Kehr & Tucker Ltd v Astronomical Ltd

Kehr & Tucker Limited (“KT”) are consulting engineers specialising in M & E design services. The Defendant company, Astronomical, is a development company run by James Ingham, who had a project to create four sophisticated town houses on a site at numbers 114-118 inclusive Denbigh St. in London, S.W.1. Mr. Ingham describes himself as a building construction consultant and has an academic qualification in construction management. He provides his expertise to a firm of solicitors. He is not a specialist designer and looked to KT for those services. Mr. Neil Day was the staff member of KT w ho was responsible for producing and managing the day to day design of the ME Services for the projected four town houses. He, Mr. Day, had no knowledge as to the terms of the contract agreed between Mr. Ingham on behalf of Astronomical and KT. The staff member of KT who was engaged in negotiating the contract was a Mr. Paul White. He is no longer employed by KT. He was not able to attend the trial. Leave was given to adduce his evidence under the provisions of the Civil Evidence Act.

The project involved two stages as first envisaged, the design and planning stage involving negotiations with utilities and local authorities and the construction stage with post-tender duties. There are two principal issues in this case which relate to the first stage: what was the scope of the services that KT agreed to perform and, secondly, of those services performed outside the scope of the agreed services what are they worth?

The resolution of the second question is more straightforward. Construction experts have costed the elements of services in contention and, subject to liability, the cost is agreed. Thus, on a quantum meruit value the additional services can be costed and subject to them being proved to be performed with the authority of the Defendant, then of course the cost of those services may be assessed. Mr. Ingham was cross-examined by Mr. Bradley. At first he was reluctant to concede that the architects employed had any authority to give instructions to KT in relation to matters such as changed layouts which give rise to the necessity of changed routing of services. Overnight he overcame his earlier reticence and accepted that the design process where the architect was the lead designer and all designers copied changes to each other it was an obvious inference that when an architect changed the physical layout of a room and copied a drawing to the M & E designer, any knock-on effects had to be embraced by the ME designer. Mr. Ingham struck me as an honest but cautious witness.

The Claimant’s case is that they agreed that the design of the project would involve the production of a full set of drawings and performance specifications for the mechanical, electrical and public health services in their paragraph 4.2 to 4.14 of their original written proposal. They originally costed this in the sum of £16,440. There were important exceptions that were recorded under an exclusion provision. Exclusions included VAT, travel outside of London, specialist lighting design, home entertainment system design, telephone system design and specification, contract procurement, swimming pool design and specification including associated supply and extract systems. Then following a telephone conversation between Mr. Ingham and Mr. White it was agreed that these services would be performed for a lump sum of £15,000. That agreement is referred to in a letter of 27^th May 2002, the material parts of which state:

“Following our telephone conversation of 24^th May 2002 in connection with our fee submission for the design of the mechanical, electrical and public health services for the above project, I have attached a copy of section 5 of our fee proposal amended to reflect our discussion. This now confirms a lump sum fee of £15,000 for the design of the services and negotiations with the utilities. Post-tender supervision during the construction period to be reviewed at a later date is therefore currently excluded.”

The material part of clause 5 of the amended proposal included with the letter in the exclusions part of the proposal is the exclusions. There is a seventh item of exclusion added, namely cyclical design. Mr. White’s evidence is that this exclusion was added because what was agreed was that the scope of the works agreed was to prepare a performance specification for core services with detailed design to be undertaken at a later stage when the design of the interior and the fittings had been settled. At paragraph 5 of his statement it is evident that he contemplated three stages in the provision of services: the performance specification for core services, a detailed design and post-tender supervision.

Mr. Ingham’s case is that two stages only were ever contemplated, the pre-tender and the construction post-tender phase. Further, Mr. Ingham agreed that phase 1 would be performed and paid for by Astronomical in the sum of £15,000. He said that he discussed with Mr. White the added exclusion, namely cyclical design, and that it was agreed that this should not remain in the exclusions. There is no written evidence that this exclusion was removed from the agreed written parts of the contract evidenced in the letter and the proposal. Mr. Ingham has given sworn evidence that it was removed. It is clear that when considered objectively the agreement evidenced by the original fee proposal, the amendment and the letter of 24^th May 2002, compared with Mr. White’s analysis of KT’s intended involvement in the project explained in paragraph 5 that I have referred to already, that the two accounts significantly differ. If it had been intended to incorporate a further phase in the design process, the proposal would have said so. The amended proposal would have said so. Thus, there would have been identified core design, detailed design and post-tender supervision. The proposal as amended clearly refers only to the two phases, and those are referred to by Mr. Ingham in his evidence.

It may have been the intention of KT to protect their position against the demands of a fussy client, but it was not done in clear terms. Neither was the exclusion accepted in my judgment by Mr. Ingham, who clearly on the account of both Mr. White’s and his own account challenged the consequences following the letter of 24^th May 2002. Further, had such an exclusion been agreed reflecting Mr. White’s apparent concerns it seems improbable that KT would not have ensured that works outside the scope of what was agreed were contemporaneously identified and some note or discussion or other memorandum between the employer KT and the project manager recorded and made. KT agreed £15,000 for the first phase and charged a further £22,140.

There is evidence that this whole matter came to a head when Mr. Gareth Tucker received a time record submitted by Mr. Day. At paragraph 30 of his written statement he said:

“It was apparent from my review of the time records submitted by the design team on the job that far more time was being recorded against the project than had been anticipated by the proposal. I discussed the matter with Neal Day who had the day to day control of the project. He informed me the Claimant had been required to redesign a number of areas of the design and had been instructed to undertake additional work. Mr. Day informed me that he raised the issue of additional costs with Mr. Ingham and that Mr. Ingham indicated that a detailed additional claim should be passed to him for consideration. At that time no such details had been passed to Mr. Ingham. I had a meeting with both Neal Day and Mr. Ingham in our office. The meeting took place on 16^th April 2004. I am satisfied that Mr. Ingham had arranged the meeting to obtain drawings that he considered overdue. I am satisfied that he complained of delay to both KT directly and through Mr. Day.”

The first indication given of the demand for additional monies beyond the fixed sum agreed was at that meeting of 16^th April 2004. I accept that it was informally recorded on the back of an envelope as an aide memoire to Mr. Tucker. It was not until 10^th May 2004 that Mr. Ingham received a formal invoice from KT setting out the claimed extra works and the charges. The drawings he had produced to him on 16^th April by KT I am satisfied were not complete. They were not in fact formally issued until 10^th May 2004 at the time that the letter was written by Mr. Tucker. The accounts of Mr. Tucker of KT and Mr. Ingham as to the precise detail of the meeting differ, but essentially it seems that Mr. Ingham wanted substantiation as to the additional items claimed and wished to complete the design project, and Mr. Tucker was minded to defer pursuing the matter in the hope or expectation that he might be instructed to undertake the supervision phase. There are allegations that Mr. Tucker attempted to bring irregular pressure to bear upon Mr. Ingham. The police became involved.

I am not in a position to make any findings as to the truth or otherwise of those matters. Suffice it to observe that it is some measure of the bad feeling that these parties emanate towards each other which may well be the cause of their failure to compromise these modest claims in a sensible and commercial way rather than to enhance costs and delay by procuring a transfer from the County Court in Liverpool to this court and in persisting in this hearing with a disproportionate amount of costs expended on each side.

There are expert reports filed in this case which purport to express opinions as to the interpretation of terms and the scope of the contract and the contractual effect of the so-called exclusions. Matters as to the terms of the contract are essentially matters for this court and not the so-called experts. They are of limited assistance as elementary Q.S. mattes and costings.

My first conclusions as to the issues are these. The scope of the contract was to produce drawings which were sufficiently detailed to be sent out for the tender process and which followed the fixed layout drawings of the architects. Secondly, any changes indicated thereafter by Mr. Ingham or by the issuing of a revised architect’s layout drawing should be considered as outside the scope of the agreed services, save where by delay or mistake by KT an architect’s layout drawing had to be amended causing consequential amendment to the M & E layout.

The design process is essentially evolutionary. It involves liaison between the professionals concerned, exchanges of information and drawings until such time as the drawings are complete for the chosen purpose. That is either tender, build or when a design freeze is imposed. I propose to consider those claims which genuinely may be characterised as additional to the agreed scope of works which if instructed justify a quantum meruit claim. I follow the order of the schedule helpfully drawn up by Mr. Bradley.

Subject to corrections in arithmetic there, it means that there are additional items outside the agreed fee proposal in the sum of £11,788. Since they derive largely from properly authorised drawings and the like, they are in my judgment matters instructed by or on behalf of the Defendant client, and therefore the quantum meruit arises.

A counterclaim in this action has not been pursued. The Claimant is therefore entitled to the balance of the contract sum which is £5,000, which when added to the sums that I have allowed amounts to £16,788. I award interest upon this sum at a rate of 6.5%, that being from 1^st January 2005. That is some five years at the rate of £1,091.22 per annum. That gives a sum of £5,456.

There will be judgment in the sum of £22,244 for the Claimant. Costs will be agreed or failing that there will be liberty to apply. I direct that this judgment be transcribed and provided to the parties free of cost. Within 14 days of the receipt of judgment the parties may make such applications as are advised to them.