Weetwood Services Ltd v Ansvar Holdings Ltd

This is the defendant’s appeal from a judgment given by HHJ Armitage on 1 December 2006, although the order was actually drawn up on 8 December. The judge gave judgment in the sum of £7,092.68. Those were fees claimed by the engineer, Weetwood Services Limited, as against Ansvar Holdings Limited.

The litigation has a very unhappy history in that it seems that a claim was brought by Weetwood Services Limited originally against IGW Group. It seems as though that litigation itself went to trial and that there may even have been an appeal before ultimately there was a decision that IGW Group did not exist. Thus proceedings had to be recommenced. They had to be recommenced against a company called Ansvar Holdings Limited; a name which, so far as I can ascertain, is not mentioned anywhere in any correspondence or in any report. It seems that Mr I G Workman to whom the vital letter in this case was sent stands behind Ansvar Holdings Limited. It further seems that following that first piece of litigation the decision was taken to sue Ansvar Holdings Limited on the basis that he Mr Workman would stand behind them.

Having regard to the sum in issue to have had those first proceedings, then a trial before a circuit judge in these proceedings and now a hearing in the Court of Appeal – well words almost fail me. How somehow or other this litigation has not been disposed of more cheaply beggars description.

In any event the case has now come to the Court of Appeal and we must deal with it. The defendant company evidently owned and occupied some land and they sought planning permission to extend the building for the storage of motor vehicles. A water course traversed that land. In the course of traversing that land it entered into a culvert. That culvert was there, it should be stressed, before the land was purchased.

The Environmental Agency served an abatement notice on the company requiring the removal of the culvert and reinstatement of an open channel. That point was affecting the planning application which was being made by the company to put the building up on the land. The defendant company consulted Weetwood Services, who are the respondents on this appeal and who were the claimants in the court below. Mr Workman on behalf of the appellant company hoped that the effect of consultation with Weetwood Services, who were environmental engineers, would be that they would be able to provide some expert advice to the effect that the culvert worked and would not flood. The parties met on site on 9 November 2001 and it would seem that Mr Grime, who acted for, and was effectively, I suspect, Weetwood Services, expressed the view that an investigation was likely to find that the culvert would work without flooding.

By letter of 9 November, i.e. of the same day, Mr Grime on behalf of Weetwood Services set out the contract and the terms of the contract which it is accepted came into being between Weetwood Services and the appellant company. It referred to the visit earlier in the day and it then said that the primary reason given (presumably by the planning inspector) for dismissing the appeal was for the “potential for flooding” arising from the culvert. The letter then continued to define Weetwood’s task:

It is right to say at the outset that “HEC-RAS” is a software which enables calculations to be done via a computer, so the purpose was to assess potential flooding using the computer software HEC-RAS and the obligation was to run the two models, i.e. one model with the culvert in place and one replaced by an open channel and “report on the results”. The issue between the parties is whether by the contract of 9 November 2001 the engineers simply undertook to run the software programme, calculate whether the culvert would flood in any circumstances, and then calculate whether the open stream if the culvert was replaced would flood and whether the limit of what they were obliged to produce was simply the results of running those two models. Or whether there was an obligation to go further and provide effectively all the calculations and the computerised figures which would support the conclusion that they had reached. The judge decided that the limit of the obligation was to run the programme with a culvert and without a culvert and report the results and to go no further.

In the course of the trial below quite a deal of evidence was given as to what occurred after the signing of the contracts and in relation to what the engineers actually produced after they produced their report. But the key issue relates to whether they fulfilled their obligation in the production of their report. They produced initially a draft report. That appears on page 102 through to 108 of the bundle before us. It contains an introduction, which it is unnecessary to read. It contains the hydrology; that is to say, a calculation as to the water which is likely to impact on this actual piece of land both having regard to rainfall and having regard to the developments of housing estates and other matters around, and it then has a calculation as to the size of the culvert. It then reports as follows, having reported the size of the culvert:

“The culvert is approximately 72 metres in length and has a total fall of 3.25 metres giving an overall hydraulic gradient of about 1 in 22. The un-surcharged capacity of the culvert in estimating using Colebrook-White formula with friction k_s of 0.6mm. The theoretical capacity is 6.6 m³/sec. However this figure is reduced significantly by the hydraulic characteristics of the entry to the pipe and a coefficient between 0.3 and 0.4 might be applicable. This being so, the capacity would be reduced to between 2 and 3.3 m³/second.”

Then it has a heading, “Modelling of Watercourse”:

“The watercourse from its point of issue south of Roman Road down as far as the railway embankment was first surveyed and then a mathematic model was prepared using a steady state HEC-RAS [v2.2] approach. A second model was also prepared omitting the culvert under the concrete hardstanding to investigate the possible sizing of an open channel if the culvert were to be replaced.”

Then it refers to the culvert model being shown in figure 3. The report then reaches certain conclusions and in summary, so far as the culvert is concerned, it reached the conclusion that at certain extreme conditions the culvert would not take the water and would flood. Then it says this in v):

“If the existing culvert is removed then a channel having a 10 metre width across top of banks will accept peak flows. The bank slopes would be a maximum of 1 vertical to 1.5 horizontal. Alternatively one sloping bank could be replaced by a vertical wall to limit the loss of concrete area.”

Consideration at that stage had to be given as to what was to be placed before the council and before those who were seeking to enforce the abatement notice because at that stage Mr Workman through his company was seeking to persuade the Environment Agency that the culvert would work. The draft report was therefore varied to take out any conclusion about the water course and that was the report finally sent in so far as planning and environmental issues were concerned.

At the beginning of January 2002, however, the Environment Agency was showing signs that it was not going to be prepared to accept the culvert and would want the water course reinstated. When that was communicated to the engineers, the engineers wrote to Mr Workman saying that:

“I now understand that you require confirmation that if the culvert were to be removed it could be replaced by an open watercourse contained within a 10m strip adjacent to the fence along the northern boundary of your site. To be certain of this we will need to produce proposals which would be acceptable to the Environment Agency (without necessarily consulting them). Preparation of these proposals and submission to you will involve some additional work. This is likely to take 6 hours. We would undertake this in accordance with our proposal letter to you dated 9 November 2001 at the rate of £70/hr.”

In fact further information was provided by the engineers. They provided a note of 21 February 2002 which provided specifications of the likely size of the channel and contained with that document were also some detailed calculations but those calculations were produced by the engineers totally separately from any HEC-RAS computerised system. In any event, ultimately, the information being supplied by the engineers, which the engineers would say was totally outside their contractual obligation, was not sufficient for the planning authorities; they wanted more. They wanted effectively detailed designs to be done in order to show precisely where the water course was to go on this land and precisely the specifications of it.

The engineers, having said that they were going to charge more for anything else that they had to do, did not in fact do so in the interests, as they put it in a letter, of goodwill. They did not charge for those extra calculations but Mr Workman for his company has refused to pay any of their fees. I have already described the unfortunate first piece of litigation but this second piece of litigation has had to deal not with the question of whether the company or any party existed or not, but it has had to deal simply with the contractual obligations of Weetwood Services.

In my view it is possible to take the matter quite shortly because the question whether Weetwood Services are entitled to their fees turns simply on the construction of the letter of 9 November 2001. What is more, it does not, as it seems to me, turn on the possibility of other figures being supplied at some later stage after the production of the draft report since those were not figures from the HEC-RAS model. One can concentrate on the draft report provided initially at pages 104 through to 108 in considering whether Weetwood Services have fulfilled their obligation. The argument of Mr Vickers for Mr Workman is that either by the express words “reporting on the results”, or alternatively by virtue of an implied term which he would say it was necessary to imply, the obligation of Weetwood was to supply calculations to back up the report on the results.

The argument of Mr McGee is, first of all, that there is no necessity to imply any term. Business efficacy does not require it. He submits that to report on the results means no more than it says. When one takes account of the fact that this is computer software with models being run through a computer, and if one takes account of the fact that just simply to serve on the client, the material that is produced by the computer would leave the client no further forward, a report on the results means simply that one tells the client what the results are.

Mr Vickers seeks to suggest that since the engineer did produce some detailed figures in relation to the culvert,(and he relies on the paragraph in the draft report which I have quoted relating to the culvert), precisely the same kind of information that should have been supplied in relation to the open channel. He submits the paragraph relating to the culvert demonstrates the sort of material which should have been supplied in relation to the channel. In my view the production of those figures in relation to the culvert establishes no more than does the supply of further figures and calculations after the production of the draft report itself. The engineers may have been doing more than they were required to do. In any event it is right to say in that context that at the trial there was an explanation for supplying more than they were required to do. This was that when visiting the site on 9 November the engineers thought that they would be reporting that the culvert would take the flow. Thus when reaching a different conclusion they wished to provide more by way of explanation as to why it was that the culvert could not cope. But all that is as it may be. The question is whether a report on the results required detailed calculations to be provided. I see no reason why it should.

Thus in my view the words themselves do not impose on the engineers an obligation to go further than they did. The question then remains as to whether, if the express words do not oblige the engineers to do more than they did, is there room for implying a term? The tests for implying a term are well known. You do not imply a term unless it is necessary in order to give business efficacy to the contract to do so.

The purpose of what the engineers were being asked to report on was to assess the potential for flooding. That is what the letter said. What was needed were results from which a comparison could made so far as flooding was concerned between having a culvert and having the culvert removed. There is as I would see it no necessity to imply any term. In my view this appeal must be dismissed.

I should just add that the judge in his judgment went into other matters which to some extent he has been criticised for in relation to the supply of engineering drawings and matters of that sort after the production of the draft report. Whether he was right in his conclusion on those matters does not arise, since the view he formed in relation to the content of the obligation of the engineers is one, as it seems to me, that is entirely right and as I have said I would dismiss this appeal.

This appeal concerns a fee of a little over £5,000 for an engineers’ report about flooding risks on land which was the subject of a planning application. It now also concerns over five years’ interest on the fee. The bill of costs sought by the appellant should it win the appeal approaches £9,000 without the addition of VAT; though it contains at least one element of almost seven hours’ work on documents in an appeal on a pure issue of law which would certainly have required examination if the appellant had succeeded. The respondent’s bill is less than half the appellant’s. Although Lloyd LJ on sight of the papers was persuaded that an appeal was “reasonably arguable”, it has rapidly become apparent on the hearing that the judge was right and for the reasons he gave. The contractual obligation was to run the two specified models and report on the results. As the judge found, this is what the claimants did. They also, in a decent endeavour to help, volunteered a great deal of further information, but not enough to satisfy Mr Workman, who in turn needed now to satisfy the Environment Agency.

I would have been content to adopt HHJ Armitage’s admirable judgment but I agree with all of my Lord, Lord Justice Waller’s reasons for upholding it. This was an appeal which, arguable or not, should not have been brought. The cost of it is entirely disproportionate to the sum at stake. It involves absolutely no issue of legal or moral principle. It represents simply Mr Workman’s final endeavour to avoid payment of a proper and reasonable fee for professional services which, whether personally or in whichever of his corporate manifestations was appropriate, he should have paid five years or more ago.

I agree with both judgments.