Arnold Project Services Ltd. (t/a APS Project Management) v Musanda Investments Ltd

The claimant (“Arnold”) claims summary judgment from the defendant (“Musanda”) for unpaid professional fees. Arnold provides project management and construction management services and it contracted with Musanda, who owned a large house in Bishop’s Avenue, North London, to provide Musanda with such services in connection with extensive refurbishment and redecoration works being carried out at that house in 2004. The claim is for about £75,000.

The contract was in writing and it incorporated a number of documents including a Memorandum of Conditions and its four appendices, being Appendices A – D, and a list of services entitled “Project Manager’s Brief, UK Projects”. The contract provided that the project management services in question would be carried out between April and 31 December 2004 with a provision allowing Musanda to extend that period if it wished. However, the contract was not extended and it terminated in accordance with its terms on 31 December 2004.

On the basis of the somewhat limited evidence placed before the court on this summary judgment application, it appears that Musanda was engaged in very substantial and costly refurbishment works. These works had a large and expensive element of interior design, fabric, and furnishing work and Musanda appointed an interior designer, introduced to it by Arnold, to design, detail and assist in implementing this element of the works. There appears to have been considerable difficulty and delay caused to the project by the design and detailing of the interior design work. It is not clear whether that difficulty was caused by poor performance by the interior designer, as Musanda alleges, or by repeated changes of mind and late provision of instructions, as Arnold alleges. However, the cause of these difficulties and delays are immaterial so far as this claim is concerned since it is not alleged that Arnold has direct or vicarious responsibility for them, whatever their cause.

Musanda appears to be, effectively, a one man company and that individual personally negotiated Musanda’s contract terms. Musanda now contends that the claim is not, or may not, be payable wholly or in part because some of the services provided for by the contract were not performed and that, in consequence, a part of the lump sum fee provided for did not become due. The defence amounts, therefore, to a claim by Musanda to an entitlement to abate the lump sum fee to take account of this shortfall in the provision of professional services for which the lump sum fee was to be paid. It is important to remember that, at this stage, no cross-claim, set-off or abatement is alleged on account of any breach of contract by Musanda. The shortfall in the performance in the contractual services provided for that occurred is to be assumed to have resulted from delay to the project caused by interior design delays. Thus, when the contractual period expired, it is alleged by Musanda that many of the designated professional services that it was anticipated would be carried out before Arnold’s contract expiry in fact remained unperformed.

Arnold’s claim is based on unpaid monthly instalments payable under the contract. The contract provided for the payment of two lump sums, one for project management services and the other for construction management services. It also provided that these lump sums would be paid in stages. Each lump sum was broken down into a series of equal tranches and the contract provided that one tranche of each lump sum would be paid each month. There was no linkage provided between the lump sum and any work stage or any particular service or any particular part of the work or the services to be performed under the contract. Moreover, the contract did not provide for any particular programme of work.

In order to determine whether Arnold was entitled to payment of each month’s tranche without deduction, irrespective of what part of the services to be performed had been carried out, as Arnold contends, or whether an abatement must be made in relation to any unpaid part of the lump sum after the contract period has ended for any part of the services left unperformed, as Musanda contends, it is necessary to consider carefully the relevant terms of the contract.

Clause 7 of the contract provided for payment. This clause provided that Musanda is to pay Arnold for the performance of the services under the contract and Appendix C. The clause also provided that the date due for payment was to be fourteen days after the submission of an invoice which was to state the basis on which the sum it claimed was calculated. The Memorandum provided that:

“(a)

[Musanda] shall pay [ Arnold] the fee of £115,000 for the services listed in Appendix A;

(b)

Payment of the fee shall be made in accordance with Appendix C of the Conditions of Engagement;

(c)

The date for completion of services beyond which the fee is to be adjudged is provided for in clause 7.9 of the Conditions of Engagement as 31 st December 2004.”

An amended arrangement for the payment of stage payments was agreed and that arrangement was set out in a letter dated 13 th February 2004 written by Musanda to Arnold. The letter was incorporated into the contract. The letter provided:

“I refer to our telephone conversation late yesterday, and agree to the following amendments to our fee/cash flow as follows: …”.

There then followed a series of dates in each of the months from February to December 2004 inclusive and a lump sum payment of £10,454 was provided for each of these dates. These payments were clearly intended to be paid monthly because the letter continued:

“On condition that the first payment is received by [ Arnold’s] London office no later than 23 rd February 2004 and the outstanding balance of our fees paid at practical completion if it is achieved before 31 st December 2004.”

Clause 7.9 of the Conditions provided that the fee had been calculated on the assumption that there would be completion of the project by the date stated in Clause 10, namely by 31 st December 2004. The Clause then stated:

“If the project is extended by agreement between the parties beyond this date the fee shall be adjusted in accordance with the provisions including Appendix D.”

Appendix A defined in great detail the project management services to be performed. These included a long list of activities including the development of the brief; project feasibility; the preparation of a programme; the arrangement of a design team; and site investigation. These services were not in any way linked to the lump sum or to any monthly instalment of that lump sum.

The contract administration services were added to the contract by agreement reached between Musanda and Arnold pursuant to Clause 8 which provided:

“The parties agree that should [Arnold] be required to act as building contract administrator he will be paid an additional lump sum fee of £30,000 to be paid in instalments to be agreed between the parties.”

A similar provision for monthly payment of the instalments of this lump sum, payable with a first instalment payment on 30 th June 2004 and the last payable on 31 st December was set out in the letter of 13 th February 2004 to that relating to monthly payments of the project management services. Equally, a definition of the contract management services to be performed was also provided.

Ms Clarke, in her cogent and succinct submissions, which clearly identified all that could be said on behalf of Musanda, contended that it was clearly to be inferred or implied from the wording of the contract provisions that I have referred to that some element of adjustment or abatement of each lump sum would take place to reflect any non-performance of the defined services provided for in the contract. This was particularly so in relation to the contract administration services because no building contract was ever entered into by Musanda. This implication arose particularly as a result of two provisions of the contract, namely that Arnold would be paid for the services listed in Appendix C and that each lump sum was calculated on the assumption that the project would be completed by 31 st December 2004. Thus, Ms Clarke contended, to the extent that the listed services were not completed by 31 st December 2004, there should be a proportionate and reasonable deduction or abatement from each lump sum to reflect that non-performance.

Mr Scott-Holland contended that the contract provided no linkage between payment and the value of any part of the services actually performed. Moreover, there was no mechanism provided to enable any valuation to be performed of the actual services performed whether for any monthly instalment or for the overall contract lump sums. Moreover, although the project was not completed by 31 st December 2004, Arnold was providing intensive professional services relating to the management of the project throughout the contract period and was in no way responsible for, or the cause of, the delay in carrying out and completing the project. As for the contract management services, although no formal contract was signed by Musanda, work was carried out by a variety of contractors throughout the latter stages of Arnold’s contract and Arnold devoted much time and resources managing these various contractors.

In my judgment, Mr Scott-Holland’s contentions are correct. The contract, on analysis, is providing for the provision by Arnold of management services for a period of months and that Arnold would be paid for such services a regular monthly lump sum. The services to be performed were loosely defined but no price or value of any part of those services was defined and no valuation machinery to be used in valuing particular services was provided. Clearly, if it was provided with the necessary instructions and details by Musanda and was not delayed by circumstances beyond its control, Arnold was to complete its project management services within a reasonable time which would be measured by reference to an intended completion of the project by 31 st December 2004. If the project was not completed by that date through no fault of Arnold’s, its services would terminate unless extended by agreement but it would have earned the entirety of the lump sum payable by monthly instalments.

Had Musanda provided any details of any breach of Arnold of its contract or of the value of services which had not been performed, there might have been the basis for some abatement of its claim pending a trial of the issues thrown up by a cross-claim for damages for breach of contract. However, no such detail was provided. In the absence of that detail, and in the light of the provisions of the contract which I have summarised and analysed, it is clear that there is no defence to the entirety of its claim for payment of £75,000. I direct that judgment should be entered for that sum in favour of Arnold.

Arnold is also entitled to interest and its costs to be summarily assessed on the standard basis.