holiday period, then (subject to any specific conditions) it would normally be charged at standing time/idle time rates. This takes into account the reduction in depreciation owing to the fact that the plant is not working. A reduction of 15 per cent to 20 per cent from the full rate would be normal. Such a reduction is made if the parties so agree.

In relation to the last point, Mr Elliott comments that whether a reduced rate is charged over the holiday period depends upon what the parties agree. What is chargeable depends upon the terms of the contract. The CPA conditions do not give guidance in this regard.

That concludes my summary of the evidence which has been called at trial. Bearing in mind both the factual evidence and the expert evidence, I must now address the preliminary issues.

Issue 2 relates to payment for meal breaks. The first question to consider is whether Ruttle's men in fact took meal breaks during the working day. On this issue, relevant evidence was given by Mr Carrol, Mrs Atwell, Mr Williams and Mr Clifford. I have summarised that evidence in parts 4 and 5 of this judgment.

On the basis of that evidence, I am quite satisfied, and I find as a fact, that Ruttle's labour force at the various farms took one half-hour meal break each day. The provision of such a meal break was required by paragraph 3.1.1 of the Working Rule Agreement published by the Construction Industry Joint Counsel as revised on 26th June 2000. It was the practice of Ruttle to comply with the Working Rule Agreement and I have no doubt that they did so in this regard.

The next question to consider is whether it was expressly agreed that MAFF would pay Ruttle for those half-hour meal breaks. The express term relied upon by Ruttle is the following provision in the MAFF letter:

Both counsel agreed in the course of opening speeches that, in the context of this contract, the word "depot" in the chargeable time clause must mean or include the lodgings where the men were staying.

Mr Spink for Ruttle contends that the effect of the chargeable time clause is that the agreed rate is payable for the entire period between the moment when the men left their lodgings and the moment when they returned to their lodgings. In other words, MAFF agreed to pay for both travelling time and meal breaks.

Mr Spink contends that the agreement reached between solicitors in correspondence during 2005 modified the original agreement in respect of travel time but not in respect of meal breaks.

Mr Acton-Davis for DEFRA contends that the chargeable time clause bites only on travelling time. It means that time spent travelling to and from site will be paid. It does not mean that the whole time spent on site will be paid for.

I have to construe the chargeable time clause having regard to the context in which it appears and all the surrounding circumstances. Having carried out this exercise, I conclude that the interpretation for which Mr Spink contends is correct. I reach this conclusion for three reasons:

Let me now consider the effect of the expert evidence. This establishes the custom and practice of the industry that the daily meal break is unpaid. It may therefore be that, in the absence of any express term, possibly there would be an implied term that meal breaks are unpaid (but see the authorities discussed in Part 14 below). Nevertheless, as Mr Elliot points out, it is always open to the parties to make a different contract. In the present case, the parties expressly agreed that meal breaks would be paid for. That displaces any implied term to the contrary effect.

I am fortified in the conclusions set out above by the fact that at the relevant time no one disputed that meal breaks should be paid for. During 2000 and 2001 MAFF paid without demur a series of invoices which made no deduction in respect of meal breaks.

Let me now draw the threads together. For the reasons set out above, my answer to the question posed by issue 2 is no.

Issue 3 raises the question whether there is an implied term in the contract to the effect that Ruttle is entitled to be paid an administration charge of 3% on labour charges.

Ruttle does not contend that the contract contained such an implied term at the outset. It is Ruttle's case that the implied term came into being as a result of an implied variation of the contract as the scale of CSF works increased.

The principal facts which Mr Spink relies upon as giving rise to the alleged implied variation may be summarised as follows:

On the basis of those facts and the surrounding circumstances Mr Spink contends that the implied variation arose (a) in order to give efficacy to the contract and (b) as a matter of obvious inference. Mr Spink relies upon paragraphs 13-005 to 13-007 of Chitty on Contracts (29th edition 2004) and the authorities there cited.

I turn now to the principal facts upon which Mr Spink relies in support of the implied variation. As to the first fact, there was no basis upon which Mr Carrol could reasonably conclude that Ruttle's work would be limited to two to three weeks and involve only six to twelve labourers. The extent to which CSF would spread and the amount of work which would be necessary were unknown. Ruttle as experienced contractors for MAFF would, or at least should, have appreciated this.

As to the second fact, neither Mr Carrol nor Mr O'Connor gave any evidence about the make-up of Ruttle's labour rates. In the absence of such evidence, I am not prepared to make the finding of fact which is sought. The expert evidence, upon which Mr Spink relies, is only of limited utility because the experts do not know how the labour rates were made up. Nevertheless, insofar as that evidence is relevant, it gives little assistance to Ruttle. In Mr Walmsley's view it is more than likely that the labour rates contained sufficient allowance for administration costs.

The third and fourth principal facts relied upon by Mr Spink have been proved. However, it should be noted that the FMD contract was very different from the CSF contract. Under the FMD contract, Ruttle was not concentrating its efforts in one region. Instead, Ruttle was providing labour and plant at many locations across England.

In my judgment, the facts which have been established in this case do not provide the foundation for the implied term or the implied variation for which Mr Spink contends. Such a term was not necessary to give efficacy to the contract. It was not an obvious inference from the agreement or from later events that such a term should be implied.

When Ruttle sought to impose an administration charge, MAFF objected and Ruttle duly issued credit notes to offset that charge. Ruttle's subsequent requests for payment of an administration charge fell on deaf ears. Staughton LJ observed in The "Gudermes" [1993] 1 Lloyd's Law Reports, 311 at 323, that the Court does not imply a term which one party has refused to accept. That principle is applicable in the present case.

Let me now draw the threads together. For the reasons set out above, my answer to the question posed by issue 3 is no.

Issue 3a raises the question whether the work described in paragraphs 49 to 53 of Mr Carrol's witness statement could properly be described as tasks carried out by working foremen and, if not, whether the value of that work is recoverable elsewhere.

The work undertaken by Mr G Ruttle, Mr Garrow, Mr Bell and Mr Carrol is described in paragraphs 49 to 53 of Mr Carrol's statement. Ruttle contends that these men were working foremen. Accordingly, DEFRA is liable to pay for their time pursuant to the provision in the MAFF letter that "foreperson (working)" should be paid at the agreed hourly rate.

DEFRA originally disputed that any of those four men was a working foreman. Accordingly DEFRA disputed any liability to pay for their time. DEFRA now accepts that Mr G Ruttle was a working foreman. Accordingly his time must be paid for at the agreed rate. However, the position of the other three men remains in issue.

The work undertaken by Mr Garrow is described in paragraph 50 of Mr Carrol's witness statement. This work was office-based. It consisted primarily of organising the plant which Ruttle provided and of maintaining the plant records.

The work undertaken by Mr Bell consisted of liaising with MAFF and responding to requests for labour, plant and materials. Mr Bell made many site visits and also assisted Mr Garrow in organising accommodation for the men. A further description of what Mr Bell did on his site visits has been given by Mr Williams, as summarised in part 5 above.

Mr Carrol's own work is summarised in paragraph 53 of his witness statement. He too was office-based, but spent much time visiting sites. He liaised with MAFF and organised the provision of plant and labour which they required. It was generally Mr Carrol who made the initial visit to a farm, after CSF had been diagnosed on that farm. Mr Williams in his oral evidence confirmed the valuable work which Mr Carrol did in this regard.

In my view, all three men did much valuable work, both for the benefit of MAFF and for the benefit of their employers. Nevertheless, their role was managerial. None of them was a working foreman or a working foreperson. The phrase "foreperson (working)", which is used in the agreement between MAFF and Ruttle, refers to the foreman who was appointed on each of the farms to supervise the work on that farm and to assist in carrying it out. The role of the working foreman was alluded to by Mr Williams in the course of his oral evidence.

Let me now draw the threads together. For the reasons set out above, my decision on issue 3a is as follows: Mr G Ruttle was a working foreman and his work must be paid for at the agreed rate of £17.70 per hour. Mr Garrow, Mr Bell and Mr Carrol were not working foremen. Furthermore, there is no other specific provision under which the cost of their work was recoverable. The cost of their work must therefore be borne by Ruttle as part of its overheads.

Issue 4 raises the question whether plant hire rates were agreed between the parties. Mr Acton-Davis contends that the rates were agreed. Mr Spink contends that they were not agreed. Both counsel have advanced careful and detailed analyses of the factual evidence in support of their rival contentions.

In my view, the correct analysis of the factual evidence is as follows. At the meeting on 15th August 2000 agreement was reached in respect of labour rates as recorded in the MAFF letter. Further agreements were reached as recorded in the Ruttle letter. No agreement, however, was reached in respect of specific hire rates. That would not have been practicable in view of the variety of plant to be utilised. Nevertheless, the parties agreed in principle that FCEC rates would be charged. I make this finding of fact on the basis of three pieces of evidence:

In the course of the meeting the parties also agreed that Ruttle would notify MAFF of the precise rates to be charged for the various categories of plant. The crucial sentence in the MAFF letter reads as follows:

This sentence meant, and was understood to mean, that the rates to be notified would be the contractual rates unless MAFF raised any objection within a reasonable time after notification. Neither party expected any objection to be raised because those rates would be derived from the FCEC schedules.

On 21st August Mr O'Connor of Ruttle faxed a list of plant rates to MAFF. All of those rates were derived from the FCEC schedules. Where items of plant were not specified by FCEC, Mr O'Connor derived a star rate or a pro rata rate by extrapolation from the FCEC schedules. Although Mr O'Connor derived every rate from the FCEC schedules, in some instances by mistake he forgot to add the 12.5% uplift specified by the FCEC in January 1992. That mistake, which affected six items of plant, does not detract from the fact that Mr O'Connor was notifying FCEC rates.

After receiving the 21st August plant list, Mr Hurn of MAFF compared it with the rates submitted by another contractor, BQP. Mr Hurn noted that the rates were very similar. He therefore concluded that those rates were in accordance with standard industry practice and were acceptable. In those circumstances Mr Hurn did not find it necessary to seek approval of those rates from anyone more senior. Neither Mr Hurn nor anyone else at MAFF indicated any objection to those rates either within a reasonable time or at all. Instead, MAFF continued to use plant supplied by Ruttle and to call off further plant as and when they needed it.

In those circumstances the rates notified by Ruttle on 21st August became the agreed plant hire rates.

On 31st August Mr O'Connor sent another plant list to MAFF. This plant list contained the same 15 categories of plant which had appeared in the first list. It also contained 13 new categories of plant. Mr O'Connor added those new categories of plant, because he had learned since 21st August that MAFF was hiring them. In the middle column of this plant list Mr O'Connor set out the full hire rates for each item of plant, derived from the FCEC schedules in the same way as before. On the right-hand side of the schedule Mr O'Connor set out the hire rates less a discount of 35%. The explanation for the discounted plant rate was given in Mr O'Connor's covering fax. These were interim figures pending agreement of the plant rates.

Over the next few weeks there was no further discussion about plant rates. MAFF did not indicate that the full rates notified in the 21st August plant list or the 31st August plant list were either agreed or not agreed.

In my judgment, the full rate notified in the 31st August plant list became the agreed rates in early September 2000. During that month MAFF raised no objection to those rates. MAFF continued to use plant provided by Ruttle and also to draw down further plant from Ruttle.

There remains the oddity that Ruttle continued to invoice MAFF at only 65% of the plant rates which had been notified. Does this undermine the finding that plant hire rates were agreed? This point was debated by counsel in their closing speeches. I accept Mr Acton-Davis's submission that invoicing at a discounted rate was done for cashflow purposes only. That is what Mr O'Connor said in evidence and that is made plain in his fax to MAFF dated 31st August. This circumstance does not undermine my conclusion that the first batch of plant hire rates were agreed in late August 2000 and the second batch of plant hire rates were agreed in early September 2000.

There has been much evidence about what specific individuals thought had or had not been agreed during the period October 2000 to January 2001. In my view, this evidence is irrelevant to the determination of issue 4. The question whether agreement was reached in relation to plant hire rates must be determined objectively by reference to what the parties did, said and wrote at the material time. Evidence as to their inner thoughts or doubts cannot affect the outcome. See Smith v Hughes (1871) LR 6 QB 597, at 607; Centrovincial Estates plc v Merchant Investors Assurance Company Limited (Court of Appeal transcript, 4th March 1983) at page 10 of the transcript; OT Africa Line Limited v Vickers plc [1996] 1 Lloyd's Law Reports 700 at 702 to 703.

Let me now draw the threads together. For the reasons set out above, my decision on issue 4 is as follows: the full plant hire rates notified by Ruttle to MAFF on 21st August and 31st August 2000 were the agreed contractual rates.

It follows from this decision that issue 8 no longer arises for decision. I shall therefore make no further reference to that issue.

Issue 5 raises the question whether clause 1A of the notes relating to plant in the FCEC schedules of January 1990 was incorporated into the contract between Ruttle and MAFF. Issue 6 raises the question of how clause 1A applies to plant hired by Ruttle from other Ruttle companies.

Mr Acton-Davis contends that the totality of the FCEC schedules was incorporated into the agreement between the parties. In support of this contention, Mr Acton-Davis relies in particular upon the references to the FCEC schedules in the 21st August and 31st August plant lists. He also relies upon the reference to FCEC schedules in the CSF document, given by MAFF to Mr Carrol on 15th August 2000. In addition, Mr Acton-Davis relies upon certain answers given by Mr Carrol in cross-examination.

I am afraid that I am not persuaded by Mr Acton-Davis's submissions. As set out in part 10 above, I have found as a fact that on 15th August 2000 the parties agreed in principle that FCEC rates would apply, but they did not agree any specific plant hire rates.

In the plant lists, which he faxed on 21st August and 31st August 2000, Mr O'Connor set out numerous references to the FCEC schedules. Mr O'Connor gave those references in order to justify and support the rates which he was notifying for specified items of plant. Mr O'Connor did not thereby incorporate the entirety of the notes to the FCEC schedules into the contract between Ruttle and MAFF.

I turn now to the effect of clause 1A on the hypothesis (which I do not accept) that it was incorporated. Mr Acton-Davis contends that plant which Ruttle hired from Holdings and from Readyplant fell within the purview of clause 1A. It appears from the evidence that such hiring of plant occurred after 1st October 2000, following some internal reorganisation of the Ruttle companies.

If Mr Acton-Davis's contention is correct, it would have bizarre consequences. The hiring rates for plant as between different Ruttle companies were set for purely internal reasons. These may be higher or lower than market rates, as Mr Acton-Davis accepted in argument on Day 1 of the trial. It would be surprising and unfortunate if these internal rates governed what MAFF had to pay for use of the plant. This was not a state of affairs which either Ruttle or MAFF desired. This is clear from the evidence of Mr Christie, who not unreasonably expected consistency in respect of hiring rates.

In my view, clause 1A of the notes about plant in the FCEC schedules must be construed in a manner which makes commercial sense. The phrase in that note "where plant is hired in" refers to hiring in plant from some external organisation. It does not apply to the situation where the provider hires plant from another company which is closely linked with itself.

For the reasons set out above, my answer to the question posed by issue 5 is no. My answer to the question posed by issue 6 is no.

Issue 7 requires the Court to determine the meaning and effect of clause 24 of the CPA conditions. In addition, counsel have asked me to decide what would be "reasonable notice" for terminating the hire of individual pieces of plant.

Clause 24 of the CPA conditions provides as follows:

Mr Spink for Ruttle contends that clause 24 of the CPA conditions provides a procedure not only for terminating the entire contract but also for terminating the hire of individual pieces of plant. Mr Acton-Davis submits that clause 24 only provides a procedure for terminating the entire contract.

On this issue of construction I have no doubt that the submissions of Mr Acton-Davis are correct. Clause 24 applies most aptly to the situation where there is a contract for the hire of specified plant for a particular purpose. Such a situation is not uncommon. There may, for example, be a contract for the hire of a crane and driver or a contract for the hire of plant required to carry out some identified civil engineering works. In such a case, the contract may be determined and all plant returned to the owner at the same time.

In the present case, however, there was a contract for the hire of items of plant to be called off in the future and to be used for varying periods of time. Clause 24 of the CPA conditions provides a procedure for terminating the contract as a whole. However, clause 24 does not prescribe a procedure for terminating the hire of individual pieces of plant in the course of a continuing contract.

It is clear from the evidence what happened in practice in the present case. MAFF notified Ruttle of the plant which it required for use at specific farms. When the work of that plant was completed at the farm in question, MAFF had three options. MAFF could (a) notify Ruttle that the plant was coming off hire; or (b) notify Ruttle that the plant should be transferred to a different farm for use there; or (c) ask Ruttle to store the plant in East Anglia for future use. Such notification should have been given on written request forms, but sometimes it appears to have been conveyed more informally.

If MAFF notified Ruttle that certain plant was coming off hire, that was not notification of termination of the contract between MAFF and Ruttle. Therefore, it was not a notice within the meaning of clause 24.

The question then arises of what notice MAFF was required to give in order to take individual items of plant off hire. No express terms stipulated this. There must therefore have been an implied term that MAFF would give reasonable notice.

In determining what constitutes reasonable notice, the following three factors (which I put to counsel during closing speeches) appear to me to be relevant:

Having regard to those three factors and also to all the circumstances in which this contract was made, in my view, reasonable notice for terminating the hire of any individual piece of plants was seven days.

Let me now draw the threads together. For the reasons set out above, my decision on issue 7 is as follows: clause 24 of the CPA conditions sets out a procedure for determining the contract between MAFF and Ruttle. During the currency of that contract, reasonable notice for taking any specific piece of plant off hire was seven days.

Issue 9 raises the question whether Ruttle was entitled to charge hourly rates for vehicles in respect of which a separate mileage charge was made.

The origin of issue 9 lies in the following sentence, which appears in the MAFF letter.

There are some vehicles in respect of which Ruttle claimed both hiring charges and mileage rates. DEFRA object to paying both on the basis that this amounts to double recovery.

The factual background to issue 9 was not fully explored in evidence. The day before yesterday, during the short adjournment, both counsel took instructions and then told me certain further facts on the basis of those instructions. Those facts were not agreed. Even if all the facts which I was told on instructions proved to be correct, I am still not satisfied that I have a complete picture of the facts in relation to issue 9.

In these circumstances both counsel have asked me to give an indication of my views in relation to issue 9, but not to make a formal decision. I am of course happy to assist the parties in the manner which counsel have requested.

The factual background, which appears to be emerging, is as follows. Ruttle provided a Peugeot Talbot van, one or more Peugeot estates and a Nissan Turano. Mr Garrow, Mr Carrol, Mr Bell and the foremen on individual farms used these vehicles in the course of their work. Presumably Mr Carrol and Mr Bell and, occasionally, Mr Garrow used these vehicles to visit a variety of farms. Presumably individual foremen used the vehicles for driving around the farms on which they were based or for visits to Ruttle's temporary office in Bury St Edmunds.

In the first round of invoices Ruttle charged mileage in respect of these vehicles. The extent to which Ruttle imposed hiring charges is in dispute. In the second round of invoices (the "A" invoices) Ruttle included both hire charges and mileage charges in respect of these vehicles. Ruttle never made a separate charge for petrol in respect of the journeys made in these vehicles.

On the basis of those assumed facts, it seems to me that the vehicles in question were not hired to MAFF at all. They were in effect company cars in which Ruttle's managers and foremen drove round when performing their duties. In order that Ruttle may recover the cost of those journeys, the contract between Ruttle and MAFF included the mileage clause.

On the basis of this analysis, it is my opinion that Ruttle was correct to charge mileage at the agreed rate. Ruttle was not correct to make a separate charge for hire.

Let me now draw the threads together. On the basis of assumed facts, I indicate my opinion that the answer to the question posed in issue 9 is no. However, I do not make any decision in respect of that issue for the reasons indicated above.

Issue 10 is directed to plant that remained on site during holiday periods. It is clear from the evidence that during the currency of the CSF contract there was only one relevant holiday period. That ran from Saturday 23rd December 2000 to Sunday 7th January 2001. I shall refer to this period as "the Christmas holiday".

As Christmas approached it would have been open to MAFF to notify Ruttle that all plant would be taken off hire for the duration of the holiday period. Indeed, that is commonly done in the industry. See the expert evidence summarised in part 6 above. However, this is not what happened in the present case. On the evidence, it appears that MAFF did not give any general notice to Ruttle that all plant should be taken off hire over the Christmas holiday. Likewise, there is no evidence that MAFF gave notice to the effect that any specific items of plant should be taken off hire for that period. Instead, over the period of the Christmas holiday, Ruttle's plant sat at numerous locations in East Anglia unused, but available for use.

The inescapable conclusion from the evidence before the Court is that all plant hired by MAFF from Ruttle during December 2000 remained on hire over the Christmas holiday, unless MAFF gave notice before 23rd December that any specific item of plant should be taken off hire. Furthermore, there was no agreement between the parties that plant hire rates should be reduced when plant was sitting idle, whether over Christmas or at any other time.

Mr Acton-Davis submitted in opening that there was an implied term that over the Christmas holiday either plant would not be charged for or alternatively that it would be charged for at a standby rate of 80%. In support of his proposed implied term, Mr Acton-Davis relies upon industry custom and practice. It is therefore necessary to review the law in this regard.

In Cunliffe-Owen v Teather & Greenwood [1967] 3 All E.R. 561, an issue arose as to whether a term could be implied from the usage of the Stock Exchange. At pages 572 to 573, Ungoed-Thomas J said this:

That passage was cited with approval and followed by Evans J in Vitol SA v Phibro Energy AG [1990] 2 Lloyd's Law Reports 84.

The law on usage and custom is neatly summarised in Chitty (29th edition 2004) at paragraph 13-018, as follows:

For my part, I respectfully agree with and adopt the summary of the law on usage given by Ungoed-Thomas J in Cunliffe-Owen and the summary of the law on usage or custom set out in Chitty.

In my view, having regard to the expert evidence, the custom and usage of the construction industry in respect of plant hire over the Christmas holiday is not so certain and invariable as to give rise to an implied term. I therefore reject the submission that there is any implied term which overrides or qualifies the express terms of the contract in relation to plant hire over the Christmas holiday.

Let me now draw the threads together. For the reasons set out above, my answer to the question posed by issue 10 is as follows: yes, at the full contractual rate for the entire holiday period.

Issue 11 raises the question whether Ruttle was entitled to charge for plant not in use in certain defined circumstances. Those circumstances are: (a) while plant remained unused on site at infected premises pending demobilisation (for example, after cleansing and disinfection had been completed) and, during the period when the plant remained on site, there was no longer any labour on site to operate the plant; (b) where Ruttle has removed plant from an infected premises, stored it at another location pending demobilisation and, during the period when the plant was stored at another location, no use was being made of the plant; (c) where Ruttle has been instructed by MAFF to remove the plant from site as recorded in MAFF's APO/CPH records.

I shall refer to these three scenarios as "situation (a)", "situation (b)" and "situation (c)" respectively.

It is Ruttle's case that it was entitled to payment at the full contractual rate in situations (a), (b) and (c), unless and until MAFF had given seven days' notice that the plant in question was coming off hire. It is DEFRA's case that, subject to certain limited concessions, Ruttle was not entitled to receive hire charges in situations (a), (b) or (c).

Let me first review what happened in practice on site. The procedure adopted by the parties was as follows. MAFF called off the plant which it required and Ruttle duly delivered such plant to the locations where it was required to work. When the plant had finished working at a particular farm, MAFF had three options: MAFF could require the plant to be moved to another farm; MAFF could require it to be moved to the field where plant was stored with a view to future use in East Anglia; MAFF could give notice terminating the hire of a particular item of plant.

The normal and proper procedure for conveying MAFF's instructions was by means of a written request form. A bare request to remove plant from a particular farm was not sufficient to constitute notice that the hire of that plant was to be terminated. In the absence of more specific instructions, Ruttle could not be sure that the plant would not be required for work on another farm. As Mr Hurn observed in his evidence, if plant was signed off and sent to Lancashire, it would take a long while to get that plant back to East Anglia.

The circumstances in which Ruttle came to store plant on a field in East Anglia were narrated by Mr Carrol, Mr Hurn and Mr Potter in their evidence. The plant located in that field remained on-hire and was available for MAFF to use whenever they needed to deploy such plant on particular farms.

In his memorandum dated 20th January 2001 Mr Potter acknowledged that MAFF was liable to pay for Ruttle plant stored in the field. His only concern was that MAFF should not make double payments for that plant. No evidence has been adduced during the trial to suggest that Ruttle ever did charge for such plant twice over.

Mr O'Connor conceded in cross-examination that he personally did not check whether each item of plant in the field was required for MAFF's purposes. However, this concession does not advance DEFRA's case. There was no reason why Mr O'Connor should not rely upon information received from site in this regard. Mr O'Connor was Ruttle's commercial director sitting at the company's head office in Chorley and processing information. It was not Mr O'Connor's duty, as a matter of routine, to cross-question by telephone either site foremen or the local managers about the accuracy of record sheets.

Let me now turn to the specific scenarios described in issue 11. In situation (a), Ruttle was entitled to charge for plant sitting unused on site unless and until MAFF had given seven days' notice that the plant should be taken off hire. Situation (b) appears to refer to plant in the field. Ruttle was entitled to charge for plant stored in the field unless and until MAFF had given seven days' notice that the plant should be taken off hire. Let me turn now to situation (c). An entry in MAFF's internal records would not affect the contractual position between the parties, nor indeed would a bare instruction to remove plant from a particular farm. Such plant remained on hire until MAFF had given the appropriate notice to take that plant off hire.

There is no room for any implied term that Ruttle should not charge for hire in situations (a), (b) and (c). It is suggested in DEFRA's written submissions that such a term should be implied for reasons of business efficacy. I do not accept that submission.

Let me turn next to the question of the hiring rate in situations (a), (b) and (c). The contract between MAFF and Ruttle did not provide for a lower rate to be charged whilst plant was standing idle. At first sight this may seem harsh on MAFF. On the other hand, MAFF had the use of plant for as long as they wanted it at the rates agreed in August and September 2000.

Let me now draw the threads together. My decision in relation to issue 11 is as follows: Ruttle was entitled to charge MAFF the full hiring rate for plant in the circumstances described in subparagraphs (a), (b) and (c), unless and until MAFF had given to Ruttle seven days' notice that the plant was to come off hire.

Issue 13 raises the question whether Ruttle was contractually entitled to charge MAFF for the items set out in paragraph 106 of the defence.

Paragraph 106 of the defence asserts that Ruttle in its invoices wrongfully charged MAFF for the following items:

For convenience, I shall refer to the items described in subparagraph (a) as category (a) items, the items described in subparagraph (b) as category (b) items and so forth.

An important contractual provision in relation to item 13 is the following clause in the MAFF letter:

I shall refer to this provision as "the consumables clause". It should also be noted that by an exchange of letters between solicitors in May 2005, DEFRA agreed with Ruttle to pay a 8% mark-up on the costs of materials.

In the course of their closing speeches, both counsel stated that they did not wish the Court to make any findings of fact about the array of items pleaded in paragraph 106 of the defence. Instead, they asked me to decide the following three questions:

It is the function of this Court to provide a service to the business community, not to nitpick about the wording of preliminary issues. I shall therefore treat issue 13 as having been amended to read as follows:

At this point I should read out the relevant provisions of the CPA conditions.

Clause 9 of the CPA conditions provides:

Clause 13 of the CPA conditions provides:

Clause 28 of the CPA conditions provides:

Let me turn now to the specific items. Some of them are discussed in correspondence between the parties. Also Mr Carrol deals with the individual items in paragraphs 69 to 72 of his witness statement and in cross-examination at pages 67 to 75 of the transcript of Day 2. There are occasional references to the items in the defendant's evidence. I bear in mind all of the evidence about individual items but will not recite that evidence when dealing with this issue.

I take first the category (a) items. These were subjected to heavy use over many months at infected premises. It is unrealistic to regard most of them as having life beyond the duration of the contract. They fall within the consumables clause. DEFRA must pay for them.

I turn now to the category (b) items. These are not consumables. They are chargeable if they were purchased at MAFF's request but not otherwise.

I turn next to the category (c) items. These are not consumables. They do not fall within clauses 13(b) or 28 of the CPA conditions. These are not items which would have been purchased at the request of MAFF. For present purposes I assume that the field in which plant was stored for future use does not fall within paragraph 106(c) of the defence. Therefore Ruttle was not entitled to charge MAFF for these items.

Turning to category (d) items, DEFRA accepts that Ruttle ordered some electrical repairs at farm sites. See paragraph 14 of Mr Potter's witness statement. The costs of these electrical works were properly chargeable to MAFF. DEFRA disputes liability in respect of any other electrical works. It seems to me that one needs to analyse those electrical works with some care. Portacabins were provided on many farms at the request of MAFF for use by Ruttle's men and also by others on site. Any electrical works or repairs done to those portacabins must be treated as having been requested by MAFF. Clearly MAFF, having decided to provide portacabins for meal breaks and general welfare, could not leave the electrical works to those portacabins in an unsatisfactory state. Therefore these costs were properly chargeable to MAFF. On the other hand, electrical repairs to Ruttle's equipment fall on the other side of the line. Routine electrical repairs to plant constitute "fair wear and tear" within the meaning of clause 13(b) of the CPA conditions. These costs were not chargeable to DEFRA.

Category (e) items are undoubtedly consumable. Indeed, one suspects that they were consumed, especially when Christmas approached. Nevertheless they do not fall within the ambit of the consumables clause, since they were not required for carrying out the contract works. These items were chargeable, if and only if they were purchased at MAFF's request.

Category (f) items fall within clause 28 of the CPA conditions. I do not accept that the notes to the FCEC schedules had the effect of overriding that clause. Accordingly the category (f) items were chargeable, subject to one exception: fuel which was purchased for journeys in respect of which mileage was charged pursuant to the mileage clause cannot be claimed separately. I understand from counsel that Ruttle never did claim fuel costs in those circumstances. That, however, is a factual matter into which I must not stray.

Category (g) items need to be considered analytically rather than collectively. As DEFRA accepts in its opening note, there was an oral agreement on 15th August 2000 that MAFF would bear the cost of necessary mobile phone calls in the course of Ruttle's work in relation to CSF. This oral agreement was evidenced by the word "mobiles" which Mr Carrol wrote on his copy of the MAFF letter.

The category (g) items do not fall within the consumables clause. They do not fall within clauses 13(b) or 28 of the CPA conditions. I do not know whether any telephone equipment was purchased for MAFF at MAFF's request. If it was so purchased, then it was chargeable.

My decision in respect of the category (g) items, therefore, is that Ruttle was entitled to charge MAFF for the costs of mobile phone calls necessarily made in the course of the CSF contract. Ruttle was also entitled to charge MAFF for any telephone equipment purchased at MAFF's request. Subject to those two qualifications, however, the category (g) items were not chargeable.

I turn now to category (h) items. Repairs to or replacements of plant would be chargeable or not, depending upon how the breakdown or loss of plant occurred. The best guidance which I can give to the parties is that the circumstances of each breakdown or loss must be examined. After that examination, the provisions of clauses 9(d) and 13(a) to (b) will determine which party is responsible for the repair or replacement costs. I shall not compose an essay on those two clauses, whose effect is tolerably clear.

Finally, I come to category (i). That category has one item, namely film processing. This does not fall within the consumables clause or within any of the CPA conditions. This item was chargeable if the processing was ordered or carried out by Ruttle at MAFF's request.

I shall not attempt a summary of my decisions on those nine categories. I propose that the Court's order in respect of issue 13 should refer to the relevant paragraphs of the transcript of the judgment.

It is now conceded that Ruttle is a "small business supplier" for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998, to which I shall refer as "the 1998 Act". Accordingly Ruttle is entitled to recover interest on outstanding sums owed pursuant to the provisions of the 1998 Act.

Issue 15 raises the question whether interest otherwise payable to Ruttle should be disallowed or reduced during the period 30th May 2004 to 11th February 2005. That period is chosen for this reason: Eversheds sent a detailed letter to Ruttle on 30th January 2004 itemising the grounds upon which DEFRA disputed Ruttle's invoices in respect of CSF work. Yates Barnes came onto the scene in February and said that they would take instructions. In a letter dated 20th February 2004 (from which I have read an extract in part 2 above) Yates Barnes said that they would withhold their detailed response until 30th May 2004. In the event, Yates Barnes did not send their detailed response until 11th February 2005.

DEFRA contends that between 30th May 2004 and 11th February 2005 Ruttle simply refused to deal with the dispute. Accordingly no interest or alternatively reduced interest should be awarded in respect of that period.

Section 5 of the 1998 Act provides as follows:

Mr O'Connor dealt with events in 2004 and early 2005 both in his second witness statement and in his oral evidence. I have briefly summarised this evidence in part 4 above. Having considered Mr O'Connor's evidence, the correspondence, the contemporaneous documents and all of the other material before the Court, I make the following three findings of fact:

Mr Acton-Davis made the point in his closing submissions that if Ruttle lacked the manpower to do that which was necessary, then the remedy lay in their hands. Mr Acton-Davis also places reliance on the Court of Appeal's judgment in Birkett v Hayes [1982] 1 WLR 816. That was a personal injuries case in which interest was disallowed during a period of unjustifiable delay.

Mr Spink, on the other hand, resists any suggestion that interest should be reduced. He points out that the 1998 Act is intended to protect small businesses with limited resources. He also submits that Ruttle did its best with the resources that it had.

In my view, the correct approach is to start from the language of section 5 of the 1998 Act. I must consider whether "the interests of justice require" that interests should be disallowed or reduced during the relevant period. I must also take into account what is plainly the policy of the 1998 Act, as Mr Spink has urged upon me.

In my judgment, Ruttle could not reasonably be expected to take on extra staff in order to expedite its pursuit of an unpaid debt. That would be contrary to the policy of the 1998 Act, which is intended to protect small businesses with limited resources.

Having regard to the findings of fact set out above, and all the circumstances of this case, I do not consider that justice requires any disallowance or reduction of interest. Furthermore, I do not consider that there was a period of unjustifiable delay in this case of the kind referred to by the Court of Appeal in Birkett v Hayes. It should also be remembered that there have been periods during the history of the dispute between MAFF and Ruttle when MAFF themselves delayed in responding to correspondence.

In the result, therefore, my decision in relation to issue 15 is as follows: DEFRA should pay to Ruttle interest on any sums due for the period 30th May 2004 to 11th February 2005 at the prescribed rate under the 1998 Act.

My decisions on the preliminary issues are set out in parts 7 to 17 of this judgment. I request counsel to liaise and to draw up a suitable form of order, which sets out those decisions.

I anticipate that the parties will now be in a position to close off the accounts on the CSF contract without further assistance from the Court. Therefore, although this is only a trial of preliminary issues, it is unlikely in practice that any further trial will be required before this Court.

Before parting with this case, may I congratulate the parties and their solicitors on progressing this complex, multifaceted case from claim form to judgment in the space of just under 11 months.

I also thank all counsel for the excellence of their written submissions and oral advocacy. For the reasons set out above, each party is successful on certain of the preliminary issues and judgment will be entered accordingly.