Clark Smith Partnership Ltd v Leyton Football Club

The Claimant is a firm of consulting engineers. As its name indicates, the Defendant (“the Club”) is a football club in the east of London. This litigation arises out of a redevelopment project which the Club undertook between 2001 and 2003. For the purposes of this judgment little of the detail of the project needs to be described. It suffices to note that the Club’s ground was (and it still is) located off the Lea Bridge Road in London E10. Adjacent to the ground and fronting on to the Lea Bridge Road was a garage/car show room known as the Morris Minor Centre. When the business closed, in or before 2000, the Club acquired the premises. Its intention was to demolish the existing buildings and to extend the football clubhouse, to provide office accommodation, a club shop, a restaurant and a function suite. The Club engaged architects to prepare plans and submit a full planning application. They did so and, on 22^nd March 2001, the London Borough of Waltham Forest granted permission for the proposed redevelopment(H/586-588).

Thereafter, the Club and the architects soon parted company and the Club looked to find another professional firm to carry the project forward. It was at this point that the Claimant came into the picture. The individuals who feature most prominently are Mr Terence A Smith (“TAS”) and Mr Costas Sophocleous (“CS”). When deciding the Claimant’s fees entitlement, I have concentrated on the factual evidence given by TAS and CS, considering what each had to say in the light of what was stated in the contemporary documents, particularly those which passed between them.

Background information concerning the Club, his taking control of it and the origin of the redevelopment project was given by CS (Paragraphs 1 to 13 and 17 of his first witness statement – C/334-337). Whilst I accept all that he there stated, there is no need to set it out in the judgment. At paragraphs 14 and 15 of his first witness statement (D/337) CS described his initial meeting with TAS at the Club in May 2001. He said that on that day TAS offered a lump sum price of £32,000 plus VAT for the whole project explaining that this was a “good deal” because it was cheap and he would do everything which was necessary. CS said he was shocked at the price quoted but TAS was very keen and offered to get on with the project at a price which he (TAS) assured him (CS) was reasonable. CS also said that TAS took a down-payment of £5,000 saying he would go back and get on with it. As I have already said, in my judgment, this part of CS’ evidence is an inaccurate recollection; TAS did not make any such lump sum offer on that day; TAS did not say he would go back and get on with anything other than producing a quotation or estimate for CS’ consideration; and TAS was not given any payment on that day.

There was an initial meeting on site on 16^th May 2001 when TAS met CS and PF. After that meeting, TAS left to consider quoting to provide engineering services. He wrote a letter dated 18^th May 2001 (H/593-596) in which he said:

A further meeting took place on 8^th June 2001 at which the Club appointed the Claimant to carry out professional engineering services, the nature and extent of which are now in issue. TAS wrote a confirmatory letter dated 8^th June 2001(H/597) in which he said:

At paragraph 16 of his first witness statement (C/337) CS referred to the Claimant’s letter dated 18^th May 2001 as TAS’ statement that “he would do everything required to assist on the project to completion for the price of £32,000”. At paragraph 18 of is first witness statement (C/337-338) he referred to a contract being entered into, evidenced by the letters of 28^th May 2001 and 8^th June 2001 “and subsequently by confirmation at a meeting held at the Club on [8^th June 2001]” by which the Claimant was to provide the services itemised as 1 to 3 in the letter dated 18^th May 2001 for the sums there quoted. The two statements of the extent of the services to be performed were inconsistent. In my judgment, the statement at paragraph 16 was inaccurate (although it seemed from what CS said in his second witness statement and when giving evidence that this was in fact what he thought) whilst that at paragraph 18 was an accurate summary of what was in fact agreed at a meeting which took place on 8^th June 2001 prior to the Claimant sending its confirmatory letter of that day.

The Claimant contended that by the agreement made in June 2001, it was to carry out the services described in the letter dated 18^th May 2001 with the standard ACE Conditions (Agreement A1) applying save to the extent that they were inconsistent with the terms of that letter (paragraph 3 of the Amended Particulars of Claim – A/2). The particular conditions identified in the pleading were the 1995 Edition of the A1 Agreement. In its defence, the Club denied that the ACE Conditions formed part of the Agreement made in June 2001 (paragraph 4(2) of the Defence – A/19). The Club also contended that Clause 6.4 of the pleaded Conditions (which was Clause 6.7 in the 1998 edition) was inconsistent with the terms of the letter of 18^th May 2001 (A/19). At paragraph 18 of his first witness statement (C/337-338) CS stated that the ACE Conditions were not mentioned in the conversations he had with TAS and that no copy of the Conditions was handed over to him or sent to him. TAS dealt with that at paragraph 11 of his second witness statement (C/364) agreeing that the Conditions had not been specifically discussed, that no copy had been sent and adding that at no stage had the Club ever requested a copy of the Conditions. However, by the time of the trial it was common ground that the reference made to the ACE Conditions in the penultimate paragraph of the letter dated 18^th May 2001 should be read to refer to the then current edition of the Conditions. That was the 1998 Second Edition (H542 to 567). At the trial it was common ground that, notwithstanding the parties had not drawn up a formal Memorandum of Agreement (see H/532 to 541), they had intended that to incorporate these Conditions as part of the Agreement and it did not seem that the Club maintained its pleaded inconsistency point.

In my judgment, Clause 6.7 of the ACE Conditions (4/552-553) which provides for the Engineer to receive additional payments for variations/disruption in performance of its services is manifestly not inconsistent with the terms of the letter of 18^th May 2001. However, when considering its applicability in this case, it must be borne in mind (a) that the parties did not agree rates for time-based fees as that condition required (see the reference to A20.2 and see H/535) and (b) that no initial estimates of “additional payments likely to be incurred” were ever made. So far as the construction of the clause is concerned, I accept the Claimant’s submission that the Engineer’s obligation to advise his client when he becomes aware that additional work is required is not a condition precedent to the right to recover payment for additional work which is in fact required and carried out.

One other point arises in respect of the initial discussions between the Claimant and the Club. At paragraph 21 of his first witness statement (D/338) CS stated that at the time (i.e. in or about May or June 2001) he was told that “the job would cost about £750,000”. At paragraphs 26 and 27 of his first witness statement (D/339) CS stated that in about October 2001 when he met with the Claimant to discuss the tenders which had been received, these were “about £750,000 for phase one work alone – up to shell. The figure of £750,000 had been talked about as an overall figure to hand over, not a phase one figure”. He said that he then explained that “the project had to proceed within the £750,000 original estimate or not go ahead at all”. In paragraphs 29 and 31 of his second witness statement TAS denied that he had told CS that the job would cost about £750,000. He said that he did not give CS any figure for the job and that he would not have attempted to do so. That, he said, was a job for a quantity surveyor. When TAS was cross-examined, it was suggested to him that he had given the estimate on 16^th May 2001 when he had first visited site and when CS/PF had told him that money was tight. This he denied. When CS was cross-examined he repeated his evidence that TAS had provided him with this estimate at the beginning of the Claimant’s involvement. Having seen and heard them both, in my judgment, TAS’ recollection on this matter is to be preferred to that of CS. I think it improbable that TAS himself would have given an estimate of the cost of the works with which the Claimant was to be concerned i.e. those which were required to achieve a shell finish, and even more improbable that TAS himself would have given an estimate of the likely overall cost of those works and the further services and finishing works which would be required and I accept his evidence that he did not do so.

After 8^th June 2001, the Claimant got down to work. The detailed design was progressed. Main Contract Tender documents were prepared and they were issued. Tenders were returned which CS considered too high. These were discussed and, according to the Claimant, the Club decided to have various elements of the works carried out individually by various “sub-contractors” of its choice, instead of appointing a main contractor and having them carried out by traditional contract means as it had originally intended. Whilst there was agreement that the Club was unhappy with the prices which had been tendered by proposed main contractors and that the way forward was discussed, at paragraphs 27 and 28 of his first witness statement (C/339-340) CS stated that it was TAS who was anxious to find a way forward and that it was TAS who suggested “[breaking] up the tenders into individual work packages which would be less expensive and which they would oversee”. TAS had a different recollection. At paragraph 11 of his first witness statement (C/95) he said that it was CS who stated that he wanted to procure the job using “sub-contract packages” as he thought this would be cheaper. Having heard from each of them on this issue, in my judgment, TAS has the more accurate recollection. When he looked at the tenders CS thought the works could be procured more cheaply if he made arrangements for significant elements to be carried out by “sub-contractors” of his own choice and, with his background in dwellinghouse development projects, he was in a position to find and make arrangements with such people. CS went on to state at paragraph 28 of his first witness statement that he had proposed that the Club should engage “a main contractor for some of the works and engage sub-contractors directly for some of the other work”. This seems to be consistent with the terms of the Claimant’s letter dated 5^th November 2001 (see below) and I believe it to be an accurate recollection.

The Claimant (in the person of RC) wrote to the Club on 5^th November 2001 stating:

At paragraph 11 of the Amended Particulars of Claim (A/5) the Claimant pleaded:

At paragraph 28 of his first witness statement (C/340) CS stated that the proposed changes to the method of procurement of the works would not change to any significant degree what the Claimant was supposed to do. As he put it “the construction phase service offered by [the Claimant] remained and was to be complied with”. As I have already indicated, given the proposed change in the method of procurement, I find it difficult to accept that is a tenable view; in any event, once the Claimant’s letter dated 5^th November 2001 (see paragraph 11 above – and see in particular the third of the stated services that would be required) was received that was not a view which a reasonable reader could hold unless the issue was taken up with the Claimant and it was prepared to withdraw that statement. There is no suggestion that happened and, in fact, the Claimant was to repeat the same point in its letter dated 27^th November 2001 (see paragraph 18 below).

At paragraph 29 of his first witness statement (C/340) and again at paragraph 13 of his second witness statement (C/373d) CS referred to the meeting held on 8^th November 2001 and stated that, contrary to the Claimant’s pleaded case, there had been no discussion along those lines and that, so far as he was concerned, the Claimant had been engaged on a fixed fee contract and that the position did not change. TAS’ evidence was at paragraphs 12 and 13 of his first witness statement (C/95) and at paragraphs 14 and 15 of his second witness statement (C/365). In his second witness statement TAS stated that he remembered telling CS at the meeting that the variation to the procurement method would affect the services which his firm was to provide. He also stated that, at that stage, it was unclear what the Claimant was being asked to do and, that being so, he could not be specific. He remembered, he said, suggesting to CS that as far as the Claimant’s services/fees were concerned, it would have to “see how it went and keep [the Club] informed”; and that, he stated, was exactly what was done. This discussion was not a matter which RC included in the Minutes he prepared (see paragraph 11 above). However, at Item 1.1 the Minutes referred to the letter of 5^th November 2001 “being discussed”. Thereafter, in the main the Minutes recorded actions to be taken where third parties were involved.

In my judgment, it is unlikely that the third of the three points raised by the Claimant in the final part of that letter was simply ignored at the meeting and it is probable that CS agreed that the Club would go forward on the rather imprecise basis described by TAS in paragraph 15 of his second witness statement. TAS’ evidence is consistent with his explaining what had been meant by the third of the three points in the letter and with CS not expressing dissent; it is consistent with the Claimant repeating the same point in its letter of 27^th November 2001 after the introductory words “as previously discussed …” (see paragraph 18 below); and, it is consistent with the terms of (a) the Claimant’s later letters on the subject of fees for the construction stage of the project recognising that the fee remained to be negotiated/agreed (see paragraphs 27, 29 and 31 below) and (b) the Club’s letter dated 18^th August 2003 (see paragraph 32 below)..

The Claimant’s case is that the change from procuring the works via a traditional main contract route to procurement through individual “trade packages” (or “sub-contractors” adopting the terminology used in the letter dated 5^th November 2001), fundamentally changed the nature of the services required whilst construction was on-going. At paragraph 12 of the Amended Particulars of Claim (A/5)the case was put in this way:

In my judgment, whilst TAS’ evidence does support the first sentence of paragraph 12 of the Amended Particulars of Claim, it does not support an express agreement that the Claimant would be entitled to charge what was described in the pleading as “the Company’s usual hourly charging rates” for any and all such additional services as might come to be required. I reject the Claimant’s case that the contract was determined under Clause 5.2 of the ACE Conditions. Manifestly nothing of the sort happened. I reject the Claimant’s case that the contract was terminated by reason of some breach. Manifestly nothing of the sort happened. I reject the Claimant’s case that the contract was frustrated became it had become impossible to perform as originally intended – consensual variation to accommodate changed circumstances is something parties can agree (if they wish) and, in any event variation of the work required was something expressly contemplated by Clause 6.7 of the ACE Conditions.

In my judgment, because there was no agreed fixed fee and no agreed rates on the basis of which “time based fees” could be calculated for such additional services as might be requested and provided, it must follow that the Claimant’s legal entitlement was to claim a reasonable remuneration for such additional services as it did in fact provide at the Club’s request. I do not accept the Claimant’s submission that the change made to the method of procurement was so significant that it altered the entire scope of the work which the Claimant carried out thereafter. To my mind, manifestly that was not so. But, how should the reasonable remuneration for those additional services which were required and provided be calculated ? Very probably, the Claimant would put forward a claim on a conventional time-charging basis viz. hours properly and reasonably spent charged out at rates appropriate for the salary and overhead cost of the employees involved plus disbursements but, in the absence of agreement on the rates it was to be entitled to charge, there was no established right to claim on this basis. The Club would be able to challenge the reasonableness of the Claimant’s proposed charges, suggesting, if it thought fit, alternative rates or even an alterative basis of charging for some or all of the additional works.

I wish to make it clear that I have not overlooked CS’ evidence that he is not a person who is in the habit of writing blank cheques for people and/or that if there had been any suggestion that the amount to be paid to the Claimant was changing from the lump sum stated in the letter of 18^th May 2001 he would have “wanted to know exactly what amounts were being talked about”. I accept unreservedly CS’ statement that he is not in the habit of writing blank cheques but that is not something which he agreed to do. I do not accept that he did insist upon knowing exactly what were the charges which the Claimant would be making for what was, at that time, an uncertain workscope. In my judgment, CS is an experienced and successful property developer, well used to negotiating accounts which are presented to him so as to ensure that value for money is obtained. In November 2001, I believe CS accepted what TAS said and that he was confident he would be able to resolve matters satisfactorily with TAS in due course; and, if the major counterclaim issues had not arisen, I think it very likely that would indeed have happened.

The Claimant wrote to the Club on 27^th November 2001 (H/634) after it had obtained a revised quotation for certain significant elements of the works. That letter stated:

The Claimant continued to pursue various quotations. On 2^nd December 2001 Threecie Ltd sent in a quotation for the ground/substructure works (4/642), the substance of which the Claimant passed on to the Club in a letter dated 5^th December 2001 (4/647). In that letter the Claimant informed the Club that the prices quoted did not include (inter alia) “any project management/site supervision for the works above ground”. On 6^th December 2001 Faircloth Ltd submitted a quotation for certain of the above ground works. On 13^th December 2001 (H/663 – 664), the Claimant wrote again to Club, enclosing a breakdown or summary of the quotations received up to that date, together with an indication of other items which the Club was expected to procure directly (see paragraph 16 of TAS’ first witness statement C/96). One of those other items, item 21, was described as “project management/site supervision for the above ground works” with a cost of “£800/£1000 per week” and with “Threecie Ltd” as the contractor. The concluding paragraph of the letter stated:

A pre-contract meeting was held with Threecie Ltd and Faircloth Ltd on 8^th January 2002. CS, PF and TAS were amongst the attendees. Minutes were prepared and circulated (C/144 – 146; H/669, 670 and 687). The minutes recorded:

Little attention was paid to the minutes of this pre-contract meeting in the witness statements and/or in oral evidence. The circumstances in which it had come to be agreed that “project management / site supervision for integration of packages would not be necessary” were not explored. When CS gave evidence he was asked about the entry “not required” which was included against item 21 in a later, updated version of the breakdown or summary of quotations documents to which reference has been made in paragraph 19 above. It was suggested to CS that this was something which notwithstanding the Claimant’s advice, the Club had decided was “not required”. In reply, CS said that it was the Claimant who had decided not to have a project manager. In my judgment, that is improbable. The Claimant had made its views clear in the two November letters and by the inclusion of item 21 in the breakdown or summary of quotations. In my judgment, it is more probable that, at the pre-contract meeting, faced with a reluctance on the Club’s part to pay Threecie Ltd a weekly remuneration of the order stated, the Claimant and the contractors had agreed that the provision of such services was not a necessity; with the consequences of the omission (so far as the extent of works which might be required of the Claimant) not being discussed.

Following the meeting on 8^th January 2002, Letters of Intent were prepared and sent to Threecie Ltd and to Faircloth Ltd (H/669 – 670). On 7^th February 2002 the Claimant sent to the Club copies of quotations and invoices received up to that date (H/687) including a quotation from Tarmac Topfloor for pre-stressed concrete ground floor planks (C/150 – 156). On 12^th February 2002 the Claimant (RC) wrote to the Club (CS) concerning the ordering of these floor planks. The letter read:

At paragraph 16 of the Amended Particulars of Claim, it was alleged that the services which the Claimant carried out for the Club “greatly exceeded” those itemised in the letter dated 18^th May 2001. This was said to have happened for four reasons. They were

The Club requested further information of the allegations made in paragraph 16 of the Amended Particulars of Claim. Details were requested of the time which had been spent in dealing with each of the additional services alleged in the lettered sub-paragraphs, of the time charging rates which the Claimant had applied and of “when and how” the Claimant had notified the Club of those rates. The Claimant responded on 4^th October 2005 (A/47-51) stating that it did not have records which enabled it to identify the amount of time spent on each of services itemized in the letter of 18 May 2001 or on the additional items of work listed at paragraph 16 of the Amended Particulars of Claim. It did however have “accurate records of the number of hours spent on the project as a whole by each individual on each day” (which had been provided to the Club). The Claimant repeated that its case was that, not only did it carry out additional items of work, but also that it was required as a direct result of the Club’s changed procurement method to provide a service of a fundamentally different sort from that envisaged in the letter of 18 May 2001 and which required a substantially increased amount of work on its part. The Claimant then averred that the total number of hours spent on the project was reasonable in view of the services carried out and that it was entitled to be paid for them. In response to the questions asked of the time charge rates which it was claiming, the Claimant noted that the parties’ respective experts had agreed that the rates charged “were reasonable in accordance with industry standards at the time” (see further below); and, the Claimant stated that it had not notified the Club of its hourly rates until it sought payment, adding that the Club had not asked what its hourly rates were before that time.

So far as payment for the services it was providing was concerned, the first payment that the Claimant received was the general “on account” payment of £5,000.00 gross (£4255.32 net of VAT) which was made on 8^th June 2001 (see paragraph 5 above - I/1095). The second payment claimed and paid was 75% of the £13,500 and 95% of the £6000 referable to items 1 and 2 in the letter dated 18^th May 2001. The request was dated 31^st August 2001; the receipt was dated 1^st October 2001 (I/1096– 097). Each of these payments pre-dated the change in the method of procurement.

A third application for payment was submitted by the Claimant on 19^th February 2002 (I/1099). In this application, the Claimant claimed 100% of both the £13,500 and the £6,000 referable to items 1 and 2 in the letter dated 18^th May 2001. No claim was made in respect of site works viz. item 3 in the letter dated 18^th May 2001, which were then about the begin but claims were made for the production of 3D images (£2,307.50) and for “additional tender action, cost negotiations, option analysis and obtaining package pricing (£7,978.71). The Club did not appear to have queried the claim but, when CS was asked to confirm that it had been paid without complain he said “that would not be correct”. He said if he had seen the application for payment” there would have been hell to pay [as the Claimants] were abusing their position”. He said the request had gone through his office and been paid in error. As I have already indicated I do not accept this evidence. In my judgement, the application was seen by CS and, in accordance with usual practice, payment was authorised by him. In any event, it is a fact that the Club received the application and it was paid promptly and in full. The receipt was dated 27^th February 2002 (I/1098).

The first correspondence concerning fees came when the Claimant submitted its fourth application for payment on 29^th October 2002. At paragraph 19 of the Amended Particulars of Claim, the Claimant contended that it had advised CS verbally that its fees were mounting and that this was something which was “further confirmed in writing” in its letter of 29^th October 2002. This letter accompanied the Claimant’s fourth application for payment. The application itself stated simply that it was an “application for payment related to construction stage services” in the sum of £12,500. This was, of course, the estimated amount which had been stated at item 3 of the letter dated 18^th May 2001. Although the application did not seek to link the sum claimed expressly to that letter, the covering letter dated 29^th October 2002 (H/847) stated:

At paragraph 103 of his first witness statement (C/113) TAS stated that he had informed the Club (CS in practice) verbally before 29^th October 2002 that the Claimant “had incurred additional fees which were rising”. He said that whenever he mentioned rising costs in general discussions with CS, he (CS) would say that he knew but would rather spend money on the Claimant and get the job done. TAS elaborated at paragraph 16 of his second witness statement (C/365 - 366), where he stated that he had discussions with CS and that, to his knowledge (because CT had told him) CT had also “similar discussions” with CS. TAS said the discussions had taken place on site during the course of “informal site meetings”. He said that at no stage during those discussions had CS intimated any concern over fee expenditure. In his evidence, CS contended that the services provided by the Claimant were those itemised in the letter dated 18^th May 2001; that the question of variation never arose and there were never discussions of the sort described by TAS. In my judgment, TAS has a more accurate recollection but, I think he was fairly careful to avoid (financial) precision in the course of what were probably fairly low key discussions of this topic. In my judgment, TAS assessed CS as a client who so far as fees were concerned, was likely to be more amenable once the project had been brought to a satisfactory conclusion. CS was asked a number of questions about this fourth application – his answers left me uncertain whether he agreed he had received it and authorised payment or whether he was saying that this too had been processed by his staff. In the latter case the views I have expressed in paragraph 26 apply “mutatis mutandis”.

The Claimant’s fifth application for payment was made on 5^th March 2003 (I/1107). The application stated that it was a request for “payment on account relating to construction stage services, additional work and extended brief” in the sum of £12,500. The covering letter which accompanied it (H/997) stated:

Although CS had agreed in advance that this fifth payment application could be made, the sum claimed was not paid particularly promptly. According to the Claimant, shortly after the application was submitted, CS made his first criticism of its performance. The criticism was made in a letter dated 31^st March 2003, to which TAS responded on 2^nd April 2003 (H/1017). In his reply TAS stated:

By August 2003 it appears that the Claimant’s involvement with the project was complete. The Claimant submitted a sixth application for payment on 5^th August 2003 (I/1109). The application stated that this was the “final application for payment calculated in accordance with [the covering letter]”. The application was for the sum of £72,000 gross, £17,000 net after deducting previous payments. The Claimant’s (TAS’) covering letter dated 4^th August 2003 (C/291) stated:

On this occasion there was a written response from the Club. CS wrote on 18^th August 2003 (C/293) stating:

The Club engaged Alan Bright Associates to advise it in relation to the Claimant’s fees claims. Correspondence was exchanged (see H/1070a – 1086). Save for one matter, the details of that correspondence do not need to be recorded. Whilst that correspondence was continuing, having not been paid the whole or any part of the £17,000 claimed in its sixth application, the Claimant made a further application for payment. On 21^st November 2003 (H/1071), the Claimant withdrew its earlier offer to compromise the claim in the sum of £17,000 and requested payment of its “total costs” (stated as £101,627.70) less the “non-productive costs” (stated as £10,000 – see the second substantive paragraph of the Claimant’s letter dated 4^th August 2003 at paragraph 31 above for details). When this application was submitted no reduction was offered in respect of the overspend due to the poor performance of some of the trade contractors (see the third substantive paragraph of the Claimant’s letter dated 4^th August 2003) and, after deducting the total of all previous applications, the net sum claimed was £19,841.49. This too was not paid. In due course, County Court proceedings were begun and these were transferred to the Technology and Construction Court.

The Club filed an Amended Defence and Counterclaim. In it the Club (a) denied that the Claimant was entitled to be paid anything more than £37,600 (being £32,000, which was the total of the fees suggested for each of the three items of work identified in the Claimant’s letter dated 18^th May 2001, plus VAT), (b) claimed it was entitled to recover the amount which it had paid to the Claimant over and above that sum and (c) claimed very substantial damages for various alleged breaches of the Claimant’s contractual/tortious duty to exercise reasonable skill and care.

The Claimant requested particulars of the Amended Defence and Counterclaim. On 4^th March 2005 HH Judge Wilcox made an “Unless Order” requiring the provision of certain particulars by noon on 18^th March 2005, failing which the pleading was to be struck out (B/57). That time limit was extended by a further Order made on 18^th March 2005 (B/58) but the required particulars were not provided in time and the pleading was struck out. The Club then made an application which resulted in an Order being made by HH Judge Wilcox on 7^th April 2005 (B/59) the material terms of which were:

The Court gave permission for expert consulting engineering evidence to be given. The Court required that the experts’ reports be exchanged, that they should meet on a without prejudice basis and thereafter serve a joint statement indicating areas of agreement and disagreement. The Claimant appointed Mr John Carter of Carter-Clack Partnership Ltd; the Defendant appointed Mr Christopher J Kendall who practises as Chris Kendall Associates Ltd. Their joint statement was dated 23^rd September 2005 (D/399-402). It showed a considerable measure of agreement in relation to the Claimant’s claims that the services described in each of the lettered sub-paragraphs of paragraph 16 of the Amended Particulars of Claim were additional services (D/402). Mr Carter and Mr Kendall were agreed that “the rates charged by the Claimant were reasonable in accordance with industry standards at the time”. They also considered what would be a reasonable fee for the Claimant’s services for the redevelopment project if the parties’ contract applied and gave this answer:

Before looking at the expert evidence, it is necessary to consider the factual evidence concerning the matters upon which Mr Carter and Mr Kendall were not able to reach an agreement. Save for the acoustic issue which I take last, these are considered in the lettered order of the Particulars given in paragraph 16 of the Amended Particulars of Claim.

The fact that the change was made is not in doubt. The Clamant contended that the change was made only for timing reasons viz. because the Club had not promptly ordered pre-cast units. The Club contended that the pre-cast planks were not ordered because Faircloth had advised of a risk of damage to those planks from temporary cranes used during the erection of the structural steelwork. Such of the contemporary documents as were drawn to my attention during the trial (e.g. H/699 and 700) supported the Claimant’s case – no contemporary documents supporting the Club’s case were drawn to my attention. Inconsistent alternative contentions were advanced by Mr Kendall which, I found unconvincing. Whilst fairly stating that he had seen no documents supporting the Club’s contentions (see paragraph 36.3 at D/392), Mr Kendall stated that, in his opinion, this point was well founded and he criticising the Claimant for not having explained matters to the Club. Mr Kendall’s alternative point, that the Claimant should have notified the Club of additional re-design fees in advance “so that the client had the opportunity to balance the potential time saving against the certain increase in fees”, does not seem to me to be consistent with the Club’s pleaded case that the original design had to be changed because it was unsuitable. I prefer the Claimant’s case on this item.

By the terms of the letter dated 18^th May 2001, the Claimant had agreed to design and administer contracts for “completion of structural steel and completion of shell” (H/594) but, in November 2001 it was decided that the staircases would be dealt with separately from (a) the structural steelwork and (b) the floor slabs. I accept TAS’ evidence at paragraphs 44 to 47 of his first witness statement (C/101-102). Mr Carter classified the works carried out in relation to the internal stairs as additional works (D/377-378). Whilst Mr Kendall agreed that such works had not been specifically mentioned in the letter of 18^th May 2001, he considered that the design and procurement of the stairs had been included as part of the initial commission and that the position remained unchanged after November 2001. He went on to praise (criticise) the Claimant for producing an unnecessary level of detail for the structural steelwork. So far as this particular disputed item is concerned, I think it sufficient to say that I accept TAS’ evidence and prefer Mr Carter’s opinion.

Mr Carter classified the work involved as additional works (D/378). Mr Kendall referred to TAS’ first witness statement (paragraph 85, C/111) and noted that the claim related to the appointment of an M&E contractor (D/395). However, Mr Kendall agreed that the work involved was additional to the scope of the original agreed services. Mr Kendall noted that he had seen no documentary evidence that the Claimant had informed the Club that this work, which had been carried out in the autumn of 2002, was extra/additional work. In view of the conclusions I have reached about the agreement made in June 2001 as varied in November 2001, I do not consider this notice point precludes recovery by the Claimant for this additional work.

In the experts’ agreed report this was said to be “not agreed” with the comment that it was a “small item”. However, on considering their reports it was apparent that, albeit this may be a “small item”, there was no disagreement. Mr Carter had said it was an additional item (D/378). Mr Kendall had said that the claim appeared to be for a client-requested design change (D/396). TAS knew little of the detail of this minor matter (see paragraph 100 – C/113) but, I entertain no doubt that, whatever work was in fact involved, was additional work.

Many of the facts were not disputed but, responsibility for the delay prior to the Equus Partnership (“Equus”) being instructed by the Club, on 1^st August 2002, to advise on acoustic issues was. I accept TAS’ evidence at paragraphs 49 to 53 of his first witness statement (C/102 to 104 – the “Steve” referred to in paragraph 51 was SB) and at paragraphs 35 to 37 of his second witness statement (C/371). CS dealt with this issue at paragraphs 42, 43 and 53 of his first witness statement (C/343 and 345) and at paragraphs 18 and 19 of his second witness statement (C/373f). He said that he assumed the Claimant itself had instructed Equus prior to the Claimant (RC) writing a letter dated 7^th February 2002 to the Club (PF) which enclosed copies of the quotations and invoices received up to that time. Equus’ quotation was one of those listed. Under the list of quotations and invoices there was the sentence –

“All of the above quotations relate to work that has been instructed and as you know, [the Club] has already paid the invoices listed.”

It was suggested to TAS that RC had meant what he had written and that the letter had (incorrectly) conveyed to the Club the fact that Equus had been instructed. TAS disagreed, and so do I. Equus had sent its quotation to the Club on 18^th September 2001 (H/607-610) but no instruction was given by the Club to Equus at that time. By February 2002, CS may have been aware that Equus had come to site at the Claimant’s request in October 2001 and undertaken an environmental noise survey (see H/1087b-1087c for Equus later account to Alan Bright Associates) but, he was also aware that notwithstanding the Claimant’s advice (summarised by TAS in his evidence), the Club had deliberately not yet instructed Equus. Matters came to a head in August 2002. At that time, CS and TAS exchanged angry words when CS (wrongly) suggested that it was the Claimant who was at fault before, as a matter of fact he ensured the necessary instruction was (belatedly) given to Equus.

Those findings are sufficient to dispose of this issue. On the basis of those findings, Mr Carter’s opinion that the Claimant was involved in chargeable additional works must be correct (D/377). Mr Kendall’s contrary opinion (D/393 to 394) is based upon a factual analysis with which I do not agree. Had I reached the contrary conclusion on the facts, I would have accepted the Claimant’s submission that the terms of paragraph 1 of the Order dated 7^th April 2005 prevented the Club from contending that the Claimant was not entitled to be paid for the additional work in fact required and carried out because acoustic advice had not been available earlier.

Although Mr Carter and Mr Kendall were in agreement that the work described at paragraph 16(d) of the Amended Particulars of Claim was additional work (although in their view it should really have been a separate commission) at paragraphs 35 and 36 of his first witness statement (C/341-342) CS stated that he regarded this as a goodwill/incidental item (my expression) for which he had not anticipated that the Claimant would charge. The Claimant’s case was straightforward. It was supported by paragraphs 37 and 38 of TAS’ first witness statement (C/100) and paragraph 25 of his second witness statement (C/368) – in December 2002, CS had requested TAS to consider what work might be required to rectify leaning flood light towers. They were leaning because of foundation movements. TAS visited the site, undertook a survey and then produced a design, including a sequencing of operations, for the required work. He spent 10 hours on this work. CS’ evidence (C/341-342) was that this had been a casually raised incidental matter, raised on a day when TAS happened to be on site; that it concerned only one floodlight, in relation to which TAS had simply volunteered his opinion; and, that if any drawings had been prepared subsequently that had been done without his having made any request for that to be done. I prefer TAS’s evidence on this issue.

In his report, Mr Kendall stated that he had been instructed to give his opinion “as to the extent to which the services which [the Claimant] provided lay inside or outside the terms of the contract [it] had agreed with [the Club], and the reasonable price for any work which [the Claimant] undertook which lay outside the terms of the contract”. In his oral evidence he said that the Claimant’s records had not allowed him to determine the time spent on additional services and, accordingly, he had not been able to calculate what would be an appropriate level of remuneration for them. So far as the Claimant’s time records were concerned, Mr Kendall confirmed that he did not suggest that the personnel involved has not worked the hours shown for the project.

In his report, Mr Kendall emphasised the particular requirements of the ACE Conditions A1 concerning the notification and recording of additional works and/or of disruption to the Engineer’s works. He drew attention to the “importance” of the Engineer’s monitoring progress on a project so that, if the client was to request a variation, the Engineer could promptly comply with his contractual obligation to notify the client that additional fees were likely to become due. He also drew attention to the “necessity” for the Engineer to keep records of time spent on work made necessary by variations or disruptions, and to keep those records separate from the records of work done in order to perform previously agreed obligations. He was critical of the parties’ failure to agree rates for time based fees at the outset; critical of the Claimant’s adoption of hourly rates rounded to the nearest £5 (albeit he agreed with Mr Carter that the rates charged were reasonable in accordance with industry standards at the time) and critical of the Claimant’s job cost records. The main conclusions which he reached can be seen from paragraphs 34 and 37 of his report (D/390 and 396). They were:

In my opinion, LFC [the Club] was entitled to expect the CSP [the Claimant] would undertake all the duties offered in their letter of 18/5/2001 for the fixed price fees quoted, and LFC was entitled to believe they were free to exercise their commercial preferences, for example in changing from the intention of using a main contractor to acting as the main contractor themselves and in procuring the building shell using several sub-contractors, without being concerned that this involved CSP in additional work as they believed the fixed-price fees quoted would cover CSP’s entire service. In my opinion, CSP encouraged LFC in this belief by (i) quoting fixed-price fees initially for what appeared to be the entire service, and (ii) by failing to advise LFC when LFC’s actions would make them liable for time-charge fees under Conditions A1. In my opinion, CSP did not appear to have wished to ‘rock the boat’ by putting forward a claim for time-charge fees each time they were entitled to do so. In my opinion, CSP appear to have taken comfort from their believe that under the Conditions A1 they would be entitled to reimbursement for any additional work they undertook for LFC. Undoubtedly LFC did require CSP to undertake extra work because of variations or disruption, but I have seen no documentary evidence that CSP at any time advised LFC that additional fees would become due as a result, as required by the ACE Conditions, nor that CSP at any time estimated the amount of such fees.

The majority of the additional fees claimed by CSP relate to items which were variations to the work for which they originally proposed fees. The ACE Conditions make provision for such work to be reimbursed, probably at hourly time-charge rates, but the ACE Conditions also require the consultant to advise the client when such charges are to be incurred. In my experience, almost every client then requires an estimate of the size of the additional cost. From my examination of the project documentation I can find no evidence that CSP informed LFC when additional fees were to be incurred, nor did they provide an estimate of cost. Furthermore, CSP do not appear to have kept records identifying which costs were attributable to which items and it would seem to be impossible to separate the costs incurred in performing previously agreed obligations from the costs incurred in undertaking variations and copying with disruption.

The points made by Mr Kendall in his report (and by Mr Graham Platford in his submissions), suggest that because of the failure to agree time rates with the Club in May/June 2001 and/or in November 2001 and because of the failure to follow ACE notification requirements, the Claimant has no legal entitlement (and, as Mr Platford put it, the Claimant had pleaded no sustainable legal entitlement) to recover anything more than a fixed fee of £32,000 plus VAT. Many of the points made seemed to me to be divorced from the comparatively simple factual reality of (a) the rather open-ended arrangements agreed in November 2001, when the Club wished to change the basis upon which the works were to be procured and (b) straightforward variations to the works which the Club required from time to time as the project proceeded. The points made by Mr Kendall in paragraph 34 of his report (cited above) are essentially advocate’s points (which I think Mr Platford adopted as part of his submissions) but, I did not find them either factually accurate or convincing. My findings/conclusions are at paragraphs 13 to 15 and 17 above. , Whilst the reference to the ACE Conditions in the Claimant’s letter dated 18^th May 2001 was sufficient for those terms to be incorporated as part of the agreement (notwithstanding the Club’s long maintained view that they were not), the absence of agreement as to the time rates the Claimant could charge was not consistent with a mutual expectation that payment for additional works and/or disruption was to be dealt with strictly in accordance with the regime contemplated by Clause 6.7 of those Conditions. Put in another way, so far as Clause 6.7 was concerned, this was a case where, in November 2001, the parties had “otherwise agreed” that the Claimant would be entitled to a reasonable remuneration for such additional services as might come to be required of it by the Club – with the amount of such remuneration being left to be agreed in due course. Prior to August 2003, after the Claimant submitted applications for payment the Club responded by making payments in the sums requested. In my judgment, in the circumstances of this case, no payment was mistakenly made by the Club to the Claimant and there can be no question of the Claimant being ordered to repay any of the sums which it has already received from the Club. However, that said, has the Claimant proved that it should be paid a further sum in respect of its final account for work done on this project ? To answer that question it is necessary to consider the evidence given by Mr Carter.

Mr Carter set out to answer five specific questions (D/375). He considered whether, if proved, the items of work identified at sub-paragraphs 16(a) to 16(w) of the Amended Particulars of Claim constituted additional work (D/377-379) and also whether the hourly rates which the Claimant had charged were reasonable (D/381). His conclusions on these issues have been superseded by the experts’ agreement that the rates charged were reasonable and in accordance with industry standards at the time, by the schedule to the experts’ agreed report (D/402) and by my findings at paragraphs 38 to 42 and 44 above. Mr Carter also considered whether the amount claimed in this action was a reasonable amount for the Claimant to charge for the balance of the works which it had undertaken. When addressing that question, he noted that the Claimant had not kept records which would have allowed him to assess the time spent on each of the individual additional services. He carried out two separate exercises. First, as he put it, assuming the contract applied, he assessed the Claimant’s “costs” and concluded that a reasonable fee for the additional works would be “approximately £52,000” (or “in the order of £50,000 - £55,000”) less the abatement of £10,000 for non productive work during the project”. Secondly, adopting what he called “a quantum meruit basis” or a “pure time basis” of charging for all the work carried out, he concluded that a total fee of £85,000 would be reasonable. Although not formally abandoned by the Claimant, this second alternative was not put forward with any enthusiasm. In my judgment, rightly so; it was not an appropriate way to attempt to quantify the Claimant’s entitlement in this case.

The experts’ agreed answer to the question “What is a reasonable fee for the project should the contract apply ?” has already been set out at paragraph 36 above. As was there noted Mr Carter had analysed the Claimant’s time records and carried out an apportionment exercise (see D/379, 380, 383 and 384). Mr Kendall had not undertaken a similar exercise of his own. When he was asked about the apportionment exercise Mr Carter’s answers reinforced the impression which I had formed when I studied it viz. a sensible/cautious approach had been taken in order to ensure that the Claimant would not be overpaid for the additional works. The only part of his exercises that I did not find helpful were the second and third main paragraphs on page D/380 (where he considered percentages based on an estimated cost of £750,000) but those had no bearing on the analysis at Appendix A (D/383). In my judgment, in allocating £48,725.75 of the Claimant’s “costs” against the original workscope Mr Carter fully recognised the “competitive” nature of the original fees quotation. I incline to the view that an allocation of more than £51,755.75 of the Claimant’s “costs” to additional works might well have been justifiable if the Claimant had kept fuller records; however, given the nature of the records which the Claimant did keep, it cannot complain that a rather cautious view has been taken. I proceed on the basis of Mr Carter’s assessment and take £52,000 as an appropriate base figure for the additional works which should be added to the agreed £32,000 which the Club agreed to pay on 8^th June 2001.

In one respect I doubted the approach which Mr Carter took in making his assessment. Having arrived at his base figure for additional services, he deducted the whole of the £10,000, which TAS had allowed for non-productive costs during the period when RC was handing over to CT (see the third paragraph of the letter dated 4^th August 2003, cited at paragraph 31 above), from the additional works “costs”. When asked why he had done this and not apportioned the deduction, Mr Carter was not able to give a convincing explanation. Since I did not recollect either Counsel expressly addressing this in closing submissions, I included a paragraph in the draft judgment inviting further submissions.

Miss Packman (for the Claimant) invited my attention to certain documents and invited me to conclude that significantly less than 50% of the deduction should be attributed to the additional works. In my view, that approach was not appropriate at this stage of the trial, after the evidence had been concluded. Mr Platford (for the Club) invited me to accept Mr Carter’s approach because that was the evidence which the Claimant had put forward. Whilst agreeing that was the approach Mr Carter had taken, in my view the Court is not bound to accept an expert’s approach which, it concludes, is flawed. In my judgment, such non-productive costs as were incurred could not possibly have been confined to the additional works; inefficiency at or about the time of handover must have had an effect on all of the works the Claimant was undertaking over the relevant period and logic demands the credit should be apportioned. Mr Carter split the Claimant’s time equally between the original works and the extra works, doing so because no better information was available to him; adopting a consistent approach, in my judgment, the credit should also be apportioned equally between the original works and the extra works.

Once that adjustment to Mr Carter’s method of assessment had been made, the parties agreed that the principal sum prima facie due to the Claimant was £24,231.79 plus VAT at 17½% (£4,240.56). However, they were not agreed that Judgment should be entered for that sum. Mr Platford submitted that the Claimant had failed to establish any one of the alternative bases of claim pleaded at paragraph 12 of the Amended Particulars of Claim (see paragraph 16 above) and accordingly, he said, the Claimant’s action had to be dismissed. That, so it seemed to me, was a bold and unattractive submission. It is a submission I did not accept. The Claimant sought payment for work done for and at the request of the Club. The facts upon which the Claimant relied were adequately pleaded. The Defendant was able to answer the factual case and instruct an expert witness who was able to address the technical/ factual issues. Insofar as the Club disputed the Claimant’s factual allegations concerning the additional work which the Claimant identified, the defence failed. Insofar as the Club maintained that the Claimant had agreed a fixed price contract and/or that nothing more than the initially agreed fixed price was due because of (a) the absence of due notification and/or (b) the absence of adequate information within the Claimant’s (project) time records, those defences failed. The Claimant sought to recover the total of the two amounts claimed in August and November 2003 (see paragraphs 1, 6, 16, 19 to 21 23, 24 and 27 as well as paragraph 12 of the Amended Particulars of Claim), and, on the basis of the facts found, an entitlement (in my judgement) to a significant part of that total, was established. It was not a pre-condition of success in the action that the Court should find that the Claimant had, in one of the pleaded alternatives, precisely analysed the legal basis upon which it was entitled to recover a significant part of the total sum which it had claimed. It follows that there will be judgment for the Claimant in the agreed sum of £24,231.79 plus £4,240.56 in respect of VAT.

At paragraph 28 of the Amended Particulars of Claim the Claimant contended it was –

In my Judgment, this is not a case where it would be appropriate to contemplate ordering interest under the 1998 Act. Had the Claimant maintained and sued upon the offer which was made in August 2003 to limit its fees claim to the sum then requested, then arguably, the position might have been different. However, it did not do so, and instead it brought an action in which it claimed to be entitled to recover an amount calculated by reference to its charge out rates for all of the hours booked to the project (less only the allowance, which it thought appropriate, to cover the handover from RC to CT). That claim succeeded in part and, in my judgement, interest should awarded under the 1981 Act. Over what period ? At what rate(s) ? In my view, the Club was entitled to a reasonable time to consider the fees claim made in August 2003 and then the further fees claim made in November 2003. A reasonable time had elapsed by 12^th January 2004 and simple interest should be allowed from that date up to the date of judgment. The appropriate commercial rate to allow over that period is 6½% per annum on the net sum of £24,231,79. It would not be appropriate to award any interest on the VAT. The parties have agreed the amount of the interest awarded, in the sum of £2,986.15.

The Claimant made a CPR, Part 36 offer in June 2005. At the trial the Club was held liable for more than that offer and, accordingly the provisions of CPR, Part 36 Rule 21 have been brought into play. By virtue of Rule 36.21(4) the Court is required to make an enhanced interest order under Rule 36.21(2) for some or all of the period starting 21 days after the offer was made, “unless it considers it unjust to do so”. In the circumstances of this case, I do not consider it could possibly be said to be unjust to made such an order. As to the rate of interest which should apply over that period, in my judgment, the justice of the case is met if the rate awarded on the net sum is increased from 6½% to 8% per annum (viz the Judgment Rate). On that basis, the parties have agreed the amount of the enhanced interest in the sum of £147.38.

In my Judgment, in this case the general rule that the unsuccessful party will be ordered to pay the costs of the successful party should be followed. Although less than the total amount claimed was recovered, the Claimant established the disputed facts and it did not put forward an exaggerated claim of the sort which might have caused costs to escalate beyond the level which would otherwise have been required. An award of standard basis costs is appropriate.

In the context of costs, the Claimant’s CPR, Part 36 Offer made in June 2005 (to which I have already referred in paragraph 52.2 above) which has brought Part 36 Rule 21 into play, is equally significant. In the circumstances of this case, I do not consider it could possibly be said to be unjust to order the Club to pay the Claimant indemnity costs for the whole of the period starting 21 days after that offer was made. Accordingly, pursuant to Rule 36.21(3)(a) and Rule 36.21(4) that Order is made.

Turning to Rule 36.21(3)(b) which empowers the Court to order interest on those costs at a rate not exceeding 10% above base rate, in my view it would be unjust to order the payment of any enhanced interest on costs prior to the date(s) of actual payment. I was informed that all the Claimant’s costs were being met by its Insurers. No details of payment made for work carried out over the last few months was provided and, in the absence of such information, in the circumstances of this case, I declined to make any Order pursuant to Rule 36.21(3)(b) and Rule 36.21(4).

No costs information was put forward when the case was listed for judgment. No application was made for any interim costs payment. Detailed assessment of the Claimant’s costs is required.

On behalf of the Club, Mr Platford requested Permission to Appeal. He did not suggest that the Club wished to challenge any of my factual findings. Nor did he suggest that the Club wished to challenge my valuation of the additional works which I had found that the Claimant had undertaken. The issue which Mr Platford submitted the Club should be permitted to appeal was the pleadings issue which is addressed in paragraph 51 above. I have there clearly stated my own views on the merits (or rather the lack of merits) of the Club’s submission. In that regard, I do not believe that an appeal could be thought to have a real prospect of success and, accordingly it would not be appropriate for me to give permission to appeal. The Club is entitled to make a further application for permission to appeal to the Court of Appeal and, in view of the imminence of the Christmas/New Year holidays, the time for so doing is extended until 4.00 pm on Friday 13^th January 2006.