Elvanite Full Circle Ltd v AMEC Earth & Environmental (UK) Ltd

INTRODUCTION

The claimant is a demolition and recycling contractor. Since September 2007, it has owned a plot of two acres within an area of industrial land at Haven Quay, Haven Road, Colchester, Essex (“the site”). Two months before the claimant acquired the site for £561,000, it instructed the defendant, a company which (amongst other things) advises about planning matters concerning waste management sites, to make a planning application seeking permission for waste recycling at the site.

The intention was that the planning application would be made at the end of November 2007. For reasons which form part of the underlying disputes in this case, the planning application was not made until 3 April 2008. Following comments on the application by, amongst others, Essex County Council (“ECC”), Colchester Borough Council (“CBC”), and the Environment Agency (“EA”), the defendant was working towards the resolution of that application by about 25 July 2008. However, on 15 July 2008, the claimant withdrew the planning application and sacked the defendant. Thereafter, on 4 September 2008, the claimant, using different consultants, made a fresh planning application. That application was not granted by ECC until seven months later, on 25 March 2009. However, notwithstanding this eventual grant of planning permission, the claimant has not been able to sell the site.

The claimant now claims damages for breach of contract and/or negligence arising out of the timing and content of the defendant’s original application for planning permission. First, it is said that the application should have been made by the end of November 2007 and that the defendant was in breach of contract in failing to complete the application by that date. Secondly, it is said that, even when the application was made in April 2008, it was deficient in numerous respects. The claimant’s suggestion is that, if it had not been withdrawn in July, it would have been refused by ECC.

The claimant’s pleaded case as to how and why these deficiencies led to loss is very specific. It is alleged that, if an “appropriately complete” planning application had been made by the end of November 2007, planning permission would have been granted by the end of April 2008 (see paragraph 12.5 of the Amended Particulars of Claim, set out at paragraph 230 below). The claimant then says that, if planning permission had been granted, they would have sold the site in April/May 2008 to a well-known waste contractor, SITA, for £1,350,000. The claimant maintains that the market then declined with the result that, even though planning permission was subsequently granted in March 2009, they have failed to find a buyer at an acceptable price. The claimant therefore claims damages by way of loss of profit, calculated by reference to the £1,350,000 figure, less the sum of £561,000 paid for the site in September 2007.

The defendant denies negligence and/or breach of contract both in respect of delay and the alleged deficiencies in the application. Further and in any event the defendant disputes the claimant’s case on causation, saying that the planning application was unconnected to the negotiations for the sale of the site to SITA, and the reasons why those negotiations fell through. The defendant also says that, but for their sacking, and the withdrawal of the planning application, planning permission would have been granted by ECC in July 2008. If SITA had wanted to buy the site, they could have done so then, but the defendant avers that, in truth, SITA would never have bought this site, and certainly not for £1.35 million. Further, the defendant has a number of other defences arising out of the express terms of the contract.

I propose to deal with the formation of the contract in Section 2 below and the contract documents and the contract terms in Section 3. In Section 4,I deal with the events up to December 2007. In Section 5, I address the allegations of delay up to mid-December 2007 and consider why the planning application was not complete by the end of November 2007.

In Section 6, I deal with the events between December 2007 and April 2008, together with their legal consequences. In Section 7, I summarise the documents comprising the planning application made by the defendant on 3 April 2008. Thereafter, in Section 8 I deal with the events up to the termination of the defendant’s contract in July 2008, and in Section 9 I outline briefly the events thereafter. In Section 10, in the light of all the information, I consider whether or not the defendant’s planning application was deficient or otherwise in breach of contract.

In Section 11, I consider all the various issues of causation and in particular whether or not the claimant is right to say that, but for the defendant’s default, planning permission would have been granted at the end of April 2008 and that, in consequence, SITA would have bought the site immediately thereafter. I deal with quantum at Section 12 below. In Section 13, I address the various additional defences based on the express terms of the contract and, in Section 14, I deal with the defendant’s counterclaim. There is a short summary of my conclusions in Section 15 below. This is an appropriate moment to convey my considerable thanks to counsel for the clarity and thoughtfulness of their written and oral submissions.

THE BACKGROUND AND FORMATION OF THE CONTRACT

The Original Agreement

The claimant company is owned and run by Mr Ralph Bailey, a hands-on, no-nonsense businessman. His evidence demonstrated a decisive man who talked a good deal but was not so good at listening; who wanted things done his way and to his timetable and could not understand when things did not go according to (his) plan; and who made instant decisions based purely on instinct and emotion. He put next to nothing in writing. His recollection of the relevant events, as was demonstrated on a number of occasions during his cross-examination, was patchy and inherently unreliable. However, I make clear that, at root, he was an honest witness and, if his answers were often unhelpfully monosyllabic, this was in part due to his exasperation with the planning process and the subsequent litigation in which he has found himself embroiled.

The claimant had owned the site in the past, before selling it to a third party. It consisted of an area roughly two acres square with a long strip leading to it which connected to the site to Haven Road. To the north west of the site was a large plant occupied by Anglian Water; to the south east of the site was land occupied by Silverton Aggregates. In time, a further strip of land immediately adjacent to the road that connected the site to Haven Road, and also owned by the claimant, would become part of the SITA offer. This strip was not part of the original two acre site and was, like the land used by Silverton Aggregates, always owned by the claimant.

Mr Bailey spoke to Mr Baker, the technical director of the defendant, on 3 July 2007, and asked him to meet him at the site on 17 July and advise on planning matters. Thereafter Mr Baker would attend a meeting at ECC to discuss planning matters and the possible future use of the site. The fees for this original limited engagement were not to exceed £500. Mr Baker said that, at this time, he did not know that the claimant did not own the site. Although Mr Bailey denied not telling Mr Baker that he did not own the site, it seemed clear to me that he did not mention it; the failure to pass on this information was consistent with Mr Bailey’s basic approach to those he engaged for advice. He only ever told them what he thought they needed to know. So for the avoidance of doubt, I find that at no time before the principal contract was made (Section 2.2 below) did the defendant know that the claimant did not actually own the site (but was in the process of buying it back).

The meeting on 17 July went well. On 23 July, Mr Baker wrote to Mr Bailey outlining what had been said at the meeting and noting that Claire Tomalin, the senior ECC planner present, was “convinced that waste use of the site is not only acceptable, but desirable”. The letter then went on to summarise the issues that would need to be addressed in any planning application, and the Assessments that ECC would require. These included a Flood Risk Assessment (“FRA”); a Transport Assessment (“TA”); and predictions of cumulative noise impacts. In addition, Mr Baker stressed the need for the claimant to prepare a proposed site layout, “including any additional buildings, fixed plant, parking, circulation areas and site access,” an element of the process which was to assume particular significance over the next few months. This letter, however, marked the conclusion of the original agreement, and it is not alleged that the defendant was in breach of its terms.

The Principal Contract

The defendant’s letter of 23 July offered to carry out the work in connection with the planning application. It informed Mr Bailey that if he wanted the defendant to start work he should let them know and that, in the meantime, he should prepare his sketch proposals for the site and work up his ideas on the nature and scale of the recycling operations that he envisaged. It was said that, if he needed a costed proposal in advance of proceeding, Daniel Murkin, one of the defendant’s senior consultants, would arrange for that to be prepared.

Two days later, on 25 July, Mr Bailey instructed the defendant to “please continue with the planning as required…as discussed, I would require an application to be lodged with Essex County Council within the next three to four months at latest. Should you require any assistance from myself in concluding this matter as speedily as possible, please do not hesitate in contacting me.” It appears that the defendant broadly took that email as an instruction to get on with the work although, perhaps unsurprisingly, their main focus in the first few weeks was to put together the promised costed proposal. In any event, I find that this email was an instruction from the claimant to the defendant to commence work on the planning application in advance of the formalisation of the contract.

In this way, from the end of July onwards, each party was working on the basis that the claimant had instructed the defendant to carry out the work necessary to make the planning application. Thus, on 7 August 2007, Mr Bailey emailed Mr Baker asking how he was “progressing with the planning for the new area?” He stressed the urgency of the application, saying that “we must be in a position to have an application on ECC desk as soon as possible.” That was consistent with his earlier request that the application be made ‘within the next three to four months’. Thus, even at this early stage, Mr Bailey had in mind a planning application being made by about the end of November 2007.

Early on, on 8 and 9 August respectively, first Mr Pennington (the claimant’s surveyor) and then the defendant made plain to the claimant, in two separate emails, that for the purposes of the application, the claimant needed to provide an accurate site survey and details of the proposed site layout. Neither materialised, despite the fact that the defendant expressly advised that the details were required in order to determine what kind of planning application was required. In addition, in the email of 8 August, Mr Pennington floated with Mr Bailey the idea that, if he was going to sell the site on, he might seek planning permission for an outline general waste use, leaving the specific application to be made by the subsequent owner. Although, in the end, this was not the approach that was adopted (and subsequently the defendant worked towards obtaining a full - and therefore detailed - planning permission), the fact that a very different approach was being mooted in August demonstrates how vague and unclear were the claimant’s plans for the site at the outset.

On 10 August, Mr Bailey was sent a copy of the defendant’s standard terms and conditions for information. Although the documents sent have not surfaced, I find that it is more likely than not that these were in the same terms as those which were provided the following month (paragraph 22 below). There was no evidence which indicated that there was any change in the conditions between August and September. Mr Bailey did not suggest otherwise. He made no comment upon the terms he was sent. He was also told in the covering fax that a fully costed proposal would follow “when further details of the proposals and of the scope of AMEC E&E work required is confirmed by yourself.” This was a further indication of the uncertainty of the claimant’s proposals at the time.

On 30 August, in a telephone call, Mr Bailey made his first mention of the possibility of using the site to recycle vehicle scrap metals. On 3 September 2007, Mr Murkin sent Mr Bailey an email following a conversation which he had had with John Snow of ECC. Mr Snow, who gave evidence at the trial, was a very junior member of the ECC planning team at the time, and this was his first significant project. He had indicated to Mr Murkin that the requirements for the planning application included a Design and Access statement; an FRA; a TA; a Noise Impact Assessment (“NIA”); and a Dust Suppression Method statement. Mr Murkin passed all of this onto Mr Bailey, and also asked for this information about the possible future use of the site:

“1.

Existing number of vehicle movements per day (all vehicles including staff);

2.

Proposed additional number of vehicle movements per day;

3.

Times of all existing/proposed vehicle movements throughout a typical day (i.e. by hourly periods)…

4.

Any proposed alterations to the existing site access at its junction with Haven Road? These may include proposed changes in the width, kerb radii, gates, visibility splays or lanes etcetera…

5.

Existing/proposed vehicle parking (all vehicles), turning and loading/unloading provision within these sites using the same access.”

In addition, the email referred to Mr Murkin’s expectation that Ms Tomalin would give her opinion the following day on the proposed “car breaker’s scrap metal recycling” use of the site. He said that the initial indications were that, given the nature of the location, this should be an acceptable use, with the requisite controls on operation.

On 6 September, Mr Murkin contacted Dr Ben Thomas, who also worked for the defendant, to undertake the FRA. Dr Thomas’ reply of the same day suggested that he considered that this was a relatively straightforward task.

On 10 September, following a conversation on 6 September, Mr Murkin emailed Mr Berriman, a freelance sub-contractor whom the defendant wanted to undertake the TA. From that email it was apparent that Mr Murkin had spoken to Mr Bailey and had obtained some sketchy information as to the existing (rather than the proposed) traffic movements. Mr Murkin said:

“The applicant estimates that the current activity involves a throughput of about 50,000 tonnes per annum equivalent to 1,000 tonne per week (or about 20-25 vehicles).

For the adjoining site (annotated on site plan) on which the car breakers scrap metal recycling use is proposed and which is to be the subject of the Transport Assessment, the proposed layout and number of vehicle movements is not known…

Whilst I do not have the proposed site layout indicating the site capacity for vehicle parking or turning, it is anticipated that this will be similar to that of the adjoining concrete/waste transfer site with PP [planning permission], the two sites also having an identical single span storage building structure.”

On the same day, Mr Murkin told Mr Bailey that he had obtained costings for both the FRA and the NIA (which was to be carried out by independent acoustic engineers called PACE). As to the TA, Mr Murkin said that “a provisional site layout would inform a more accurate costing at the outset.” And as to the possibility that Mr Bailey had raised, that the application be based on a car breaker’s scrap metal recycling use of the site, Mr Murkin said that he had discussed this with Ms Tomalin and that no additional information was required, although they needed the proposed use to be specified in the application, together with the site layout and design of any buildings included, and a supporting statement referring to other similar uses that are relocating from the area. Both these emails from Mr Murkin therefore stressed (again) the importance of finalising the proposed site layout for the purposes of the application.

The Relevant Contractual Exchanges

On 13 September, the defendant wrote to the claimant setting out their detailed proposals for the work “necessary to advise on, prepare and submit the Planning Application on your behalf in November 2007 as requested.” The planning application was described as “Full Planning Application for Waste Recycling Use Involving Re-Incorporation and Development of Land”. The proposals included, amongst other things, a layout plan; a Design and Access statement; an FRA; a TA; and a NIA. The figure quoted was £13,225. In addition, hourly rates were quoted for additional costs “incurred as a result of further work being required at the client’s request.” The letter enclosed a further copy of the defendant’s standard terms and conditions.

On 14 September, Mr Bailey returned the Fax Back Order Confirmation which had been sent with the letter of 13 September. This again referred to the “Full Planning Application for Waste Recycling Use Involving Re-incorporation and Development of Land.” It instructed the claimant to proceed with the work for the sum of £13,225. It confirmed that Mr Bailey, on behalf of the claimant, had read and accepted the defendant’s terms and conditions of contract. I find, therefore, that the principal contract was made on 14 September.

Mr Bailey was cross-examined about these terms and conditions on the second day of the trial:

“Q: This sets out what AMEC are going to do, yes?

A: Yes.

Q: And sets out the rates and the terms, and then we see attached the terms and conditions?

A: Yes.

Q: Presumably you read all of that at the time?

A: Briefly.

Q: And you didn’t raise concerns, did you, about the content of those terms?

A: No.

Q: And you signed the confirmation and sent it back to say you had understood them?

A: Yes…

Q: Well, presumably, as an experienced businessman, you wouldn’t sign things you don’t understand?

A: To a degree there was a push to get on with it and get it done.

Q: And we can also agree that at the time you never raised any concern about these terms?

A: No.

Q: You didn’t, for example, consult lawyers at the time?

A: I did not.

Q: But you could have done that, couldn’t you?

A: Possibly.”

On the basis of this evidence, I find that Mr Bailey, who is an experienced businessman, generally understood the claimant’s terms and conditions, and found nothing on which he believed that he needed clarification, much less re-negotiation. He agreed the terms without qualification and without any pressure (whether direct or indirect) to sign up to terms he did not understand or did not like.

THE CONTRACT DOCUMENTS AND THE CONTRACT TERMS

The Contract Documents

The Contract Documents were therefore made up of the defendant’s letter of 13 September 2007; the claimant’s order confirmation of 14 September 2007; and the defendant’s standard terms and conditions of contract.

Those standard terms contained the following particular clauses:

“2)

CHANGES. Upon receipt of notice from CLIENT of a change in the scope of the work hereunder, AMEC will promptly notify the CLIENT if there is an impact on the schedule, price or terms of the agreement. Thereafter, an estimate of any impact on the contract will be prepared and submitted to the CLIENT. The parties agree to promptly negotiate and implement changes to the Agreement. CLIENT acknowledges and agrees that its use of any purchase order or other form to procure services is solely for administrative purposes and in no event shall AMEC be bound to any terms and conditions on such form regardless of reference to or signature. CLIENT shall endeavour to reference this Agreement on any purchase order (or any other form), but CLIENT’s failure to do so shall not operate to modify this Agreement.

…

8)

STANDARD OF CARE. In the performance of professional services, AMEC will use that degree of care and skill ordinarily exercised under similar circumstances by reputable members of its profession practicing in the same or similar localities. No warranty, either express or implied, is made or intended by this agreement or by furnishing oral or written reports of the findings. AMEC is to be liable only for damage proximately caused by the negligence of AMEC. The CLIENT recognises that conditions may vary from those encountered at the location where, surveys are made by AMEC and that the data, interpretations and recommendation of AMEC are based solely on the information available to him. AMEC will not be responsible for the interpretation by others of the information developed.

…

10)

CONSEQUENTIAL DAMAGES. AMEC shall NOT be responsible for any consequential, incidental or indirect damages.

11)

LIMITATION OF LIABILITY. Notwithstanding any other provision of this Agreement, the total liability of AMEC, its officers, directors and employees for liabilities, claims, judgments, demands and causes of action arising under or related to this Agreement, whether based in contract or tort, shall be limited to the total compensation actually paid to AMEC for the Services or £50,000 (UK Sterling), whichever is less. All claims by CLIENT shall be deemed relinquished unless filed within (1) year after substantial completion of the Services. Nothing in this Agreement shall exclude or restrict any liability of AMEC for death or personal injury resulting from negligence (as such term is defined in Section 1 (1) of the Unfair Contract Terms Act (1977).”

The Relevant Contract Terms

The particular terms of the contract relevant to the dispute that have arisen between the parties are set out in the paragraphs below.

Workscope

The contractual workscope was to carry out all work necessary “to advise on, prepare and submit the Planning Application”. That planning application was seeking permission for waste recycling to be carried out on the site. The workscope included all of the items set out in the letter of 13 September, including the various assessment documents there listed.

In addition, I consider that this contractual workscope included any work required to deal with the queries arising out of the planning application. If the planning application was, for example, less clear than it might have been, or did not include all the information required by ECC or the other consultees, then the claimant was not entitled to be paid extra for dealing with those subsequent queries or responses. In my judgment, that was all part and parcel of preparing a comprehensive planning application in the first place.

Costs

This was a lump sum contract in the sum of £13,225. This was broken down into £3,450 for the defendant’s letters, attendance at meetings, and the preparation of the design and access statement; £8,525 for the various Assessment documents which were to be prepared by others (such as Dr Thomas and PACE); and £1,250 for printing. If the claimant requested further work beyond the contractual workscope, then that was to be paid for at the hourly rates set out in the letter.

Time

In my judgment, the defendant expressly agreed to complete the planning application by the end of November 2007. That can be seen by the reference to the planning application being made “in November 2007 as requested” in the second paragraph of the defendant’s letter of 13 September. That reference was itself entirely consistent with the earlier emails from the claimant, in which the importance of making the application by the end of November 2007 was emphasised (see paragraphs 14 and 15 above).

Accordingly, it was a term of the contract that the defendant would complete the planning application by the end of November 2007. I reject the defendant’s primary submission that, in some way, this was merely an aspirational date. It was not: it was an agreed completion date.

But I do accept that this obligation was qualified, and that the November 2007 date could be extended if there were delays due to acts and omissions on the part of the claimant which were beyond the defendant’s reasonable control. Thus, if some important piece of information was provided - or radically altered - by the claimant on, say, 30 November 2007 then, plainly, the defendant could not be expected to deal with the consequences of that late change and complete the planning application by the end of November. Whenever a contracting party has to complete a task by a certain date, the other contracting party has a duty to co-operate to take reasonable steps to ensure that such date can be met: see, for example, Merton LBC v Stanley Hugh Leach Ltd [1985] 32 B.L.R 51. That duty is usually covered by implied terms. In this case, I conclude that there was an implied term that the time for the completion of the planning application could be extended beyond the end of November 2007 if there were delays (due to the acts and/or omissions of the claimant) which were beyond the defendant’s reasonable control. The contract would be unworkable without such a term, because it would render the defendant liable for the claimant’s default. Moreover, such an implied term is entirely consistent with (indeed it is suggested by) clause 8 of the defendant’s terms and conditions, with its general exclusion of any warranty on the part of the defendant and its emphasis on ordinary skill and care.

I also consider that, as a result of SITA’s involvement from November 2007 onwards, the term obliging completion by a fixed date was subsequently varied by agreement in any event. I deal with that topic in greater detail in Section 6.2 below.

Limitations on Liability

Clauses 8, 10 and 11 of the defendant’s standard terms and conditions were expressly incorporated into this contract. They were plainly intended to limit and/or exclude the defendant’s liability to the claimant in damages. There are a number of arguments about those provisions involving both the Unfair Contract Terms Act 1977 (“UCTA”) and issues of contract construction. I deal with those matters in Section 13 below.

EVENTS UP TO DECEMBER 2007

On 19 September, Mr Murkin emailed Mr Bailey, asking him to collate and forward to him as much information as he had on the various items that he had noted on an attached list of drawings. He also requested again the existing/proposed site layout and the application boundaries. He said that this information could then be used as the base plans for the full versions to be prepared by the defendant. On the same day, Mr Murkin emailed Dr Thomas with an instruction to proceed with the FRA.

On 20 September, Mr Murkin emailed Rachael Grant, at PACE, and provided information in order for PACE to quote for the assessment. In that email, Mr Murkin said that he had learnt that morning that the site was about to be marketed and that therefore the final operator was not yet known. I find that this was the first time that the defendant became aware that the claimant planned to sell the site on to a third party. Significantly, this was after the principal contract had been made. The site was only re-purchased by the claimant on 21 September.

On 24 September, Ms Grant provided a fee proposal for undertaking a NIA for the proposed waste facility. This envisaged setting up environmental noise monitoring equipment to measure background levels “representative of the closest noise sensitive receptors”. She proposed that the works would be carried out between 4 and 7 October 2007.

The claimant was anxious to advertise the site on the open market as soon as possible. Thus, on 20 September, Mr Murkin wrote to Mr Snow at ECC to ask for a letter that confirmed “that the potential for use of the site as a waste facility was accepted by ECC subject to specific design, layout and operational criteria.” Mr Murkin said that this was required “in order to achieve the best response” from the proposed sale. Mr Murkin assured ECC that “the specific waste related activity of any future occupier of the site will be fully detailed in the forthcoming planning application.” Mr Murkin also acknowledged that any such advice from ECC would be given without prejudice to their final decision on any planning application.

ECC did not respond to this request until 23 October 2007 when, having set out various general matters, they went on to say:

“Based on the Waste Local Plan policies relevant to the location of waste facilities and the past planning history it is likely that subject to meeting the appropriate criteria and environmental controls (policy W10E) that the site is likely to be suitable for a waste facility. However it should be noted that the opinions put forward in this letter do not in any way prejudice the consideration of any future planning application that might be submitted.”

On 24 October, Mr Murkin emailed the claimant to say that ECC had indicated that they were happy to attend a pre-submission meeting which had been pencilled in for the week beginning 12 November 2007. This date was also noted in an email sent on 25 October to Mr Pennington. Mr Murkin went on to say to the claimant:

“Your comments on the general arrangements shown on the site layout plan and further information/specifications on the drain connections, office building, weighbridge and shear equipment are requested at this time. We can add the drains, merge with the spot levels and prepare sections.”

On the face of it, this was yet another request to the claimant relating to the proposed site layout.

Also on 24 October, Mr Murkin wrote to Mr Berriman, the consultant who the defendant wanted to use to produce the TA. The letter enclosed a draft of the Professional Services Agreement which the defendant was asking Mr Berriman to sign. This was in a new standard form which had just been produced internally by the defendant. The letter went on to warn Mr Berriman that the intended submission date for the planning application (for which the TA was required) was before the end of November 2007. However four days later, on 30 October, Mr Berriman wrote back, refusing to enter into the proposed agreement and saying that the terms were biased in favour of the defendant. Mr Berriman added that he formally withdrew his offer to work on this project. On 2 November 2007, Mr Murkin informed Mr Bailey of this development and proposed that Mr Bailey instruct Mr Berriman directly. Mr Bailey declined to do so.

Mr Murkin had to look elsewhere for a TA. In this connection, on 9 November, he emailed a Mr Farmery. The email contained information as to the current traffic use by Silverton Aggregates on the adjoining land. It said:

“The applicant, Mr Bailey of Elvanite, estimates that the current activity undertaken by Silverton Aggregates involves a throughput of about 50,000 tonnes per annum equivalent to 1,000 tonnes per week (or about 20-25 vehicles).

For the adjoining site (annotated on site plan) a separate new waste facility, specifically a car breaker scrap metal recycling use, is proposed which is to be the subject of a Transport Assessment in support of the Planning Application.

…I don’t have much information to hand about he proposed car breakers activity. The exact number of vehicle movements is not known, however the car breakers yard will be approached and the shared existing access from Haven Road (see plan) with a resulting increase vehicle movement.”

In a subsequent email, on 14 November, Mr Murkin told Mr Farmery that the site layout for the proposed facility was being revised and said that, if further information was required, it might be advisable to contact Mr Bailey direct. Both emails reveal the continuing uncertainty as to the eventual use of the site, which had a continuing effect on the collation of all the relevant information necessary for the planning application.

Other elements of the planning application progressed smoothly. Mr Murkin had arranged in October with a Mr Redfearn, an in-house employee of the defendant, to undertake the Dust Suppression Method Statement. This was done promptly. It is worth noting that, in his original email of instruction to Mr Redfearn dated 26 October, Mr Murkin said that “Mr Bailey has had early interest in the site for occupation by car breakers and a planning application will be submitted on this basis in November/December 2007.” This again demonstrated that Mr Murkin was working on the basis that the planning application would be completed by the end of November 2007.

There also seemed to be no difficulties with the NIA, which was sent by Ms Grant to Mr Murkin on 31 October. The report said that noise levels from the possible use of a shear on the site (as part of the car breaking operations) would cause very high levels of noise at the adjacent Anglian Water site and that, whilst the bund around the site gave some screening to the lower floors, it did not for those higher up. She thought that some compromise would have to be negotiated with Anglian Water, but that also depended on the stance taken by ECC.

Having received the NIA from PACE, Mr Murkin passed it on to Becky Whitely, an in-house noise consultant, to ask her to give the report a quick glance through and to give him any comments on it. He said that he thought that, on the basis of the report, noise did not seem to be a major issue and that any difficulties could be resolved through third party agreements. It appears from the email to Ms Grant on 7 November 2007 that the main issue identified by Ms Whitely was the possible use of the shear on the site, which was of course one of the uncertainties created by the lack of a purchaser/occupier of the site.

Despite this, the claimant did not keep the defendant informed of the progress on the proposed sale of the site. It appears from the evidence, such at it is, that the only possible purchaser at all interested in the site at this time was SITA. In his witness statement Mr Bailey said that he was approached by John Crow of SITA in about November or December 2007; during cross-examination, it became apparent that SITA made their first approach in early November 2007. The defendant was not told of this; they did not learn of SITA’s interest until mid-December 2007.

The pre-submission meeting with ECC did not take place until 28 November. It was not clear why it had not happened two weeks earlier. No record or minute of the meeting exists, which I find surprising. It appears that one of the matters that was discussed was the optimal circulation of vehicles within the site, which directly affected the proposed site layout. In consequence, on 5 December 2007, the defendant sent Mr Bailey two sketches with dimensions of alternative possible site layouts for the scheme, arising out of the meeting, and asked Mr Bailey to indicate a preference. Mr Bailey did not respond immediately.

At about the same time, on 6 December, Mr Murkin sent Mr Berriman an email asking him whether, if the contract terms could be revised, he would be willing to prepare a full TA during January 2008. Mr Berriman responded in the negative the following day, 7 December.

Although he apparently responded to the request about the site layouts on 10 December 2007 (unhappily, the response is not in the court bundles), Mr Bailey separately emailed Mr Baker to complain that Mr Murkin was now saying that the planning application would not be made until January 2008.

In response to this complaint, in an internal email on 10 December, Mr Baker told Mr Murkin that he needed a list of reasons for the delay which were not within the defendant’s control, noting that the delay in respect of the TA was within the defendant’s control. He asked Mr Murkin whether it was possible for the planning application to be submitted that week. In his reply of the same day, Mr Murkin said that a combination of issues had delayed the application. In essence, Mr Murkin blamed the delay on the problems with Mr Berriman and the uncertainty surrounding (and revisits to) the proposed site layouts. On this latter point, he said that “the proposed site layout has been revised (FAX received today?) and elevations and sections based on these are thus still to do.” Mr Murkin said he thought it would be far better to submit a complete planning application with all the supporting statements the following month, rather than provide something that was “likely to be invalidated or held in abeyance pending receipt for information.”

In the defendant’s formal reply, written by Mr Baker, and sent to Mr Bailey on 11 December 2007, a number of reasons for the delay were put forward. The letter stated:

“I know that the original agreement in July, confirmed in September, was to submit an application by the end of November, but several changes have been made to your proposals at your request as a result of feedback from the County Council and your own intentions for the site. Further, and hopefully final, amendments to the layout plan have just been received from you and our Drawing Office is finalising the plans based on these, but obviously such amendments cannot be instantaneous.

My understanding is that you had agreed with Daniel that, in view of ECC’s helpful comments at your meeting with them on 28^th November, they would discuss with their Highways colleagues whether the need for a Transport Assessment could be avoided altogether because of the previous and permitted traffic generation at the site, with a significant cost saving to Elvanite. To do this they needed your revised layout as well as confirmation of the proposed traffic generation given to them orally at the meeting. This information could be sent to them now, asking them to talk to Highways to confirm that they would have no objections, and that a TA is not needed provided that the relevant traffic information is included in the application, or at least the scope of the TA can be reduced…

All of the other information is complete or having a final edit. The FRA and Noise Assessment are ready for submission. The Design and Access Statement, Covering Letter, Application Forms and Dust Control Statement will all be ready to submit this week, subject to you confirming that they can be sent in. In the current situation I think there are two options:

1.

We submit the application and assessment in the next week without a Transport Assessment and before ECC planners have raised the matter with Highways. This is likely to result on a TA being requested before the application is registered, but we would not now be able to get such a TA carried out until January.

2.

We wait until ECC have considered the traffic issue, then carry out a TA if needed in January, and submit the application as soon as the TA is finished, or immediately if Highways agree a TA is not required.

Option 1 could result in a delay in ECC considering the application until the TA was received and will not achieve any cost savings.

Option 2 may result in a delay until January but with a potential cost saving of over £1,500. Option 2 also has the advantage that it will be seen by Essex planners as working with them, to enable them to proceed to a quick decision on the application once submitted…

I therefore do not think that AMEC can be accused of failing to deliver the service that you appointed us for, or criticised for the longer timescale which has been primarily required to ensure a positive response from ECC, through a process you have been actively involved in…

My advice is that we should proceed with Option 2 and that Daniel should forward the revised layout and confirm traffic movements with John Snow as soon as possible.”

Thus, this letter highlighted two critical reasons for delay: the changes to the proposed site layouts, and the problems with Mr Berriman and the TA.

It is to be noted that at no time did the defendant suggest that Mr Bailey was not entitled to at least raise with them the fact that the application had not been completed by the end of November 2007. That can only be because - as the letter itself acknowledged in the first paragraph - they recognised the term of the contract dealing with completion, set out at paragraphs 32 to 34 above. The next question is why the planning application was not complete by the end of November: was it because of the defendant’s default, or was it for reasons beyond their reasonable control?

WHY WAS THE PLANNING APPLICATION NOT COMPLETE AT THE END OF NOVEMBER 2007?

I deal with a preliminary matter at the outset. At various times during the trial, it seemed to be suggested by the claimant that one of the reasons for the delay was the defendant’s failure to make any significant progress on the planning application between the instruction at the end of July and the finalisation of the contract terms in mid-September. Whilst I agree that, because of the nature of the July instruction, the defendant could perhaps have made faster progress during August, it is plain that, on any view of the evidence, this did not cause a delay in the completion of the planning application by the end of November. This was because everyone was agreed that, even if the defendant had started from scratch in September 2007, it was still perfectly possible (all other things being equal) for the planning application to have been complete by the end of November 2007.

I find that there were three reasons why the planning application was incomplete at the end of November: the absence of finalised versions of the FRA, and the NIA; the failure to engage a consultant to produce a TA; and the ongoing revisions to the proposed site layout, due to the uncertainties of how the site might be used by the new purchaser. I deal with each in turn below.

The Absence of Final Versions of the FRA and the NIA

There is no dispute that final versions of the FRA and the NIA were not ready for submission by 30 November 2007. There is no suggestion in the defendant’s letter of 11 December that this was in any way connected to any acts or omissions on the part of the claimant. In my view, these documents were not in final form because the 30 November date had not been in the forefront of Mr Murkin’s mind; he had not told any of those working on this project (except, ironically enough, Mr Berriman) that they had to meet a date of 30 November. But it is equally plain that the vast bulk of the work required on both the FRA and the NIA had been done; all that was required was the preparation of the final form of each document. In addition, it appears that one reason why the NIA had not been finalised may have been the ongoing uncertainty about the precise use of the site (see paragraph 47 above and paragraph 64 below).

I consider that the failure to have these documents in final form by 30 November 2007 constituted a breach of contract on the part of the defendant. But it is plain that, if these had been the only outstanding matters (i.e. if the non-completion of these two documents was the only reason why the planning application could not be made), both documents could and would have been finalised in a matter of hours or days. There was very little left to do to convert either of them into their final form.

The Transport Assessment

The absence of a TA by the end of November 2007 was the defendant’s responsibility. They did not contact Mr Berriman until sometime in September and did not send him their proposed terms and conditions until October. His refusal to enter into a contract based on those terms and conditions appears to have taken the defendant by surprise and although, at one point, they appeared to be planning to use another consultant, they then went back to Mr Berriman and tried to persuade him again to undertake this work. All of those matters were within the defendant’s control. I am bound to conclude that they failed to manage Mr Berriman in a way which the claimant was entitled to expect, and were therefore in breach of contract.

However, this breach was of no consequence. As we shall see, it soon became apparent that ECC had completely changed their minds about the need for a TA. Having indicated on 23 July that a TA was required, they subsequently concluded in January 2008 that no such document was required for the planning application. So whilst the absence of a TA at the end of November was a breach of contract, it could not be causative of loss, in circumstances where ECC quickly decided that it was not even required.

Proposed Site Layouts

The delays in relation to the proposed site layout, and the repeated changes to the site layout because of the ongoing lack of clarity as to precisely who was going to use or buy this site and what operations would be conducted there, were entirely the responsibility of the claimant. Mr Bailey was constantly chased for the details of the location and dimensions of the proposed details of the plant and equipment, going back to August 2007 and continuing into December (see, for example, paragraphs 12, 18, 20, 21, 37, 42 and 49 above). Even once a version of the proposed site layout was identified, it was repeatedly changed. Indeed, the layout changed again as a result of the meeting with ECC on 28 November 2007, with Mr Bailey being asked to choose which of the two latest versions he wanted. He did not respond until 10 December.

Once Mr Bailey had chosen his latest preferred layout on 10 December 2007, various consequential matters arose out of his decision. It was not just a question of some minor changes to a drawing; the evidence was that all the other documents and assessments had to be checked to see if, in consequence, they too had to be modified or amended by the new proposals. These knock-on consequences were noted in the second and third paragraphs of the letter of 11 December (paragraph 53 above). In particular, the defendant’s drawing office was going to have to make amendments based on the new proposed layouts.

And it could not be said the link between the completion of the planning application and the proposed use of the site by the new owners was a new concept: Mr Murkin had referred to “fully detailing” the proposed activities on site in the planning application as long ago as 20 September (see paragraph 40 above).

I conclude that the consequences of the delays and changes to the proposed site layouts from July to December were highly significant, as the defendant’s letter of 11 December made plain. What is more, the issues were ongoing and unresolved as the completion date at the end of November came and went. To take just two examples of the importance of these unresolved issues in early December: the defendant said that the new proposals might persuade ECC that no TA was required, and that is precisely what happened. Secondly, the new proposed site layout meant that the noise report had to be changed. The email from Ms Grant of 11 December and the reply from Mr Murkin of the same date deal with this. Mr Murkin noted somewhat ruefully:

“Yes, the site layout has indeed changed again, as of yesterday and I will forward this to you an accurately drawn up in the next few days. It should hopefully require only very minor adjustments to the report…”

Critical Delay

Accordingly, I find that the application was not complete by the end of November 2007 for three reasons: two of those reasons (the lack of two documents in their final form and the absence of a TA) were the defendant’s responsibility, whilst the third (the delays and changes to the proposed site layouts) was beyond their reasonable control and was the responsibility of the claimant.

It follows that the planning application could not have been made by the end of November/early December 2007. However, for the reasons noted below, it cannot be said that the defendant’s breaches of contract were the critical cause of that delay.

First, even if final versions of the FRA and the NIA were in place by the end of November the planning application could still not have been made because of the continuing uncertainty about the proposed site layouts. Until that vital issue had been resolved, any necessary amendments to the drawings and the other Assessments accompanying the planning application could not be made. The FRA and the NIA could have been put into final form in a matter of hours or days; the proposed site layouts could not be and were not, because of the uncertainties over the possible end-user. In short, it was the proposed site layouts (and the wider issues as to the proposed use of the site) that were on the critical path, not the polishing of the FRA and the NIA which, had it been necessary (i.e. if these were the only outstanding matters), could have been completed promptly.

This can, I think, be tested in another way. Even if these two documents were in final form by the end of November, and even if a planning application had been made at that stage, there would have been an inevitable delay once the proposed purchaser was identified, and that purchaser’s proposals and site requirements were then identified and detailed. Planning permission was only valuable to the claimant if it was in accordance with the proposed purchaser’s requirements. It is therefore more likely than not that, even if the planning application had been made before the involvement of the proposed purchaser (SITA), once that involvement began in earnest (from mid-December onwards) precisely the same delays would have occurred thereafter, whether the application had actually been made or not. On this point I accept paragraphs 59 and 60 of the defendant’s written closing submissions.

Secondly, I find that the absence of a TA was not critical because, as set out in Section 6 below, ECC concluded that a TA was not necessary at all. This was because, just as the defendant had advised, the changes to the proposed site layout – and other changes – rendered a TA unnecessary. Again, therefore, the TA was not on the critical path, but the finalisation of the proposed site layout was.

So at this critical juncture, in the second week of December, what was being worked on were the further modifications necessitated by the new proposed site layouts chosen by the claimant on 10 December. And then the claimant introduced SITA as the prospective purchasers of the site. As explained below, that changed everything and was recognised at the time - by everyone, including the claimant and its various advisers - as meaning that there would inevitably be further delays in the making of the planning application.

A Consensual Extension Of Time, Clause 2, Variation, Waiver and Estoppel

At section 3 of his closing submissions, Mr Susman argued on behalf of the claimant that there was no consensual extension of time beyond the end of November 2007 and/or that the defendant failed to operate clause 2 of its own conditions and/or any case of variation/waver/estoppel was unarguable. I deal briefly with each of those points in turn.

It is right to say that there was no express agreement prior to the end of November that the contract deadline should be extended. But my primary view is that, because of the nature of the contractual obligation (see paragraphs 32 to 34 above) that was unnecessary; the deadline of the end of November would be extended if the delay in completing the application was due to acts and omissions on the part of the claimant which were beyond the defendant’s reasonable control. That is what happened. In the absence of an agreed extended date, the appropriate extended date would therefore be fixed by the court, taking into account all the circumstances: see Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725 (TCC), an approach approved by the Court of Appeal in Peregrine Systems Ltd v Steria Ltd [2005] EWCA Civ 239. I undertake that exercise in Section 6 below.

Clause 2 is irrelevant to the delays up to mid-December (there being no change in workscope). Thereafter, it is said that the defendant failed to activate clause 2 of the terms, because, on the defendant’s case, there was a change to the workscope – the extra work caused by the involvement of SITA - but no change to the agreed schedule (i.e. timetable). It seems to me that that point is subsumed in the extension/variation etc arguments, and depends on a proper analysis of what happened in the months following SITA’s introduction. Again, therefore, that is dealt with in Section 6.2 below.

If, contrary to my view, the claimant had an unqualified right to a completed application by 30 November 2007, I consider that that right was varied or waived by the claimant’s failure to identify the proposed site layouts prior to that date, and by the events during the period between December 2007 and April 2008 (again, see Section 6.2 below).

DECEMBER 2007 – APRIL 2008

The Facts

I now turn to the period between the original completion date (the end of November 2007) and the date the application was actually made (3 April 2008). Although at first blush this was a long period, which might otherwise have raised question marks as to the defendant’s performance, I am in no doubt that, for the reasons noted below, this delay was entirely explained by the involvement of SITA as the prospective purchasers of the site. During these months, although there was a certain amount of fine-tuning and final preparation of the Assessments that would go with the planning application, everything was being channelled through SITA for their agreement, and they were slow and sometimes capricious in indicating what they wanted. As a result, I find that all the significant delays from mid-December onwards were beyond the defendant’s reasonable control, and were instead due to the claimant’s insistence that SITA approve everything.

On 12 December 2007, Mr Pennington, the claimant’s surveyor, contacted SITA for the first time and offered them a design and build deal “delivering a turnkey facility to your client’s requirements and specification, either freehold or leasehold”. The email went on to ask SITA to confirm “any alterations you require to the proposed layout that is to be submitted for planning permission for the site.” This was a frank acknowledgement that, as the prospective purchaser, SITA had an obvious interest in addressing and agreeing the proposed site layout; and that the planning application could not be made until the proposed site layout had been finalised and agreed by SITA.

On 20 December, Mr Murkin sent Mr Pennington the latest site layout drawing based on the proposed specification for the buildings as it then stood, and asked for that information to be provided to SITA. Again, this was consistent with the approach, agreed on all sides, that the planning application could not and should not yet be made, and that everything now turned on SITA.

On 7 January 2008, Mr Murkin emailed Mr Pennington to say that the critical information that ECC would require in any TA was the number of vehicle movements likely to be undertaken per day in the hours of operation. Mr Murkin asked if Mr Pennington had that information or whether he had a contact at SITA who would have it. Mr Pennington’s response the following day did not deal with the detail of that request, but said that he understood that the general site layout now proposed was acceptable to SITA and that “any changes are likely to be minimal.” Again this demonstrated that the site layout was still not finalised, and that it still remained unclear how the site was going to be operated.

On the basis of that response, on 8 January 2008, Mr Murkin emailed Mr Pennington again to say:

“It will be good to submit a bespoke application so to speak i.e. one that matches the end user’s requirements though there will still be flexibility on some of the finer details of layout and operations that can be conditioned on any planning permission. I anticipate that the application can be submitted within two weeks.”

In the light of the situation as it then stood, that seems to me to have been a realistic assessment. On 15 January 2008, Mr Murkin emailed Mr Bailey setting out a revised schedule for submission of a planning application to ECC which showed the application not being submitted until about 11 February 2008. The reason for the further delay was given by Mr Murkin at the end of the email:

“I think these [the projected time periods] are realistic – we have been waiting for the discussions with SITA to consult ECC on the traffic/highways impact but [Mr Berriman] is ready to complete a Transport Statement and can do so in two weeks, subject to confirmation from ECC that that is what required.”

I consider that Mr Bailey’s response to this time estimate – “not bad considering the deadline was November 2007!!” – was manifestly unfair; although, as I have noted, Mr Murkin had been slow in certain respects prior to the involvement of SITA, the delays now occurring were the direct consequence of Mr Bailey’s desire to involve SITA in the detail of the application. That was of course entirely understandable, since SITA were the prospective purchasers of the site. But that involvement carried with it the inevitable risk of further delays.

On 28 January 2008, Mr Murkin sent ECC a consultation letter and the latest site location and layout plans. The letter dealt in some detail with proposed traffic movements, saying that the proposed waste facility operation would involve the handling of approximately 1,000 to 1,200 tonnes per week with 20 lorry movements per day. Mr Murkin made the point that this was within the maximum of 80 movements (40 in and 40 out) set out in the 1997 planning permission for a recycling centre on the whole of this and the adjoining Silverton Aggregates land. As a result, Mr Murkin said, “subject to confirmation of likely daily vehicle movements from SITA, it may be appropriate to submit a Transport Statement in lieu of a full Transport Assessment to accompany the Planning Application”. Mr Mason of ECC confirmed that a Transport Statement would indeed be sufficient on 31 January 2008, information that was immediately passed on to Mr Berriman by email.

Also on 28 January, Mr Murkin emailed Dr Thomas (FRA) and Mr Redfearn (Dust Control) to say that SITA were due to advise him on certain elements of their plans shortly and that, once that had happened, he would forward a revised site layout to reflect their requirements as soon as possible thereafter. He said that, subject to that, he anticipated submitting a draft planning application to ECC next week, with a formal application to follow in the week beginning 11 February 2008, and asked them to tell him if there was any outstanding information “on the existing site or proposed operations/layout” that they required in order to complete their respective Assessments.

In the event, SITA proved slow in providing information about their plans. On 1 February 2008 Mr Murkin asked Mr Pennington if there had been further progress following a meeting on site with SITA. Mr Murkin said that the traffic information was needed to inform the pre-application consultation with the Highways Department of ECC. In addition, Mr Murkin noted that Dr Thomas had warned that part of the site (the access road) was within Flood Zone 3 (which has the highest risk of flooding) and that that might have implications for any buildings that SITA were proposing to locate on the unused strip of land to the side of the access road. Further information was therefore required and Mr Murkin asked to be updated “as soon as possible”. Mr Pennington replied that he was waiting to hear back from the SITA board with their proposals and would be chasing them on Monday.

One of the features of this period, and indeed the correspondence over the next year or so, was the highly changeable nature of SITA’s interest in the site. Sometimes they seemed enthusiastic about buying it; at other times they did nothing to progress either the planning application or the purchase. As early as 4 February 2008, Mr Pennington was saying to SITA that, if the claimant had not heard from them in the next couple of days, they would assume that SITA were no longer interested in buying the site. In addition, Mr Pennington made plain to SITA the consequences for the proposed planning application if they remained so reticent, saying that “it would be useful to know whether you wish to pursue this site and make any material changes to the proposed scheme – if so it would seem appropriate to make the changes prior to submitting the application.”

On 4 February 2008, Dr Thomas emailed Mr Murkin passing on what he described as the “typically unreasonable” Environment Agency (“EA”) view in relation to possible flooding at the site. Ms Ager of the EA had said in an email of the same day that the EA did not consider a ‘dry island’ solution to be safe. This was a reference to Dr Thomas’ proposal that, because the site itself was not in Flood Zone 3, but only the access road, the occupants of the site could be protected by staying in the centre of the site and not seeking to escape by way of the access road. The EA stated that the FRA would need to consider access/egress from the site along the route likely to be used for evacuation; if that route took people through flood water then particular proposals, set out in Ms Ager’s email, would apply. She said that the FRA should consider a flood plan for the site which should allow for people to evacuate the site ahead of a predicted flood event.

Dr Thomas told Mr Murkin that, as a result of the EA’s intervention, modelling work would be required to quantify depth/velocity. He also said that he was not confident that he could demonstrate safe access along the access road, because the road was lower than the site. He said that he had spoken to ECC Fire and Rescue about access for emergency vehicles along the road and had been told that they were putting together a best practice document on the topic that would not available for a couple of months. Dr Thomas concluded:

“As such, Ralph [Bailey] must be informed of the situation, and also the fact that this process could drag on for sometime yet. I guess, in an ideal world, it would be best for you to get him to say “do whatever it takes” but I appreciate this might not be acceptable to him.”

On 7 February 2008, SITA responded to Mr Pennington (paragraph 84 above) to say that they were prepared to proceed to buy the site on certain conditions. These included the claimant obtaining a satisfactory planning permission. As the letter confirmed, that meant “satisfactory to SITA, acting reasonably”. The letter proposed that the contents of the planning application for the change of use of the site to a waste and scrap metal facility should be agreed between the parties and submitted to the local planning authority by 31 March 2008 or earlier. The price SITA offered was £1,150,000. On 11 February, Mr Pennington responded to SITA’s offer and indicated that the claimant was unwilling to sell for £1.2million. No issue was taken by the claimant with the suggestion that, due to SITA’s involvement, the planning application may not be made until 31 March 2008.

I consider that these exchanges are of importance, because they give the lie to any credible suggestion that, at this stage, the planning application was somehow in delay. With SITA involved, everyone, including Mr Pennington and Mr Bailey, was well aware that it was inevitable that the planning application would be delayed until it reflected SITA’s particular requirements. Whilst that did not alter the defendant’s continuing obligation to do all that it reasonably could to complete the application as soon as possible, it would be entirely artificial to render the defendant responsible for the delays which the claimant and Mr Pennington knew were inevitably going to occur as a result of the involvement of SITA. The exchange also demonstrates a clear variation to the original contract completion date; on behalf of the claimant Mr Pennington was now agreeing with SITA to an extended date for the application of 31 March 2008, so he could hardly insist on performance by an earlier date from the defendant, particularly because the defendant’s completion of the application was so bound up with the provision of the necessary information by SITA.

On 8 February 2008, Mr Murkin emailed Mr Bailey, dealing with three elements of the ongoing planning application: the requirements of SITA, the FRA and the TA. As to SITA, he noted that they had requested an amendment to the application site boundary which took out the access road but retained the land to the side for the siting of office buildings. As to the FRA, he referred to Dr Thomas’s view that predictive modelling would have to be done and sought Mr Bailey’s agreement to this (and therefore the extra costs). No such agreement was forthcoming. As to the TA, he informed Mr Bailey that ECC had said that a short Transport Statement would suffice. Again, Mr Murkin suggested that Mr Bailey instruct Mr Berriman himself to carry this out. Mr Bailey rejected that idea by return.

On 11 February, ECC responded to Mr Murkin’s email and letter of 28 January 2008 (paragraph 81 above), and said that, provided that the planning application was the same as the content of the letter of 28 January 2008, ECC would not require either a Transport Assessment or Statement. Mr Berriman was finally out of the picture.

On 12 February, Mr Murkin informed Mr Pennington about the ongoing dealings with the EA in relation to safe egress in the event of flooding. He said:

“This is primarily for information at this stage, but when the Planning Application is submitted the accompanying Flood Risk Assessment will need to take into account possible alternative routes of egress which do not involve going through flooded land and may involve constructing gates and/or staircases to vacate to the open dry ground to the south or west (with the agreement of the adjoining landowners)…please pass this message on as necessary – it won’t stop the development but this issue must be addressed in the detail of the Planning Application.”

On 26 February 2008, Mr Murkin sent Mr Bailey and Mr Pennington a full set of drawings that it was proposed to submit to ECC for the planning application. Again there was a request that, in particular, the final site layout be checked. It does not appear that, at this stage, the draft planning material had even been sent to SITA by the claimant because on 29 February, Mr Pennington received an email from SITA in which they sought a copy. Mr Pennington even asked Mr Bailey if he wanted SITA to be the applicant, again demonstrating that major elements of the planning application still remained uncertain. Mr Pennington responded to SITA the same day, saying that they would forward the proposed planning application so that SITA could make any amendments or comments that may be appropriate for their proposed operation.

On 3 March, SITA made a revised offer in the sum of £1.325 million. Again that was subject to obtaining satisfactory planning permission. It is important to bear in mind that this offer was for more than just the site with which the planning application was concerned, because it also included the additional strip.

On 5 March, Mr Pennington responded to SITA’s offer saying that “provided we can agree the basis of the planning application and SITA’s planning requirements, my client Ralph Bailey is minded to accept your company’s offer (subject to contract).” The letter went on to say that in order to finalise the proposed transaction it was necessary for the claimant and SITA “to agree the final details of the planning application”. A possible meeting on 11 March 2008 was identified. This letter therefore made plain that the issue which still had to be agreed – a potential deal-breaker – was SITA’s planning requirements. If those could not be agreed, there could be no contract for the sale of the site.

On 7 March, the defendant sent Mr Pennington drawings of the site, the proposed site layout and the proposed plan/elevations. As Mr Pennington’s response made plain, these were for onward transmission to SITA for their own use.

On 11 March, Mr Murkin informed Mr Bailey that the costs incurred in connection with the involvement of SITA would be additional to the contract sum. The email went on:

“I anticipate that SITA’s requirements, provided you agree to have these incorporated in the Planning Application, will necessitate minor amendment to the drawings and references to the layout in the relevant accompanying statements, and that the cost of these will be up to £2,000.”

In his response of 12 March, Mr Bailey said that the costs were only accepted on the condition that all dates for the planning application were met. This included a proposal that the planning application would be lodged with ECC by 26 March 2008. Mr Bailey went on to say that, if those dates were not met, he reserved the right to recover the costs from the defendant. On 12 March, Mr Murkin replied saying that he could not agree to be held to the date of 26 March 2008 in case there were delays in the responses (presumably from SITA) to the amended plans, forms and supporting statement. Otherwise, he said that the defendant was happy to proceed on that basis. Again, these exchanges show the reality: that the involvement of SITA had inevitably caused delay to the end of March, and that everyone was aware of it.

On 17 March, Mr Murkin sent Mr Bailey and Mr Pennington the draft planning application (again for onwards transmission to SITA). He sought a prompt response if the application was to be made by 26 March. Mr Pennington passed this material on to SITA on 18 March. On the same day, SITA responded, attaching a marked-up drawing with changes to the use of a number of the proposed buildings noted on it. On 19 March 2008, Mr Murkin emailed SITA direct to say that the consequential changes could be made quickly, but he sought confirmation or agreement on a variety of matters raised by the SITA comments. Subsequently, changes were required to the design and access statement and the final drawings, including (yet again) the proposed site layout.

On 31 March, Mr Pennington sought SITA’s approval for the final version of the planning application to be submitted. On the same day, Dr Thomas emailed Mr Murkin on the subject of the finalised version of the FRA saying that “the egress issue has been left sufficiently ambiguous”. On 1 April 2008 Mr Murkin chased Mr Bailey to see whether the application could be submitted with SITA’s agreement. Mr Bailey responded the same day to say that the application could now proceed. The planning application was then lodged on 3 April.

The Legal Consequences

As foreshadowed in paragraphs 71 to 74 above, I now turn to deal with the legal consequences of the findings of fact that I have made relating to the period between mid-December and early April 2008. On any view, the only fair summary of these events was that the involvement of SITA caused delays to the finalisation of the planning application, which may have been frustrating to Mr Bailey, but which was accepted as inevitable by all those involved. If, as I have found, the defendant’s principal obligation was to complete the application by the end of November 2007, but which date could be extended by acts or omissions on the part of the claimant beyond the defendant’s reasonable control, then I find that the matters noted in Section 6.1 above were the claimant’s responsibility and beyond the defendant’s reasonable control. They extended the contractual deadline until the date that the planning application was actually made, namely 3 April 2008.

It is wrong to suggest, as Mr Susman does in his closing submissions in sections 3 and 4, that the defendant was in breach of contract as at 30 November 2007 and that, thereafter, the claimant was simply seeking to mitigate the loss caused as a result. For the reasons I have given in Section 5 above, there was no causative breach of contract on the part of the defendant. But on any view, the last thing the claimant was doing from mid-December 2007 onwards was mitigating its loss. For one thing, the claimant had not suffered (nor was likely to suffer) any loss in December 2007, so there was nothing to mitigate. Moreover, it was the claimant who introduced SITA; it was therefore the claimant, as between itself and the defendant, who was the cause of the subsequent delays. The claimant needed SITA to agree to the planning application because SITA were the only people who had expressed any interest in the site. The claimant was not mitigating any loss; it was seeking – quite reasonably – to maximise the profit from the proposed sale of the site.

Furthermore, it was because of this that the claimant, and its advisors, such as Mr Pennington and Mr Powell, were entirely sanguine about the fact that the involvement of SITA inevitably meant that the planning application would not be made for some time. The exchanges summarised at paragraphs 76-79, 82-84, 87, 92, 95, 97 and 98 above make clear beyond any doubt that the claimant’s other advisors were, like the defendant, operating on the basis that the most important thing was getting the agreement of SITA to the detail, and that the planning application could not be made until that had happened. In those circumstances, I reject the suggestion that in some way all the claimant was doing was mitigating its loss.

The same factual findings provide an answer to the remainder of the claimant’s submissions on this point. The dealings between the parties which I have summarised in some detail above make clear that there was a consensual extension of time to 3 April 2008, brought about by the necessity of complying with SITA’s requirements. In the alternative, the parties operated (or were at least within the parameters of) clause 2, because there was a mutual recognition that the contract workscope had been varied, and a mutual recognition that the schedule would itself have to be changed, with the appropriate extended completion date being that which represented the first available opportunity to make the planning application with SITA’s approval.

The factual findings that I have made also amount to a waiver of any contractual right (which in its unqualified form I do not accept in any event) which the claimant otherwise had for the planning application to be completed, come what may, on 30 November 2007. Although Mr Susman rightly submitted that such waiver had to be reasonably clear and definite (see Woodhouse AC Israel Cocoa Limited SA v Nigerian Produce Marketing Co Limited [1972] Ac 741 (HL)), I consider that the waiver here was both. All parties worked on the basis that the application would be made once SITA was happy with it, and not a day before, so any conflicting contractual right was waived. And there was consideration for the waiver: the claimant got a different (and better) planning application from the one it would otherwise have received, because it was in accordance with the requirements and approval of SITA, the only third party interested in buying the site.

A similar conclusion arises, if necessary, in respect of estoppel. Mr Pennington’s email of 11 February (paragraph 87 above) is perhaps the best evidence of the estoppel. On behalf of the claimant, he accepted that SITA could have until 31 March 2008 for the planning application to be made, so the claimant is estopped from demanding performance to any earlier date from the defendant (who could not in any event work to any earlier date because of the importance of the information from SITA). I should add that, in my view, the approach that I have adopted to both the extension of time and the alternative arguments is in accordance with Astea and Peregrine Systems (see paragraph 72 above).

THE DEFENDANT’S PLANNING APPLICATION

The defendant’s Planning Application comprised the following:

Various criticisms are made of some of these documents, particularly the FRA and the NIA. In my judgment, those criticisms are best considered in the light of the subsequent events. Accordingly, I consider each of the alleged deficiencies in the defendant’s planning application (Section 10.2 below) in the light of the events leading up to the termination of the defendant’s contract (Section 8 below); and the events thereafter (Section 9 below).

THE EVENTS LEADING UP TO TERMINATION

On 4 April, SITA wrote to Mr Pennington dealing with the various matters outstanding in respect of the purchase of the site and the additional strip. The figure of £1.325 million was confirmed. Confirmation was also provided that the planning application met SITA’s requirements for the proposed facilities “should permission be granted”. In consequence of this letter, on 9 April, Mr Pennington prepared heads of agreement. This referred to a conditional exchange of contracts on or before 30 April 2008.

On 18 April, the defendant wrote to Mr Bailey claiming an additional sum of £3,500 plus VAT, principally as a result of the involvement of SITA in the planning application process. In reply, on 28 April, Mr Bailey said that he was prepared to pay for the extra meetings involving SITA (which he valued at £700/£800) but not otherwise. He said that:

“If we had been on time with our original application SITA would not have been involved in the process as the application would have been in and running. Your procrastination has caused me some £20,000 to £25,000 in extra costs so if you will concede to meeting part of these costs I will look at your request more favourably.”

On 30 April, ECC’s Highways Authority notified John Snow of ECC that they would not wish to raise an objection to the planning application. No issue was raised as to vehicle movements. But, whilst other consultees had not yet responded and everyone waited for their feedback to the planning application, the negotiations with SITA started to go wrong.

On 13 May 2008, Mr Pennington emailed SITA to say that Mr Bailey had expected to exchange conditional contracts by 30 April and was unhappy that nothing had happened. The email said that Mr Bailey was minded to increase the purchase price by £50,000 every four weeks until the exchange occurred and it was said that, if that did not happen, he would withdraw the papers. Eventually, it was agreed that there would be a meeting on 28 May to finalise all of the relevant issues with the aim of exchanging conditional contracts on that day.

On 15 May, the EA, one of the consultees, objected in writing to the application. This was based principally on their continuing concerns about safe access/egress, and their dislike of the ‘dry island’ solution. Thus, the letter said that “at this time it has not been shown that the occupants of the site would have a safe escape therefore we cannot comment further until more details are provided.” The EA also sought further details of the surface water scheme; they accepted that the concept of the surface water management scheme was appropriate but they needed more information on the design of the detention basin and how it would function.

On 20 May, Anglian Water, another consultee, responded to the application, saying that they had no objections to the proposal although they had concerns over highway safety in Haven Road immediately adjacent to the application site, “where safety could well be compromised by the increased traffic volumes generated by the proposal.” The following day, 21 May, CBC, another consultee, indicated they had no objections to the planning proposal subject to various minor conditions.

Despite their involvement in the process prior to the application on 3 April, in the ongoing negotiations with Mr Pennington, SITA said that they were concerned about the obtaining of both a satisfactory planning permission and an environmental permit. On 19 May, SITA emailed Mr Powell of Ellisons, enclosing a draft amended contract. They said:

“The main change relates to the condition for planning. SITA must have a satisfactory planning application and an environmental permit in place before we can complete and I have set out a list of unsatisfactory conditions in Schedule 1.”

Schedule 1 in this draft version of the proposed contract was a radical rewrite of what had gone before. It purported to identify a list of unsatisfactory planning conditions; in other words, a list of the planning conditions which, if they were imposed, would mean that SITA would not buy the site. They included any conditions which matched these descriptions:

“…

(d)

It restricts the number of waste carrying vehicle movements to and from the property;

(e)

It requires that any material will be delivered other than by road going vehicles alone;

(f)

It restricts the hours of delivery of material or the hours of operation of the development in a manner which is unacceptable to the buyer;

(g)

It prevents material which is similar to the type contemplated by the development from being processed at the property…”

Against each of those conditions, in the version of the documents in the court bundles, Mr Bailey has written ‘No’.

On 22 May, Mr Powell of the claimant’s solicitors, Ellisons, retuned this draft contract to SITA, saying that the proposed unsatisfactory conditions, set out in Schedule 1, were too extensive. In particular, Mr Powell made the point that “there will inevitably be some restrictions upon lorry movements.” He said that Mr Bailey had instructed him not to negotiate further on the contract. In SITA’s response of 23 May 2008, their proposed list of unsatisfactory conditions was reinstated because, said SITA, they were essential to their ability to carry out the development (as defined in the contract) and to the nature of the proposed business.

The proposed unsatisfactory conditions identified by SITA appeared at this stage to be the principal reason why no contract could be agreed. The differences were extensive. Thus it was that, on 23 May, Mr Powell wrote on behalf of the claimant to say again that the conditions required in schedule 1 were unacceptable and that he had been instructed to close his file.

On the same day, Dr Thomas emailed Mr Baker in respect of the EA response (paragraph 111 above), to say that he was unhappy about the access/egress (‘dry island’) issue as he had been flagging it up since the work began. He said he was not willing to undertake any more work to right this section without an increased budget (another reference to the modelling which he had requested but which the claimant would not pay for). He went on to say that the EA’s objections regarding access/egress were “massively disproportionate to the nature and scale of the development”. He also described the EA’s views about the surface water issue as “utter drivel. This is an FRA not a detailed drainage design report”.

Also on 23 May 2008, there was an Environmental Control Planning Response from CBC. This did not object to the planning application, but said that if permission were granted, an advisory note dealing with site boundary noise levels would be required. Amongst other things, they recommended that a further acoustic assessment was carried out taking into consideration the machinery that would be operated on the site to ensure that the site boundary levels could be met. The note identified the relevant levels. A separate point was also raised in relation to a requirement for an oil interceptor, due to the risk of contamination/pollution.

Despite the earlier threat to abandon the negotiations with SITA, on 28 May, Mr Bailey, Mr Pennington and Mr Powell met with the SITA representatives to discuss again the proposed purchase. The following day, SITA attached the draft contract which, they said, was intended to capture the points that had been agreed at the meeting. The email went on:

“Schedule 1. I have gone through the planning application (which I attach) in the assumption upon which the application is based. This gives a longer list than previously but also a more focused list which is benchmarked to the planning application. I have kept in conditions which limit the life of the Planning Permission as we have assumed that there would be no limit and the reference to construction works.”

As foreshadowed in the email, Schedule 1, the possible planning conditions which SITA considered to be unsatisfactory, was in a different form. However, it identified the following conditions as being unsatisfactory if they were included in any planning permission:

“(b)

it restricts the number of waste carrying vehicle movements to and from the property to fewer than 80 HGV movements (Monday to Friday) and 40 HGV movements (Saturdays)

(c)

it restricts the number of waste vehicle carrying movements to and from the property for smaller than HGV (7.5 tonne) size…

(j)

it imposes more restrictive measures to control water pollution and drainage flood control measures than those contained in the Flood Risk Assessment within the Planning Application.”

In response, on 2 June 2008, Mr Powell said that some of the SITA amendments which were not acceptable. The email identified two in particular:

“As to paragraph (b) surely the figure should be 40 HGV movements rather than 80. I cannot see 80 referred to in the planning application.

As regards paragraph (j) my client will not accept this as a condition. His view is that the local authority may require additional measures to control pollution or drainage or flood control because it is ‘the nature of the beast’ to, in my clients view, over regulate these matters. Accordingly your company must take a view of the matter if necessary make provision in its budgeting for additional measures to be required.”

Accordingly, although the question of HGV movements remained critical for SITA, it was a matter that was outside the planning application that had been made, because nobody - and certainly not SITA - had asked for the planning application to seek permission for 80 HGV movements.

On 3 June, Mr Murkin attached his summary of the issues that had emerged from the various consultations. As to flood levels, he said that Dr Thomas was forwarding him a draft response to the EA setting out why the information requested by the EA was unnecessary given the flood modelling techniques used in the FRA. It also repeated the point about the ‘dry island’, that the emergency plan would have to be agreed between the claimant and SITA to meet the EA request. As to surface water, Dr Thomas was to provide more information on the design and function of the detention basin.

Although Natural England had not been a consultee in the original process, Mr Murkin noted in his email that a species survey was going to be required, following an objection to that effect by Natural England. That was likely to be done in the next two weeks. The email concluded:

“ECC will hold their decision on the application, pending receipt of the information in the further consultations with the EA and NE, thus their decision is likely to be delayed by 2-3 weeks beyond the current due date of 3^rd July. Please note that unless these objections are removed, the Planning Application will probably have to be reported to the Planning Committee for decision thus making a refusal more likely.”

On 4 June, Mr Bailey emailed Mr Murkin to say that he was “most disturbed” by the FRA. He said that he had taken advice from further consultants which had highlighted a number of reasons why the FRA was insufficient. He said he would not accept any extra cost in preparing a suitable FRA. On 5 June, Mr Murkin replied to Mr Bailey enclosing Dr Thomas’s draft response in relation to flood levels, safe access/egress and surface water. As to the species survey, he said that he had passed on to his ecology team Mr Bailey’s reasons for why such a survey may be unnecessary but he advised Mr Bailey that the possibility remained for such species to be present and he had alerted his ecologist to be ready to carry out the survey just in case.

By this point, as his email of 4 June made clear, Mr Bailey was unhappy with the defendant’s performance. On that same day, he met with Mr Crowther, an employee of JP Chick Environmental Services (“JPC”) to look specifically at the question of flood levels, safe access and egress and surface water. Essentially, JPC were engaged to shadow the work being undertaken by Dr Thomas. It was Dr Thomas’ view in his oral evidence that everything became much more convoluted and complicated as a result of JPC’s involvement. Initially, however, JPC endeavoured to be constructive. In their letter to the claimant dated 9 June (and sent to Mr Murkin the following day), they suggested various ways round the problems raised by the EA as to flood level, safe access and egress and surface water. The letter of 9 June showed that JPC agreed with much of Dr Thomas’ original approach.

At the same time (and this was doubtless the principal source of Mr Bailey’s palpable and increasing frustration), the negotiations with SITA broke down altogether. On 9 June, SITA sent through comments (which they called ‘final’) on the draft terms proposed by Mr Powell (paragraph 121 above). These included an agreement of 40 HGV movements between Mondays and Saturdays. It retained as an unsatisfactory condition any restrictions on movement of vehicles smaller than 7.5 tonne (which Mr Powell had not addressed at all). It also added a new condition in relation to noise:

“(e)

it imposes a restriction on noise levels emanating from the property to less than the predicted noise levels contained in the Noise Impact Assessment produced by PACE Acoustic Consulting dated 3 March 2008 within the Planning Application (or equivalent noise levels at the receptors nominated by the Planning Authority taking into account the relevant distances) from the perimeter of the Property.”

At the same time as the draft contract had been exchanged back and forth between the parties, the claimant and SITA had also been exchanging a proposed Transfer relating to the site. That was to effect the conveyance of the land. The email exchanges had not hitherto identified the Transfer document as being particularly controversial. However, on 9 June, together with the draft contract, SITA also sent to Mr Powell an amended version of the draft Transfer. The email warned Mr Powell that an amendment had been made to it, saying:

“On the Transfer, SITA will require protection if Silverton exercise the rights they have been granted over the Property under the Lease. I note there is no obligation on them to make good any damage done to the Property if they exercised their rights or to obtain SITA’s consent to the route of any such connection. As a minimum, SITA would require this protection and I have reflected these minimum requirements in the Deed of Transfer.

I assume of we can agree the contracts today we can exchange tomorrow. Please confirm.”

The proposed amendment to the draft Transfer was in these terms:

“5.

It is acknowledged that by a lease dated 22 August 2006 made between (1) the Transferor and (2) Duncan Leslie Charles Fowle and David Peter Arthur Goodwin (“lease”) that rights (“rights”) were granted by the Transferor to the said Duncan Leslie Charles Fowle and David Peter Arthur Goodwin and their assigns to use the Portaloo erected on the Property and the right to lay temporary service media over the Property. The Transferor warrants and represents that such rights were intended to be of a temporary nature and are not used and have not been used as at the date of this Transfer. The Transferor shall procure that if there is any exercise of the rights then the person exercising the rights shall (a) obtain the approval of the Transferee (such approval not to be unreasonably withheld or delayed) to the positions and manner of any connections with all existing Service Media and the position of any new connection with the Service Media and (b) shall make good as soon as reasonably practicable all damage caused to the Property and any buildings from time to time on it to the reasonable satisfaction of the owners of the Property.”

On the same day Mr Powell responded to SITA to say that, as he had anticipated, “your amendments to the Transfer are unacceptable and my client has asked that you return the papers.” That was the last exchange with SITA. Accordingly, it would appear that SITA’s late insistence on this form of indemnity in the Transfer had finally tested Mr Bailey’s patience one step too far. On the face of it, this amendment was the principal reason that Mr Powell asked for the papers to be returned and in the final analysis, appears to have been the deal-breaker. The dispute about the planning conditions was also unresolved, and Mr Powell never actually responded to the counter-proposals about the unsatisfactory conditions identified by SITA on 9 June. I revert to these exchanges when I deal with causation in Section 11 below.

On 12 June, Mr Bailey chased Mr Murkin for an update in respect of ‘the planning problems’. On 17 June, Mr Murkin sent Dr Thomas a copy of the JPC comments of 9 June 2008 (paragraph 125 above). Mr Murkin asked whether the JPC comments could be incorporated into the defendant’s draft response to the EA’s objection. Although Mr Murkin noted that the FRA was one of three balls up in the air, along with site contamination and ecology, it seems plain that the FRA issues were the most significant because they stemmed from the only formal objection to the planning application (by the EA) that had been made.

On 18 June, following a further chaser from Mr Bailey, Mr Murkin confirmed the current position, dealing with matters under a variety of heads. Under the FRA, he said that a response to the EA objection was being coordinated between Dr Thomas and JPC. He repeated a request for the invert level of the existing drain. The email also referred to a review of the noise issues by Dean Barke, of Sharps Redmore, other consultants directly engaged by the claimant. On both 19 and 20 June, Mr Bailey sent various chasing emails to Mr Murkin complaining about various matters, and in particular the FRA and the proposed surface water detention basin which he was now saying - for the first time - would not work on this site. This prompted Mr Murkin to ask Dr Thomas whether he had managed to speak to Robin Crowther at JPC.

As noted above, Mr Bailey had become concerned about the noise issue and instructed Dean Barke to liaise with PACE to see if there was a way round the matters raised by CBC (see paragraph 118 above). Various noise mitigation measures were discussed in Dean Barke’s email to Mr Murkin of 20 June. The email also demonstrated that additional work to address noise was being suggested by Mr Bailey himself as part of an ‘update’ of the scheme.

Also on 20 June, Mr Murkin emailed Dr Thomas, asking him whether he had managed to speak to Robin Crowther at JPC about the need for a detention basin and other surface water/flood matters. In consequence, on that same day Dr Thomas emailed Mr Crowther at JPC and set out his comments in response to JPC’s comments of 9 June (paragraph 125 above). In those comments, Dr Thomas confirmed that data in relation to flood levels had been ordered from the EA. As to access and egress, Dr Thomas said that he took Mr Crowther’s point about highlighting the likely duration of isolation and would amend the report to include that information. He said that he did not agree with extending the topographical survey in connection with Haven Road because that would have to be backed up with velocity data, which in turn required modelling. Dr Thomas said that they had been trying to avoid modelling throughout in order to reduce costs (as noted above, he had recommended it and been refused on budget grounds). He also referred to his conversation with Essex County Fire and Rescue and the fact that they were preparing a strategic document which had not yet been published (paragraph 86 above). On this point, Dr Thomas said that the options were clear: either a serious consideration given to egress to the west of the site (across adjoining land) or consider egress along Haven Road and resign themselves to the extra costs for modelling.

In relation to the proposed detention basin, Dr Thomas said that it represented the cheapest method of achieving the aim of attenuating the surface water run off with little additional effort to implement proposals. He concluded that he hoped his comments alleviated Mr Bailey’s concerns and that if Mr Crowther wanted to discuss any of those matters in detail he should not hesitate to get in touch.

On 24 June, Mr Murkin confirmed to Mr Bailey that, having spoken to John Snow at ECC, a preliminary species survey was required (Footnote: ¹), despite Mr Bailey’s repeated statements to the contrary. In addition, Mr Murkin said that Mr Snow had indicated that he would be prepared to hold off the determination of the planning application for three weeks (i.e. to 25 July 2008) to enable this work to be carried out. Mr Murkin thought that the other matters such as the FRA, contamination and noise, would be resolved by the end of that week.

On 25 June, Mr Murkin sent Mr Barke an addendum to the NIA, seeking comments. The mitigation measures included amending the barrier height and sheeting one of the buildings. Mr Barke, the claimant’s noise consultant, was content with the addendum, and emailed Mr Murkin by return on 25 June to say that the noise limit would be met by the sheeted building “which is good.” He congratulated the defendant/PACE for responding so promptly.

However, progress was not as quick on the FRA. As noted above, Dr Thomas had emailed JPC on 20 June, but had not heard further from them. In addition, on 26 June, Mr Murkin sent to Mr Crowther a document which Dr Thomas had prepared, clearly labelled a draft reply to the EA letter of 15 May. Later on 26 June, JPC eventually replied to Dr Thomas’ comments in an email in which they made various comments on the points that had been made by Dr Thomas. The email was not copied to Mr Murkin. It would be fair to say that the JPC comments did not betray any urgency in connection with the planning application which, as Mr Murkin had already pointed out, had to be resolved by 25 July. It does not appear that JPC ever commented upon or even acknowledged the draft reply to the EA that they had been sent on 26 June. This was particularly unfortunate given that Mr Bailey had made it quite clear to Mr Murkin that the final version of the FRA had to meet Mr Crowther’s approval.

This was a potentially significant omission by JPC. In his written submissions, Mr Susman suggests that the JPC email of 26 June was “a combined response” to both the points raised by Mr Thomas and points raised by the EA. That is plainly not the case: it was a response to Mr Thomas only. To the extent that it matters, I find that JPC’s failure to address the draft reply to the EA caused delay in relation to the finalisation of the FRA.

Noise issues were still being debated, principally because, belatedly, SITA had appointed their own acoustic engineers, Adrian James Acoustics Limited. On 30 June, they emailed Mr Barke to say that there was a serious risk that operating a scrap metal recycling facility on the site would result in noise levels exceeding the planning limits. In addition, Adrian James said that irrespective of planning issues, there was a significant chance of complaints about noise nuisance. However, at the same time, on 3 July 2008, Mouchel, the acoustic engineers engaged by CBC, sent an upbeat letter to John Snow at ECC dealing with noise. It concluded:

“Providing it can be proven that the increase in noise levels at Anglian Water can be reduced to a more reasonable level with the use of mitigation methods such as the ones listed in the report by PACE Acoustic Consulting, we see no reason to refuse this application on noise grounds.”

It was doubtless as a result of this letter - the last document relating to noise - that Mr Susman said in his closing submissions that, by the middle of July, “noise was under control.”

On 7 July, Mr Bailey noted that the reptile study had been provided and that noise was being dealt with by Mr Barke, leaving the FRA as “now the only stumbling block before 25^th.” Over the next few days there was considerable email traffic between the various parties regarding the FRA which went at least some way to supporting Dr Thomas’ view that the involvement of Mr Crowther and JPC caused muddle and delay. It is therefore worth setting out those events in some detail:

On 9 July, the EA wrote to the defendant setting out answers to questions they had been asked a month before in respect of the site and the relevant Flood Zones that affected it. This information was relevant to the FRA, although it is not immediately apparent how much of it (if anything) was really new.

There were two exchanges in relation to the detail of the planning application on 11 July 2008. First, in relation to noise, Mr Barke emailed Mr Bailey summarising the position as to the likely noise from the site and setting out a positive conclusion that the amendments would not be controversial. Mr Barke also supplied that information to Mr Snow in summary form.

As to the FRA, Mr Murkin emailed Dr Thomas in the afternoon of 11 July to say:

“I have spoken to Ralph Bailey and Robin Crowther at JPC about how we proceed at full speed from here.

Robin is happy to review our final response to the EA objection on matters of flood levels, access and egress and surface water. In this regard I told him that you now have the EA flood level data which he hopes can solve the question of egress thus avoiding the need to get Anglian Water’s permission to go over their land in a flood emergency. He still has concerns about the detention basin and other surface water solutions which I couldn’t answer - his original comments still apply.

Please can you therefore forward ASAP an electronic version of our re-considered response with appendices to Robin. If necessary he will be able to receive these at home over the weekend. Once the content of this has been agreed it should be forwarded to Ralph [Bailey] before sending via email to the EA’s planning liaison officer.”

In response, Dr Thomas emailed Mr Crowther, with copies to both Mr Bailey and Mr Murkin, attaching drawings showing the dimensions and location of the detention basin in the express hope that that would alleviate some of JPC’s concerns. In addition, Dr Thomas said that he had the EA data about Flood Zones which he would look at over the weekend in respect of access/egress.

However, other more important events happened on Friday 11 and Monday 14 July 2008. They were controversial, because they led to Mr Bailey’s decision to terminate the defendant’s contract and withdraw the planning application. There was a good deal of confusion about precisely who said what to whom, partly stemming from the fact that neither Mr Bailey nor Mr Snow of ECC made contemporaneous notes of their meetings or discussions, and partly because of the inherent unreliability of Mr Bailey’s recollection and evidence generally. Appendix 6 of the defendant’s closing submissions sets out some of the more colourful contradictions. However, despite these difficulties, I am in no doubt as to the thrust of what happened and I set out my findings of fact below.

Mr Bailey met with Mr Snow on 11 July (see the email from Dean Barke to Mr Snow of that date). It was Mr Bailey’s evidence that, at that meeting, Mr Snow described the planning application as “half baked” and said that it would be rejected by ECC. Mr Bailey said that Mr Snow expressly advised him to withdraw the planning application. Mr Snow, on the other hand, although called by the claimant as a witness, gave no such evidence. He could not remember the conversation at all. The best he could do was to say that he was told by Mr Bailey of the various outstanding pieces of information required in order to deal with the various queries. He thought that he had made clear that, if the information was not provided, the application would have to be considered without it.

Plainly, the implication of this observation was that, if important information was necessary for the planning application and was not provided, it was possible the application might be refused. Mr Snow may even have said that, although his memory was very poor. But even if he did, I find that that was the limit of the advice Mr Snow gave Mr Bailey at this meeting. For him to have said more, and certainly for Mr Snow to describe the planning application in the excoriating terms suggested by Mr Bailey, would have been unprofessional and wholly out of character. It would also have been far outside his authority which he stressed in his evidence was very limited. He would, as Mr Susman accepted at paragraph 4.11.7 of his closing submissions, have used “guarded terms”, not the colourful language ascribed to him by Mr Bailey. Accordingly, I am in no doubt that Mr Snow did not describe the planning application as “half baked” and did not say that the planning application would fail. Mr Snow did not suggest that he ever said these things and, having considered him carefully as a witness, I do not believe that he would have said any such thing.

I have already said that Mr Bailey was not a good listener. I have no doubt that he complained to Mr Snow about the defendant and about what he saw as Mr Murkin’s lack of coordination of those with an input into the planning application and the outstanding queries. I am equally sure that Mr Snow was generally sympathetic. I am sure that Mr Bailey came away with the impression that, without the outstanding information (which he himself had wrongly told Mr Snow would not be forthcoming) the application would be refused. But Mr Bailey failed to realise that Mr Snow’s advice, about what might happen if information in answer to queries and objections was not forthcoming, was routine, and was not a comment on the application itself. Moreover, it would have been at most a comment based on Mr Bailey’s own incorrect conclusion that such information was not going to be provided, which was itself the result (at least in part) of the confusion and muddle created by the multiplicity of consultants whom he had introduced to the project (the exchanges at paragraph 140 above being only an example).

Accordingly, I find that Mr Bailey came away from his meeting with Mr Snow with the same impression that he had had when he went in, namely that the application was in disarray, and that it was all the defendant’s fault. Accordingly, on the following Monday, 14 July 2008, he decided (in a typically emotional reaction to his frustration) to sack the defendant without further ado. I find that that was his own decision, based on his own (unjustified) unhappiness with their performance. On analysis, it was not related to anything that Mr Snow said or did at their meeting on 11 July. Equally significantly, he took no advice from anyone else before he reached that decision.

On 15 July 2008, the defendant was sacked and the planning application was withdrawn. It was thereafter dealt with by JPC, who had not been asked to advise on the proposed termination.

Ironically, it appears from the emails that, the day before this happened, on Monday 14 July, significant progress was made in relation to the FRA. Mr Murkin emailed Dr Thomas on the morning of 14 July to ask him to indicate whether and when the detention basin solution was agreed. And later that day, Mr Crowther of JPC emailed Dr Thomas, with copies to Mr Bailey and Mr Murkin, saying that it might be better to relocate the storage of surface water below ground and identified the necessary technical amendments to the design. The email went on to say that, because of the need for a noise-reducing bund around three sides of the site that might be as high as nine metres, and the likelihood of protracted negotiations arranging a route of access over the adjoining land, the issue had now come back to how deep any floodwater might be on Haven Road. The issue therefore became (as Dr Thomas had previously advised) the applicability of the earlier modelling in the absence of any further modelling.

The FRA issues being discussed between Mr Crowther and Dr Thomas were the only matter outstanding. This can be seen from the draft letter from the defendant to Mr Snow of ECC dated 14 July which dealt with noise, site contamination, the ecological assessment, and the highways contribution. The only element of the draft which was incomplete was in relation to the FRA, which was still awaiting the final report from Dr Thomas, and which he had promised for after the weekend of 12/13 July.

EVENTS THEREAFTER

On 16 July, Mr Murkin emailed Mr Bailey to express his disappointment at the termination of the contract. He went on:

“I understood in speaking to Sharps Redmore and JPC this week that the outstanding Noise and Flood/Surface Water issues raised by Colchester BC and the Environment Agency had been satisfactorily resolved subject to your agreement and that both SR and AMEC were therefore now in a position to submit the formal responses on these matters to Essex CC. Also we are still within the extended time period, nominally the 25^th July, for considering and determining the Planning Application which was granted upon our request by Essex CC. I am certain that they would have held the decision for another week or so to allow for a second consultation response from the EA.”

This was an important email because it was (and remains) the defendant’s case that, for the reasons noted here, the outstanding matters would have been resolved and the existing planning application would have been successful.

I find that, if there had been any possibility of a sale to SITA at this time, Mr Bailey would not have withdrawn the planning application. Even though it appears that (quite wrongly) in late July Mr Bailey was working on the basis that he might still get planning permission within 6-8 weeks, his experience of the process thus far would have demonstrated to him that the withdrawal of the application would inevitably lead to delay. He would not have countenanced such delay if a sale to SITA had been a possibility. But no such sale was even being discussed. Following the collapse of the proposed deal in June (for the reasons noted in paragraphs 126 to 129 above), there was no further contact with SITA in respect of the proposed sale until the end of the year.

Also consistent with the absence of any potential purchaser, the preparation of the new planning application proceeded at a similar pace as before. On 1 August, JPC wrote to the EA dealing with flood levels, safe access and egress and surface water. Although there was a change to the design of the surface water arrangements (which was now below ground rather than above ground), both the flood levels and access/egress were dealt with very much along the lines that had been discussed between Mr Crowther and Dr Thomas prior to the termination of the defendant’s contract. The EA responded on 19 August, and made plain that they were not happy with JPC’s new underground tank design. They raised a number of questions and sought further information and details, saying that the information and details had to be submitted before they could be satisfied with the new drainage scheme.

On 27 August, Mr Bailey sent SITA the planning application that had been completed by JPC and was about to be made. The application was actually made by way of a re-submission on 4 September 2008.

Planning permission would not be granted until 25 March 2009, some seven months after the application was first made. That seven month period was notable for two things: further to-ing and fro-ing in relation to the planning process generally, and the on-again/off-again negotiations between the claimant and SITA. The correspondence between the claimant and SITA indicates a lukewarm attitude on the part of SITA to acquiring the site, and yet more frustration on the part of Mr Bailey. Although Mr Bailey was always confident that planning permission was about to be granted (Mr Pennington described it as “imminent” in an email of 23 September, 6½ months before it was actually granted) and he was forever sending ultimata to SITA, his various negotiating ploys were markedly unsuccessful.

Thus, on 11 December 2008, after months getting nowhere, Mr Bailey described SITA in an email he sent them as “the most appalling company that I have ever had to deal with and I can quite understand why your metal recycling division is in decline.” Further, when SITA seemed more (rather than less) interested in acquiring the site, their internal emails demonstrated that they remained concerned about the number of HGV movements being sought as part of the planning application. Thus, in an internal email dated 3 February 2009, SITA’s Mr Hughes said:

“I am not happy with the following:

Number of HGV movements below and above 3.5 tonnes, I have always worked on 7.5 tonnes, it states we can only have 20 customers below 3.5 tonnes.”

This led to a subsequent request to Mr Bailey to ask JPC for a change in the number of vehicle movements sought to “no more than 30 movements per day over 7.5 tonnes, unconditional for vehicles under 7.5 tonnes.” But Mr Bailey replied in angry terms to SITA, saying that this would delay the planning and was “again your own mess…I feel that nothing positive comes from SITA…”

Mr Bailey continued to endeavour to be inventive in his forlorn attempts to put pressure on SITA to buy the site. Some of the time this was done by reference to purely fictitious alternative purchasers for the site. On another occasion, on 9 February 2009, he instructed Mr Pennington to tell SITA that he had decided to sell the claimant company (something which he vehemently denied in cross-examination). Two days later, on 11 February, he told SITA that there must be some hidden agenda that he was not aware of and referred to the “same old SITA procrastination that leads me to believe that I am just being dangled along”. However, as the SITA email of 11 February made plain, what now mattered to them was the proposed variation to the planning application (in respect of traffic movements) whilst ensuring that ‘the current planning was safe’.

On 12 February, SITA sent Mr Bailey a draft letter dealing with the planning application, which said that the draft condition that was being sought in relation to vehicle movements was not what SITA wanted and did not have the necessary flexibility. This prompted the response from Mr Bailey that he no longer wished to deal “with such an irritable company”. Despite this, on 13 February, SITA put their request formally in writing. In response, on 17 February, Mr Pennington said that legal formalities should now commence and the lease should be completed conditionally on the grant of the variation of the planning conditions. However, progress was still not made and, on 11 March 2009, Mr Bailey again complained about his time being wasted. He set a deadline of the end of March.

On the same day, Mr Snow emailed Mr Bailey in relation to the condition which SITA now wanted to change. He said that the claimant could either, withdraw the current application and re-submit it, with an amendment to reflect the change in vehicle movements, or they could get a section 106 agreement signed and then submit an application to vary the condition once the permission was issued. Two days later, on 13 March, Mr Snow clarified this position and said:

“The application as submitted proposed that vehicle movements associated with the development to be restricted, hence condition 7. While I appreciate that the decision has not yet been issued, the decision was to grant planning permission subject to the signing of the section 106 requiring the highways contribution. The amendment proposed would not be considered as a minor amendment of the application and would therefore require full re-consideration, to enable all consultees and members of the public to consider the amendment and makes amendments. The decision was made under delegated powers some weeks ago and it is not considered appropriate to vary the application at this late stage.”

Meanwhile, SITA had now valued the site at around £400,000, a lot less than the figures being talked about a year before. There was also a real possibility that SITA might pull out of the deal altogether. On 18 March, Mr Bailey emailed SITA asking them to address the rumours that they were thinking of closing their Colchester depot and therefore would not require his site. However SITA responded to say that that was untrue.

The claimant eventually decided to pursue the current application and seek the variation in relation to traffic movements later. The claimant agreed the section 106 undertaking on 25 March 2009 and, on the same day, the planning permission to use the land as a scrap metal for waste recycling and transfer facility was granted. Condition 7 of the permission stated:

“The maximum number of HGV movements associated with the development hereby permitted shall not exceed the following limits:

40 Movements (20 in and 20 out) per day (Monday to Saturday) of HGV’s less than 3.5 tonnes.

20 Movements (10 in and 10 out) per day (Monday to Saturday) of HGV’s greater than 3.5 tonnes.

No HGV vehicle movements shall take place outside the hours of operation authorised in condition 3 of this permission.”

As noted, this permission was giving the claimant what they had asked for in their planning application of September 2008. But of course that was significantly less than the HGV movements which SITA had indicated they required. In other words, for reasons which were never explained, the claimant’s resubmitted planning application was contrary to what SITA wanted. That further confirms my view that, in September 2008, when the resubmitted application was made, there was no question that SITA were an interested purchaser.

As noted, thereafter, the claimant immediately sought to change condition 7 to bring the traffic movements into line with what SITA wanted. Mr Snow confirmed on 3 April that the Highways Department had no objection to the proposed increase in movements. However, the further delays continued to frustrate Mr Bailey who, on the same day, asked for confirmation from SITA that they had no further interest in his site. Four days later, on 7 April, Mr Bailey told SITA that they had other interested parties (which was untrue) and said that “I’ve never dealt with any company as unethical and as unprofessional as SITA.” Two days later on 9 April 2009 he told SITA (which was again untrue) that he had received a full asking price offer for the site.

On 24 April, an application was made to vary the conditions on relation to vehicle movements. Four days later, on 28 April, SITA wrote to the claimant to say that they understood that the claimant was proceeding with the sale to another party and returned the ground investigation report. For once, this was true. The other party were called Brand and Howes Environmental Limited. In May 2009, they offered £950,000 for the site. Given that this did not include the extra strip of land, this was on any view a very good offer. However, it quickly came to nothing when Brand and Howes realised how much it was going to cost to implement the various planning conditions. By the end of May, Brand and Howes had pulled out of the deal altogether and there appeared to be no other prospective purchaser.

On 6 July 2009, condition 7 of the planning permission was varied so that there were unrestricted movements for all vehicles less than 7.5 tonnes. On 10 July, SITA asked Mr Pennington if the site was back on the market. Mr Pennington said that Mr Bailey would sell the site for £800,000 and that that price was not negotiable. In September 2009, the site was marketed. The only interest was from SITA. They offered £700,000 for the site including the extra strip but this was rejected by the claimant who still sought £800,000 excluding the extra strip of land.

Thereafter, although SITA apparently remained interested in the site, this was principally on the basis of acquiring some, or all, of the Silverton site as well. The position dribbled on into 2010 but SITA did not pursue their interest and nobody else made an offer.

On 28 May 2009, the claimant’s solicitors wrote to the defendant to confirm their instructions and went on to say:

“Having investigated the papers in this matter, we are satisfied that our client has a clear claim for breach of the retainer and for professional negligence in your conduct of the contract. We are carrying out detailed enquiries and will write fully to you shortly with a formal Letter of Claim pursuant to the Pre-Action Protocol for Professional Negligence Claim.

However, we are required by the Protocol to give you a preliminary notice of our intention to bring a claim as soon as we are able so to do. Please accept this letter as required notice, kindly acknowledge receipt and please confirm you have passed a copy of this letter to your insurers for their information.”

No particulars of any claims whatsoever were provided in the letter.

Over a year later, on 2 June 2010, the claimant’s solicitors wrote again. This was a much longer letter, running to six pages, and set out the detailed allegations arising out of the defendant’s performance of their work. The letter said that it was “a formal Letter of Claim in accordance with their Professional Negligence Pre-Action Protocol.” The defendant responded to the letter on 14 September 2010. The proceedings were commenced on 25 July 2011. The precise nature and terms of the letters of May 2009 and June 2010 are important because of the particular terms of the defendant’s retainer (see paragraphs 291 to 301 below).

ALLEGED DEFICIENCIES IN THE DEFENDANT’S PERFORMANCE

Delay

Up to Early December 2008

In Section 5 above, I have analysed whether or not the defendant was in breach of contract for failing to complete all necessary tasks by the end of November 2007. I have concluded that, although the defendant was in breach of contract in two respects, these were not the critical cause of delay (Footnote: ²). The critical reason why the planning application could not be made at the end of November was the uncertainty surrounding and the repeated changes to the proposed site layouts, and the possible effects of those changes on the other parts of the application. Moreover, these changes stemmed from the fundamental difficulty inherent in the claimant’s whole approach to the application: whilst Mr Bailey did not want to make a general planning application, leaving the details to be the subject of a subsequent application by the purchaser or tenant, and instead wanted the application to be as detailed as possible, the uncertainty as to who would use the site and what precise operations would be carried out there always made it difficult for the planning application to identify with clarity what was required and why. It inevitably made the draft application vulnerable to repeated revisions, modifications and refinements which were wholly beyond the defendant’s reasonable control.

December 2007 – April 2008

For the reasons set in Section 6 above, I reject the allegation that, between December 2007 and April 2008, the defendant was responsible for any significant delay at all. It is plain that, from the moment that SITA became involved, the planning application process was delayed so that it could accommodate their requirements. What is more, I find in Section 6 that the reality – that the planning application would be made only once SITA were happy with it, and would therefore take longer to be completed than would otherwise be the case - was accepted on all sides.

As noted in Section 6.2 above, I find that the making of the application on 3 April 2007 was in accordance with the defendant’s contractual obligation. In the alternative I find on the facts that the original contractual completion date was extended by agreement (either in accordance with clause 2 or generally). I also accept Ms Day’s alternative submission that the original agreement as to the timing of the planning application was varied by agreement, and became instead an obligation on the part of the defendant to take all reasonable steps to obtain SITA’s approval and then make the planning application as soon as reasonably possible thereafter. If necessary, the waiver/estoppel arguments are also be made out.

I should add for completeness that my conclusion that the defendant did not cause any critical delay at any time prior to the submission of the planning application on 3 April 2008 does not run counter to any expert evidence adduced by the claimant. I deal with some general aspects of the expert evidence in paragraphs 176 to 180 below, but, on the question of delay, I accept paragraph 57 of Ms Day’s written submissions: Mr Gardner, the claimant’s expert planner, admitted that he could not apportion responsibility for delay, and could not say if it was due to the claimant or the defendant. Mr Stock, the defendant’s expert, had no doubt that the defendant had not caused any such delay.

After 3 April 2008

There is no pleaded case against the defendant in respect of their alleged responsibility for any delay after the planning application was made on 3 April 2008. This reflects the reality that, on the claimant’s whole approach, the criticism concerned the delay in making the planning application in the first place, not what happened after it had been made. But secondly, and perhaps more importantly, the claimant could not criticise the speed with which the application was pursued after it was made, principally because that same application was unilaterally withdrawn by the claimant in circumstances where the delays resulting from that decision wholly outstripped any delays between April and July 2008.

For these reasons, therefore, I reject the claimant’s case against the defendant in respect of delay.

Deficiencies in the Application Itself

Expert Evidence

Before addressing the detail of the allegations concerning the planning application itself, I should make some general observations on the expert evidence.

As Akenhead J noted in Middle Level Commissioners v Atkins [2012] EWHC 2884 (TCC) there is a range of qualifications and/or experience against which the court must seek to judge whether “planners fell below the standard to be expected of reasonably careful planners.” There is currently no recognised profession of planners as such. There is no right or wrong way to make a planning application. Moreover, a planning consultant cannot guarantee success; generally, he will only be liable for damage caused by advice which no planner who was reasonably well-informed and competent would have given: see Saif Ali v Sydney Mitchell & Co. [1989] AC 198 at 218D.

I reiterate these principles at the outset because there was a marked difference of approach by the planning experts in this case. I consider that Mr Stock, the defendant’s expert, approached the allegations against the defendant with these principles in mind. Mr Gardner, the claimant’s expert, did not. Repeatedly, Mr Gardner accepted during his cross examination that he could not say whether or not the defendant had acted in a way that no reasonably competent planning consultant would have acted. Instead, his approach was to identify various aspects of the application and say, in terms, that he would have done things differently. As Ms Day points out, that is hardly surprising, given that Mr Gardner has spent most of his working life acting for local planning authorities, rather than those making the applications.

More importantly, whether an expert would have done something differently can never be a test of whether what the defendant actually did was negligent or not. To that extent, therefore, Mr Gardner’s evidence was singularly unhelpful. Moreover, on occasions at least, there was a strong element of hindsight in his approach, despite the well-known warning that ‘hindsight is no touchstone of negligence’: Duchess of Argyle v Beuselinck [1972] 2 Lloyd’s Rep 172 at 185.

For all these reasons, therefore, I generally preferred the evidence of Mr Stock on those (surprisingly few) issues on which expert planning evidence was necessary.

Potential Flooding

The allegations at Section 6 of the amended particulars of claim dealing with this aspect of the case can be summarised as follows:

It is not entirely clear whether this allegation was maintained: the claimant’s ‘Concessions’ document dated 8 March suggests that it may have been abandoned. However, for completeness, I reject the suggestion that the defendant failed to identify the essential problem of identifying an adequate means of egress. Dr Thomas undertook an FRA at the outset which demonstrated that, even if there was flooding from the river, the site itself would remain a ‘dry island’ and would therefore provide a safe refuge in times of flooding. The problem was that Haven Road itself was much more liable to flood, and was the only method of egress from the site. It was for that reason that the ‘dry island’ solution was maintained. The difficulty was compounded by the fact that, as set out in paragraph 86 above, Essex Fire and Rescue were working on the development of a policy in respect of egress along flooded roads, but this was not yet available.

I find that, throughout, Dr Thomas was acutely conscious of the need to satisfy the EA in relation to adequate egress of the site in the event of flooding. Accordingly, the allegation at paragraph 6.2 of the amended particulars of claim is rejected. The issue becomes whether Dr Thomas’ methodology was negligent, which is addressed in paragraphs 184 to 192 below.

Dr Thomas made contact with the EA in October 2007 and, amongst other things, obtained a detailed flood map. Dr Thomas used flood levels taken from the EA’s technical modelling. Although at one point the EA alleged that the defendant had “assumed” the flood levels, that was incorrect, and Mr Gardner confirmed in his evidence that he made no criticism of the flood levels utilised by Dr Thomas.

When the EA were involved first (paragraph 111 above), they gave an early indication that they did not like the ‘dry island’ solution. However, Dr Thomas thought that it was the best solution in all the circumstances, and it was part of the FRA that went with the planning application. At paragraph 6.3.3 of the amended particulars of claim, the fact that the EA objected to that solution is relied on as proof of the defendant’s negligence or breach of contract.

I reject that allegation. The EA have an obligation to raise whatever matters they consider appropriate when dealing with applications of this kind. If they felt in good faith that the ‘dry island’ solution was potentially problematic, they were obliged to raise it. That does not make the solution itself inadequate, let alone negligent. For two entirely separate reasons, I conclude that the ‘dry island’ solution was appropriate.

First, at various paragraphs in his report, Mr Stock, the defendant’s expert, explained in some detail why no criticism could be made of that solution. I accept his evidence, which was not substantially challenged in cross-examination. In any event, although he was not an expert in this area, and had not himself ever prepared a FRA, Mr Gardner agreed in his oral evidence that the ‘dry island’ was a competent solution to the problem. Furthermore, Mr Crowther of JPC, who did have relevant expertise in this area, supported the ‘dry island’ solution (both in his letter of 9 June 2008 to Mr Bailey and in his evidence in cross-examination).

Secondly, the EA’s letter of 19 August 2008 (paragraph 154 above) shows that they eventually withdrew their objection to the ‘dry island’ solution. The problem did not arise again. I do not consider that an objection raised by the EA, and subsequently abandoned, can possibly constitute negligence or breach of contract. For completeness, I also find that Dr Thomas had said that the FRA had left the egress issue “sufficiently ambiguous” (as he put it) because he was confident that he could still persuade the EA of the suitability of the ‘dry island’ solution, a solution which - as we have seen - they did eventually accept.

When they felt that they were getting nowhere with the EA’s objection to the ‘dry island’ solution, and with the Essex Fire and Rescue consultation still outstanding, the defendant and Dr Thomas were obliged to cast round for other means of egress which did not involve Haven Road. Inevitably, therefore, they had to consider egress across the neighbouring land. But that was not unreasonable: indeed, it was the only thing they could do. Since the possibility only had to be explored in the first place because of the EAs objection to the ‘dry island’ solution, which was itself later abandoned, the criticism of this alternative possibility cannot be sustained.

For completeness, I also note that, in June/July, JPC agreed that, because of the difficulties of the EA, a potential solution across adjacent land should at least be considered. Mr Gardner also said expressly in cross-examination that it was reasonable to raise it as an option. Again, therefore, it could hardly be said to be negligent.

It is said that the defendant failed at any stage to propose subscribing to the EA’s flood early warning system. I reject that allegation as a matter of fact. At paragraph 4.1.2 of the FRA, Dr Thomas confirmed that the occupier of the site would subscribe to the EA’s Flood Line, which was the relevant flood early warning system. That was not only a reasonable suggestion, it was also incorporated into the subsequent planning permission that was granted. Mr Gardner did not appear to support this criticism in his oral evidence. Accordingly, I find that there is nothing in this pleaded criticism of the defendant. (Footnote: ³)

There was also a faint suggestion that the reference to the ‘plan’ in the FRA was unclear, and that it was in any event unsatisfactory that the plan was “subject to consultation”. There is nothing in either point. The ‘plan’ was plainly a reference to the Evacuation Plan (something Mr Gardner accepted in cross-examination) and it was still subject to consultation because, as set out in paragraph 86 above, Essex County Fire and Rescue were still working out whether a maximum flood depth on Haven Road of 0.5m would be acceptable.

For the reasons set out above, I reject all the criticisms of the FRA. The difficulties created by the EA’s original objections had largely been withdrawn by August 2008. On the balance of probabilities, I find that, if the planning application itself had not been abandoned on 15 July 2008, it was more likely than not that the content of the FRA, together with the additional information provided during June and July, would have led to the approval of the defendant’s planning application on or about 25 July 2008.

Drainage and Pollution

There are two linked allegations in relation to this aspect of this case. First it is said that the detention basin was an inadequate solution to the problem of draining surface water from the site; secondly, it is alleged that the defendant failed to advise an alternative solution of excavating an underground tank on-site to receive flood water, with an interceptor to exclude waste oils. I deal with each of those allegations in turn below.

I accept the defendant’s submission that it was unusual for the EA to request further information as to how the on-site surface water drainage would be addressed. It was unclear how this related to the EA’s usual areas of concern. A detailed drainage solution was usually dealt with by way of planning conditions, a point made more than once by Dr Thomas in his emails. Despite this, Dr Thomas designed a detailed detention basin to meet the EA’s request.

It seems plain that the criticisms of the detention basin solution stemmed from Mr Bailey’s own antipathy to it, which itself seems to be have been based on the mistaken notion that the EA had rejected it. He was wrong about that; the EA had simply asked for more details. He was also wrong to say that it would often be full of standing water: the evidence was that any standing water would be rare.

The shaky nature of this allegation is confirmed by reference to the expert evidence. Mr Stock said the detention basin was a proper and viable solution. Mr Gardner could not gainsay that, admitting in cross-examination that he could not give a view as to whether it was a negligent solution or not.

In any event, any criticism was based on a fallacy, namely that the defendant was in some way obliged to provide detailed drawings of the proposed drainage scheme, for a site that was going to be sold to a third party and where its precise use was always the subject of debate and doubt. That was not part of the defendant’s contractual obligations. And it has resulted in the absurd position whereby the claimant maintains that the defendant should have designed an underground tank instead, the cost of which would have been enormous, immediately putting off any prospective purchaser.

Eventually even Mr Gardner accepted that it might have been better to leave this matter “to later detailed design and conditions.” I agree. The only issue, therefore, is whether the proposal of the detention basin was itself negligent, and the evidence was clear that it was not.

The underground tank (to which I have already referred) was another solution in principle to the problem of surface water drainage. However, since the suggestion of a detention basin was not of itself negligent, the fact that there was another design solution is immaterial.

Furthermore, since it would have been a more expensive option, I consider that it is artificial to bolster the case against the defendant by alleging that it was negligent in not advocating an expensive solution to a relatively simple problems, particularly in circumstances where the claimant did not have to carry out that work anyway (because it was going to sell the site).

Finally, I note that the EA sought more details in relation to JPC’s proposed underground tank, just as they had sought more details about the detention basin. Again that seems to me to equate the two options; they were both possible solutions to the surface water problem but they were both solutions in respect of which the EA wanted further information.

Finally, I find that there is nothing in the interceptor point. That was a matter of detailed design. Some form of interceptor to prevent polluted surface water from getting into the river was always going to be required, either as an uncontroversial planning condition or as part of the detailed design prepared for the eventual occupier.

Noise

The allegation that the defendant failed to consult CBC in order to ascertain and meet its concerns about noise has been abandoned (see page 2 of the claimant’s ‘Concessions’ document). Two principal allegations in relation to noise remain. First it is said that the defendant failed to undertake or procure a proper investigation of the use being made of nearby premises and the likely effect on those premises of noise from the site. Secondly, it is said that the defendant failed to provide an adequate solution to the noise issues.

Although, at paragraphs 207 to 214 below, I deal with the detail of these allegations, I should say at the outset that they were not supported by the expert evidence. During the course of his cross examination, Mr Gardner made plain that the only real criticism that he could make was that, because PACE had made an error in describing the use of buildings adjacent to the site, that error (although meaningless in itself) would somehow have caused him to question everything else that PACE did. I regard that point as simply unarguable. Even if PACE were wrong to say, for example, that the Anglian Water buildings were offices rather than a workshop, Mr Gardner agreed that the error, of itself, went nowhere. I reject his suggestion that, because PACE got that wrong, they might have made other errors as well. Mr Stock was clear that there was no sustainable criticism of the noise investigation, and the single question and answer that made up his oral evidence on this point did not alter the effect of his evidence.

Accordingly, the pleaded criticisms in relation to noise fail at the outset because they were wholly unsupported by expert evidence. However, I deal briefly with them on their merits.

The defendant engaged PACE to undertake the necessary noise report. This considered the potential effect if the site were to be used as a vehicle scrap yard. The receptors used to measure noise were those which were subsequently used by the claimant’s noise consultant Mr Barke, and had in any event been agreed with ECC.

PACE properly assessed the noise on the Anglian Water premises adjacent to the site, and at Valley View Lodge to the west of the site, which was the closest residential building. I find that there was no reason for any buildings or areas to be used as receptors other than those used by PACE. Thus I reject the (unpleaded) criticism that PACE should have carried out tests at other locations, such as the University of Essex buildings some distance away: they were not agreed, and no need or requirement to test there was demonstrated by the evidence.

For all these reasons, I consider that the PACE report was adequate and properly conducted. In one sense, again, the proof of the pudding is in the eating: when the planning application was made, supported by the PACE report, there was no objection by CBC. All that happened (paragraph 118 above) was that they identified a potential noise issue if planning permission was granted, which was an unremarkable observation, given the proposed use of the site. Moreover, the matters raised subsequently, all concerned with the precise type of plant that was to be used on the site, were points which nobody - certainly not the claimant - could identify with any precision in the absence of a confirmed purchaser.

Accordingly, I reject the suggestion that the PACE report was inadequate or that in some way the defendant was in breach of contract in relation to its NIA.

In my judgment, the defendant is right to say that PACE were not in a position to propose a final solution in relation to noise issues, because that could only be provided once the exact use of the site, and the machinery to be used thereon, was made plain. That said, the general suggestion of cladding was one that was endorsed by Mr Barke, the claimant’s own consultant.

As to the building up of the bund surrounding the site, that was again a possible way of dealing with any noise issues but, for the reasons stated, the fact that the original planning application did not identify that (or other possibilities) was not a sign of negligence.

It is, in any event, difficult to see how the allegations that a proper solution was not found to the noise issues could be made at all, given that the letter from Mouchel of 3 July 2008 (paragraph 139 above) made plain that CBC no longer had any objection on noise grounds, and that the claimant’s closing submissions, at paragraph 4.5.2, expressly conceded that, prior to termination in mid-July, “noise was under control.”

At one point, in his cross-examination, Mr Gardner appeared to be criticising the defendant because the EHO had said that detailed noise issues could be dealt with by way of conditions attached to the planning consent, and he said that all the noise issues should have been resolved then, rather than leaving “further uncertainty.” But that was a wildly unrealistic view of a site without a purchaser or occupier; it was far outside the defendant’s retainer, which was to apply for planning consent, to ensure that the consent provided was free from all conditions. Accordingly, I reject all the allegations in relation to noise.

Additional Vehicle Movements

This part of the case can be dealt with briefly. The pleaded allegations are that there should have been a TA accompanying the planning application of 3 April, and the fact that there was not was a breach of contract on the part of the defendant. For good measure, it is said that the defendant was also in breach of contract for accepting ECC’s written confirmation that no TA was required.

It seems to me that these allegations are doomed to fail. A TA was not necessary. ECC originally required a TA, but later confirmed - when given further information about the proposed layout - that no such document was required. The defendant was entitled to rely on what they were told. In any event, I consider that these allegations have been rightly abandoned (see page 2 of the ‘Concessions’ document), making it unclear what, if anything, remains in connection with this aspect of the claim.

The one remaining allegation seems to be that the defendant failed to undertake sufficient investigations relating to the likely vehicle movements at the site. I consider that this allegation is untenable as a matter of fact: as set out, for example, at paragraphs 18, 20, 44, 81 and 90 above, the defendant made repeated efforts to obtain this information (both before and after SITA were involved) and were repeatedly the victims of the paucity of information with which they were supplied.

Finally, it is said that the defendant failed to propose the simple solution of a planning condition restricting the number of additional vehicle movements and/or the size and capacity of the vehicles. This is a puzzling allegation, which is not supported as an allegation of negligence in Mr Gardner’s report, or in his oral evidence. In any event, it appears to ignore the fact that vehicle movements were inevitably going to be the subject of a planning condition, as they had been before, and as they were again in 2009 when planning permission was eventually granted. In short, the defendant did its best with the limited information with which it was provided by the claimant and/or SITA. There is nothing to say that, if the planning application had been considered and approved in July 2008, it would not have been the subject of precisely the same condition that ECC imposed the following year. Of course, the fact that SITA did not like the condition that was imposed in 2009 was merely a reflection of the uncertainty regarding SITA’s requirements, rather than anything to do with the defendant.

For these reasons, I consider that there is no basis for any of the allegations in respect of the transport assessment or additional vehicle movements.

Ecology

There are a number of allegations in relation to ecology. They are:

I deal with these allegations from paragraph 222 below. However, it should again be noted that these allegations must fail at the outset because there was no expert evidence to support them. Mr Stock explained how and why the allegations were groundless. During his cross examination, Mr Gardner was unable to sustain the pleaded allegations, making full or partial concessions in respect of each aspect of the ecology issues. In those circumstances, I consider that the allegations of negligence in relation to ecology have not been made out.

I accept as a matter of fact that the defendant failed to consult with Natural England before the application was made. However, the site was not the subject of any ecological designation and there was nothing which would have alerted a reasonable planning consultant to the possibility that such a consultation was required. It was put to Mr Stock in cross-examination that some sort of general inquiry ought to have been made but, as he explained, a reasonably competent planning consultant would first consider whether the site had any ecological designation (which it did not) and whether any ecological issues had been raised on previous applications (which they had not). In those circumstances, he said, it was not negligent for the defendant to fail to anticipate any objection that Natural England might have. I accept that evidence.

The defendant’s solution to the problem was to advise that a preliminary species report would have to be undertaken. Mr Bailey did not initially accept that advice but in the end instructed a separate consultant to produce such a report. That separate report was then part of the ultimately successful planning application. On that basis, therefore, it can be shown that the defendant’s advice was correct, a point confirmed by Mr Gardner when, in cross-examination, he said he had no criticism of the course of action proposed by AMEC following the representations by Natural England.

This allegation seems to have at its root Mr Bailey’s repeated observation at the time that no species report was required. The emails make plain that the defendant passed on this view to Natural England but that Natural England remained firm that at least a preliminary species report was needed. In those circumstances, the claimant cannot now criticise the defendant for, in some way, failing to persuade Natural England that their objection was misconceived.

For these reasons, I reject the allegations in respect of ecology.

Conclusions as to Breaches of Contract

For the reasons set out above, save for the two specific breaches noted in paragraphs 57 to 60 above, I reject the claimant’s case that the defendant was in breach of contract in any of the ways alleged in the amended particulars of claim, whether in relation to delay or in relation to the quality of the planning application itself. Moreover, those two breaches of contract were manifestly not the reason why the planning application was not complete by the end of November 2007. In those circumstances, therefore, the claimant’s substantive claim against the defendant must fail.

Although it is not expressly pleaded, there was a clear inference in the presentation of the claimant’s case that, if the defendant’s contract had not been terminated, the planning application would have been refused. When I asked Mr Susman in the closing submissions whether or not that was his case he invited me, on the balance of probabilities, to find that the application would have been refused.

There was no expert evidence addressing that issue. It was not a matter that was at the forefront of the claimant’s evidence or submissions. But to the extent that it matters, I do not consider that this aspect of the claimant’s case has been made out. On the contrary, I consider it more likely than not, on the basis of the matters set out in Sections 8 and 10.2 above, that such permission would have been granted in late July 2008. But it follows from what I have said above that, even if the application would have been refused, that was not the result of any breach of contract on the part of the defendant.

That is therefore the end of the case: no substantial allegation of breach of contract or negligence has been established by the claimant. However, in case I am wrong to reject the substantive allegations of breach of contract, I go on in Section 11 below to consider the arguments on causation.

CAUSATION

The Claimant’s Pleaded Case

The claimant’s pleaded case on causation is set out at paragraphs 12.4-12.9 of the amended particulars of claim, in these terms:

“12.4

On or about 3 March 2008 the Claimant agreed with SITA UK Limited to sell the Site to SITA UK Limited for £1,325,000 subject to contract, subject to obtaining satisfactory planning permission, and subject to obtaining an environment permit, and with the mutual intention that by the end of April 2008 the Claimant and SITA UK Limited should exchange contracts expressed to be conditional upon obtaining planning permission and an environment permit.

12.5

If by the end of November 2007 the Defendant had presented to Essex County Council on behalf of the Claimant in accordance with its obligations under paragraph 3.3 above an appropriately complete planning application for use of the Site as a Scrapyard, planning permission would have been granted by the end of April 2008.

12.6

The Claimant would then have made as profit the

difference between the sale price of: £1,325,000

and the cost price of £561,000

namely an expected profit of £764,000

12.7

However, because of the breaches by the Defendant of its obligations pleaded in paragraphs 5 to 10 above, the Claimant and SITA UK Limited did not exchange contracts for the sale and purchase of the Site by the end of April 2008.

12.8

When there was a subsequent general fall in property prices in the summer of 2008, SITA UK Limited chose not to proceed, except for a much reduced consideration which was not acceptable to the Claimant.

12.9

Accordingly the Claimant suffered loss of that expected profit.”

In essence, the claimant’s case is that, but for the delays and/or deficiencies in the planning application, planning permission would have been granted by the end of April 2008 and the site would have been immediately sold by the claimant to SITA at that time for £1,325,000. Thereafter, the sale could not be revived because of the decline in the property market. As noted above, I have found that the defendant was not in default in a way that meant that the planning application was delayed. I also reject the criticisms of the quality of the defendant’s work. However, assuming that I am wrong about that and the defendant was in breach of contract, as alleged, the next issue is whether the claimant’s case on causation been made out.

For six separate reasons, I consider that, even if (contrary to my findings) the defendant was in breach of contract, each of the essential elements of the claimant’s pleaded case on causation has not been established. I deal with those six reasons in Sections 11.2 – 11.7 below.

‘Appropriately Complete’ Planning Application

In her final submissions, Ms Day took issue with the claimant’s case as to what is meant by an “appropriately complete” application (which, on the claimant’s case, had to be made by the end of November 2007). It seems to me that this could mean one of two things: an application that was complete because it was not deficient in any material way, or an application that was complete because it was one with which SITA were satisfied: to use the language of Mr Murkin’s email of 8 January 2008 at paragraph 79 above, it was a “bespoke application [which] matches the end user’s requirements.”

As to any alleged deficiencies within the application, for the reasons set out in Section 10.2 above, I am satisfied that when it was made, the application was not deficient and was not produced by the defendant in breach of contract. It was therefore “appropriately complete”. And to the extent that “appropriately complete” means a planning application of which SITA (the proposed purchaser) approved, and which matched their requirements, then the claimant’s pleaded case on causation fails at the outset. The contemporaneous evidence set out above, in particular at Section 6, makes plain beyond doubt that no ‘appropriately complete’ application could have been made until 3 April 2008. SITA simply did not identify their requirements so as to enable any more prompt planning application to be made. On either basis therefore the claimant’s pleaded case on causation is based on an unwarranted assumption against the defendant (that an ‘appropriately complete’ application could and should have been made in November 2007), and fails on that ground alone.

Planning Permission Would Not Have Been Granted By The End Of April 2008

In my view, even assuming that the defendant had been in breach of contract in any of the ways pleaded, planning permission would not have been granted by the end of April 2008. There are two separate reasons for that.

First, when the planning application was resubmitted in September 2008, months down the line, and once a whole host of matters had been discussed and resolved, it still took another seven months for the application to be granted. Even then, because of SITA, modifications had to be sought and obtained, which delayed matters still further. In my view, even if the planning application had been made at the end of November 2007, and even leaving SITA out of account, the application would not have been granted until around late June/early July 2008 at the earliest (7 months on). It certainly would not have been granted by the end of April 2008, which on this hypothesis would have been just five months after the application had been made.

Secondly, the involvement of SITA from mid-December onwards would inevitably have caused further significant delay, even if a planning application had been made at the end of November 2007. Indeed it may have caused that application to be withdrawn altogether. Again that can be tested by what actually happened between mid-December 2007 and early April 2008 (Section 6 above) and again in the latter part of 2008 and early 2009 (Section 7 above). SITA were capricious; sometimes they said that they approved the planning application; on other occasions, they raised detailed points of disagreement with that same application, weeks and months down the line. Delays would have inevitably occurred as a result of SITA’s involvement, whether or not the planning application itself had been made at the end of November 2007.

Accordingly, for these separate reasons, I consider that the claimant’s pleaded case, that, (even assuming default on the part of the defendant), planning permission would have been granted by the end of April 2008, to be wholly unrealistic.

The Failure to Exchange Contracts With SITA

Now let us assume that I am wrong about the foregoing and that, but for the defendant’s default, planning permission would have been granted (or was imminent) by the end of April 2008. The next issue on the pleadings is whether, in those circumstances, the claimant and SITA would immediately have exchanged contracts for the sale in the sum of £1,325,000. In my judgment, the resounding answer to that question is No.

First, I must note the claimant’s failure to call anyone from SITA in support of this allegation. In a claim of this kind, which depends on a hypothetical agreement with a third party, the court may draw adverse inferences if that third party is not called to give evidence: see Wisniewski v Central Manchester Health Authority [1998] PIQRP 324. In the subsequent case of Stoll v Wacks Caller [2010] PNLR 4, His Honour Judge Hodge QC drew an adverse inference against the claimant (in a case not dissimilar to the present) resulting from the claimant purchaser’s failure to show that the vendor would have agreed to a ‘call-in’ (or ‘buy-back’) clause in a contract for sale, the omission of which was at the heart of the claimant’s professional negligence claim against its former solicitors. In that case, Judge Hodge reasonably concluded that the failure to call the other contracting party to give evidence about whether they would have accepted a varied contract was an important matter; he concluded that the absence of such evidence meant that he could infer that the vendor would not have given evidence in support of the claimant’s hypothetical case.

Similarly, I am driven to conclude that the absence of any evidence from SITA on this point is because no one at SITA would have given evidence in support of the claimant’s pleaded case. In particular, I infer that no one at SITA would have said that it was the delays in making the planning application, or any particular ‘deficiency’ within the defendant’s application itself, which resulted in their failure to reach agreement with the claimant in June 2008. I consider it much more likely than not that they would have said that, even to the extent that they were interested in purchasing the site, the negotiations broke down because of Mr Bailey’s unreasonableness over various topics, in particular the terms of the Transfer, and that, after that, they had second thoughts about buying the site anyway.

The absence of any evidence from SITA is thrown into stark relief by paragraph 5.3 and following of the claimant’s closing submissions. That seeks to construct an argument that SITA would not have gone as far as they did in the negotiations if they were not keen to acquire the site, and that the court should infer that they would have agreed to buy the site but for the defendant’s defaults. The argument is advanced by reference to matters which were not in either the written or the oral evidence at all, or which were the subject of (at most) minor passing references in the claimant’s documents. That is unsatisfactory and unpersuasive. Furthermore, although the claimant’s case is based on the premise that, but for the defendant’s default, they and SITA would have entered into a contract in April 2008 for the purchase of this site, the reality is that, not only is such an assumption contrary to the contemporaneous evidence, but it is also wholly unsupported by any evidence from SITA. In those circumstances, the adverse inference speaks for itself.

Secondly, I consider that, even without SITA’s evidence, an analysis of the relevant exchanges (paragraphs 121 to 129 above) shows that the state of the planning application was not the principal reason for the failure of the negotiations. The first and most obvious point is that the parties were negotiating on the basis that the sale would happen before planning permission was granted, which therefore uncoupled the proposed sale from the success (or otherwise) of the application anyway. In May/June 2008, SITA appeared willing to proceed on the basis of a conditional contract, without planning permission having been granted.

It is right that at one point, the parties were negotiating over the likely conditions that might be imposed when planning permission was granted, and whether or not those could be reasonably regarded by SITA as unsatisfactory (paragraphs 113 to 121 above). But that was nothing to do with the detail of the planning application itself: planning conditions of some sort were and are inevitable in cases like this. The principal sticking point, namely the traffic movements, was not the subject of the planning application at all, and was a matter which everyone recognised would be (and ultimately was) the subject of a condition imposed by ECC. In any event, SITA and the claimant never reached an agreement on these matters, an impasse which was nothing to do with the defendant.

Therefore, to the extent that the claimant and SITA were unable to resolve their differences in relation to planning matters, it was in respect of the possible conditions which SITA feared, but which did not arise out of the detail of the defendant’s application. Even if the application had been granted, SITA’s concerns were in respect of the conditions that would be imposed as part of that approval. So, even if the defendant had been in breach of contract and even if planning permission should have been granted by the end of April 2008, the ongoing disputes between the claimant and SITA about (for example) permitted traffic movements or noise would have continued.

Again, as repeatedly happened in this case, the same problem came around the following year: in 2009, long after the defendant had been sacked, this issue arose again between SITA and the claimant, and it continued even after the second planning application had been allowed (because SITA were not happy with the condition as to traffic movements, just as they feared they would not be in May/June 2008). Again therefore, this was not a matter in respect of which the defendant had or could have had any reasonable control.

Most significantly of all, I consider that, from my analysis of the relevant documents (see paragraphs 121 to 129 above) in around May/June 2008, it was not the on-going dispute about the permitted traffic movements or the other conditions that was the principal reason why the claimant did not sell the site to SITA (even assuming that the latter’s interest was genuine). Instead, as that analysis demonstrates, by then what mattered was the amendment of the Transfer and the terms of the indemnity that was sought by SITA. Mr Powell’s email of 9 June made clear that it was the new proposed terms of the Transfer (which had nothing to do with the planning application whatsoever) which had caused Mr Bailey to seek the return of the documents from SITA. Nothing more then happened in connection with SITA for over 6 months.

It is right to note that the problem with the proposed amendment to the Transfer was not raised by either party during the hearing; I raised it during the closing submissions because the contemporaneous documents seemed to make it so clear that it was the principal reason in June 2008 for Elvanite’s solicitor to withdraw the papers from SITA. Mr Susman said that he thought that the problem might have related to a possible right of pre-emption (or first refusal) which the individuals at Silvertown Aggregates might have had to buy the site. However, as his subsequent written submission made plain, there was really no evidence about that at the trial and it is certainly not what the contemporaneous documents identified as the reason for the disagreement.

In her written response on this point, Ms Day confirmed the content of the contemporaneous documents and therefore, unsurprisingly, argued that this was another reason why the claimant’s case on causation must fail. Mr Susman was unhappy that Ms Day’s subsequent submissions went beyond the topic of pre-emption but, in my view, that misses the point: I asked for submissions on what these documents appeared to reveal as the principal reason why the negotiations broke down, because I thought it important and neither side had yet done so. Both parties made those submissions. As I suspected, pre-emption was irrelevant, but the terms of the indemnity sought by SITA in the Transfer were directly causative of why the negotiations failed. Having invited both parties to deal with the issue, and both parties having taken up my invitation, I conclude that the content and effect of the contemporaneous documents, set out in my analysis above, has been confirmed.

Accordingly, I find as a fact that Mr Bailey, in his usual emotional style, over-reacted when SITA sought to amend the Transfer in early June 2008. He asked Mr Powell to withdraw the papers and the proposed deal was at an end. That reaction may well have been intended to get SITA to give way on this particular proposal. But they did not do so; as a result, the deal was dead until the end of 2008 when, at least on the claimant’s case, the property market was in decline.

I therefore find that the principal reason why the proposed sale to SITA did not happen was nothing to do with the planning application or the potential imposition of planning conditions, and thus nothing to do with the defendant at all. Instead, the sale did not happen for commercial reasons, wholly unconnected to the planning application, and may well have resulted from Mr Bailey over-playing his hand (not for the last time) in his negotiations with SITA.

This is, therefore, another critical break in any chain of causation. The claimant’s pleaded case assumes that, if planning permission had been granted by the end of April 2008, a deal would swiftly have been done with SITA. Such a case is simply not made on the facts. Instead, the proposed sale to SITA did not occur for reasons which were the claimant’s responsibility. For that reason alone, this claim fails.

There is one final point to be made about the inability to reach an agreement with SITA. If (contrary to my findings noted above) the question of the outstanding planning application was linked to the proposed sale to SITA, it was linked in a way which Mr Bailey did not like and which, ultimately, he decided to abandon. As the documents show, and as Mr Bailey accepted in cross-examination, SITA were willing to enter into a conditional contract, that is to say a contract which was conditional on the terms of any planning permission matching their requirements. It was Mr Bailey who did not want that: it was Mr Bailey who said that this was not the way he wanted to proceed, because “it was more prudent to wait for the planning, as it was such a short time away.” Although Mr Bailey’s evidence on this whole topic was very contradictory (see footnote 147 on page 68 of the defendant’s closing submissions) I find that it was Mr Bailey who ultimately decided against the possibility of a conditional contract. On that basis, of course, there could have been no exchange of contracts by the end of April, because there was no planning consent by that date and the delay in obtaining it was not the defendant’s responsibility.

The Impossibility of a Contract with SITA in June 2008 because of the Planning Conditions

Even if we assume that (contrary to my findings) it was not the amendments to the Transfer that mattered, and even if we assume that (also contrary to my findings) Mr Bailey was prepared to enter into a conditional contract with SITA, we can still be confident that - through no fault of the defendant - there would have been no contract between SITA and the claimant. In my view, even if there had been a contract between the claimant and SITA conditional upon the absence of certain planning conditions, the contract would not have been completed because those unsatisfactory conditions would have formed part of any planning consent in July 2008 (as they were to do a year later).

Vehicle movements is the best example to illustrate this point. I have set out in paragraphs 157 to 163 above, the final position of SITA in relation to HGV movements. They wanted no less than 40 permitted movements of HGV’s greater then 7.5 tonnes and no restriction at all on movements of HGV’s less then 7.5 tonnes. In fact, even when planning permission was eventually granted (in March 2009) the restriction on HGV’s greater then 3.5 tonnes was 20 movements, and the number of movements of HGV’s less than 3.5 tonnes was still restricted. In addition, the planning consent contained restrictions on noise levels, which SITA also did not want.

So the planning permission eventually obtained was not in accordance with the conditions on which any contract with SITA was dependant. Therefore, even if there had been a conditional agreement in April 2008, SITA would have been entitled not to ratify it, and would not have done so, because the conditions would not have been in accordance with their requirements. That is yet another reason why I find that there would have been no contract between the parties in June 2008.

The Failure To Exchange Contracts Thereafter

There was a suggestion that the claimant’s pleaded case allows them to argue that, but for the defendant’s default, the sale and purchase of the site might have gone through later in 2008. I do not agree that the pleading encompasses such an alternative case but, in any event, I reject such a claim on the facts. The principal reason for that is the one already given, namely that the deal with SITA was killed off by Mr Bailey in June for reasons unconnected with the planning application, and it was not revived until six months later. But there are two other reasons why I consider that such an alternative or fall-back case is not sustainable on the facts.

First, I consider that any fair analysis of the emails between the claimant and SITA later in 2008 and into 2009 demonstrates that SITA were never fully committed to buying this site. That was Mr Bailey’s view at the time; hence his bitter emails referring to SITA “keeping me dangling”. I find that, whilst some employees at SITA did have an interest in this site, that was not shared by all the decision-makers, with a result that SITA never concluded a deal (despite the fact that much lower figures were being bandied around in the 2009 emails). Since SITA were the only people ever to express an interest (save for the fleeting interest expressed by Brand and Howes in April 2009) a suggestion that the claimant could have sold the site at a later date is not made out.

Secondly, if it is said that, but for the defendant’s defaults, the sale to SITA might have gone ahead in mid summer 2008, I reject that assertion. By then, if (contrary to my views) the sale of this site was linked to the granting of planning permission, then the absence of such planning permission was the claimant’s responsibility. The claimant had sacked the defendant just at the time when the final responses to the matters raised in the consultation were being prepared. I have found that, on the balance of probabilities, the planning application would have been granted in late July 2008, on the basis of that additional information. Thus, the delays caused by the withdrawal of that application were entirely the responsibility of the claimant.

The Alleged Fall in the Property Market

A potentially interesting issue arose as to whether, in a falling market, a claimant is not necessarily restricted to diminution in value as at the date of the breach and, in support of this contention, Mr Susman relied on John Grimes Partnership Ltd v Gubbins [2013] EWCA Civ 237 and Hooper v Oats [2013] EWCA Civ 91. However, in the circumstances it is unnecessary for me to resolve this issue because I have considered, and rejected, the causation required to sustain the claimant’s claim. In addition, I consider that there is one final difficulty with the claimant’s case on causation. It assumes that, from the summer of 2008, there was a decline in the property market so that the sale to SITA could not be revived. However, on the evidence in this case, that assertion too has not been made out.

Of course, the general property market has fallen since late 2008. But this was a specialist site: one for industrial use in an area of other industrial sites. The only evidence as to the general market for properties such as this came from Mr Pridmore, the defendant’s expert valuer. He said that the general fall in the property market did not affect specialist sites like this. That evidence was not challenged, and there was no contrary evidence from Mr Chambers, the claimant’s expert valuer.

Accordingly, I am not persuaded that this is a case in which the fall in the property market has been a material cause of the claimant’s loss. The evidence is to the contrary. Moreover, although the figures being used in the documents to describe the value of this site appear to be lower than those being used in the first part of 2007, it seems to me that there are two reasons for that. The first is that the £1.325 million figure may have been utilised by some employees at SITA without any regard to the actual value of the site; there is nothing to indicate how it was arrived at. Secondly, the subsequent figures, particularly those based on the position after planning permission was granted, reflect the fact that a very large amount of money would have to be spent on the site for a waste facility to be built in accordance with the planning conditions.

Accordingly, I reject the claimant’s case that the property market declined so as to prevent the sale after the summer of 2008.

Summary

For the reasons set out above it seems to me that, however the claimant’s case on causation is analysed, it fails at every hurdle. The two critical assumptions (planning permission by the end of April 2008 and a sale to SITA almost immediately thereafter) are both demonstrably unwarranted. The claimant did not sell this site to SITA for £1,325,000 either because Mr Bailey decided that he did not want to sell it on the terms that SITA proposed (which were nothing to do with the planning permission) or alternatively because, in the final analysis, the decision-makers at SITA did not want to buy it. Either way, those matters break the chain of causation between any breach on the part of the defendant and the losses alleged.

QUANTUM

Introduction

It follows from Sections 10 and 11 above that, having rejected the claimant’s case as to breach of contract (save in two relatively minor respects), and having additionally rejected the claimant’s case on causation, it is unnecessary for me to consider quantum. However, it is clear to me that the claimant’s pleaded case as to quantum is flawed, so I ought to deal briefly with the points that arose.

The Value Of The Site With Planning Permission

The upper figure for the loss of profit claim should be the value of the site with planning permission. That is not the figure of £1,325,000, because that includes an additional strip of land that was not part of the site and was not the subject of the planning application.

The experts’ joint report can do nothing other than identify a pro rata apportionment for the strip in the sum of £265,000.

Accordingly, if one takes the SITA offer at face value then pro rata, the SITA offer price for the site without the strip was £1,060,000 (£1,325,000 less £265,000).

But is that a proper market valuation of the site with planning permission? If, as I have found, this was unlikely to be an offer on which SITA would ultimately follow through, then it follows that the £1.060 million cannot - without other evidence - be taken as the proper market value of the site. In any event, an analysis of the evidence of the experts makes plain that neither could say that the value of the site and the strip with planning permission was £1.325 million. That was Mr Pridmore’s firm view, on which he was not cross examined. Mr Chambers, the claimant’s expert valuer, agreed in cross examination that this figure could not be confirmed as the market value of the site.

Further, Mr Chambers only sought to rely on the £1.325 million figure at all with the express qualification that there would have been a reasonable prospect that the sale would have occurred at that figure. He readily accepted that this was speculation and, for the reasons that I have given, I conclude that such a sale would not have happened. As previously noted, Mr Pridmore, the defendant’s expert valuer, rejected any figure based on the SITA offer.

Accordingly, in relation to the expert evidence, I find that there is no reliable evidence as to the upper figure used in the claimant’s calculations, and therefore no basis for the quantum of the claim as pleaded or advanced at trial.

Would Planning Permission Have Added Value?

Another approach to the quantum of the claimant’s claim is to ask whether, if planning permission had been obtained in April-June 2008, it would actually have added any value at all to the site. The claimant’s case is that it would have done: they say that, on any view, the site with planning permission was worth more than the £561,000 that they paid in September 2007 for a site without planning permission.

On a superficial analysis, it might be thought that they are helped in that approach by paragraphs 30 and 31 of Mr Pridmore’s report, in which he suggests that an overall value for the site with planning permission was £818,000. On that basis, it could be argued on behalf of the claimant that the loss of profit/diminishment in value claim was worth at least £257,000 (that is to say £818,000 less £561,000).

However, as Mr Pridmore stressed, it was not as simple as that. Everybody agreed that the planning permission would have contained - and eventually did contain - significant conditions which would have required significant expenditure in order for the permission to be implemented. He said that such costs had to be factored into any calculation of diminution in value. Mr Chambers’ evidence was general and based on the unpromising and unsupported assumption that the implementation costs may not have had any effect on market value. That was untenable: Brand and Howes pulled out altogether for just that reason. Accordingly, I conclude that the costs of implementation plainly affected the value of the site.

There was also a dispute as to the likely costs of such implementation. Mr Bailey put forward various figures, although these often sought to minimise the work that was required. He eventually put the costs of implementation at £600,000. This was to be contrasted with Mr Stock’s supplemental report which put the figure at about £1,547,000, an amount consistent with the cost of similar work done at a site in Corby which was dealt with in Mr Pridmore’s report.

It would be unnecessarily wearisome, in a judgment in which I have already found against the claimant on both liability and causation, to deal with the hypothetical costs of implementation in any detail. Even if we take an amount halfway between the competing figures, and assess the costs of implementation at £1.1 million (Footnote: ⁴), then I consider that Mr Pridmore was quite right to conclude that the value of the land was not enhanced at all by the obtaining of planning permission (see paragraph 32 of his report, on which he was not cross-examined). To put the point another way, even if there was a claim open to the claimant for £257,000 as the value added by the grant of planning permission, that would have been more than offset by the extensive costs of implementing that same permission.

It seems to me that this was always a highly speculative investment on the part of the claimant. They bought the site for over half a million pounds, assuming that, if they got planning permission, they would make a profit. There was no evidence that they did any calculations to support that assumption, or to demonstrate whether that profit would be negligible or significant. For the reasons that I have given, I conclude that it would have been non-existent.

Of course, the potential sale to SITA might have changed everything because SITA were at one point, apparently prepared at least to make an offer of over a million pounds for the site itself. But as I have found, in the end SITA were not willing to go through with that offer and, in any event, the claimant turned it down. The brief opportunity represented by the SITA offer was lost for reasons which were wholly unconnected with the defendant.

Other Matters

There are a range of other matters that arose in relation to causation and quantum which, although it is now unnecessary for me to deal with in detail, I ought to comment on briefly. First, the claimant’s calculation of loss of profit assumed a drop in the market value because there was a decline in the property market for this type of property in the summer of 2008 onwards. I have already rejected that argument (see paragraphs 260 to 263 above).

Secondly, complications arise both as to the tax that would plainly have been payable on the profit that would otherwise have been made, and the need to give credit for the rental that was being received from Silverton Aggregates for a part of the site. I consider that both the tax and the rental position would have reduced the amount of the claim, had any such claim been sustained. (Footnote: ⁵) It is unnecessary, however, in the circumstances for me to deal with those matters further.

For these reasons, I conclude that the claim for loss of profit cannot have been worth more than a maximum of £257,000, and even that is based on a number of assumptions which I do not accept. In particular, it assumes that the value of the site was enhanced by the obtaining of planning permission. In my judgment, there is no basis for such an assumption. The quantity of any damages claim has therefore not been established.

THE EXCLUSIONS/LIMITATIONS IN THE CONTRACT CLAUSES

Introduction

The defendant raises two separate arguments to say that, pursuant to the terms of the contract, it has no liability at all to the claimant. One of these arguments relies on clause 11 and the failure to commence proceedings or make a claim within a year of the termination, and the other relies on clause 10 and the exclusion of liability for consequential, incidental or indirect damages. In addition, if those two arguments are wrong, the defendant says that any liability that it would otherwise have had to the claimant is limited to the sums paid to the defendant under the contract (£13,987.20) in accordance with clause 11.

Although my views on the operation of these terms are obiter, because I have already dismissed the claim on the facts, I ought to set out my conclusions, particularly since these matters were the subject of considerable argument. Accordingly, in Section 13.2 I deal with UCTA, before addressing the time bar provision in Section 13.3, the consequential/indirect damages issue in Section 13.4, and the cap in Section 13.5 below.

The Unfair Contract Terms Act 1977

The claimant has raised the applicability of UCTA. Accordingly, it is for the defendant, who seeks to rely on the terms, to demonstrate that they are reasonable.

Pursuant to section 11(1) of UCTA, a term will be reasonable if it a “fair and reasonable one to be included having regard to circumstances which were, or ought reasonably to have been known to or in the contemplation of the parties when the contract was made.” It is conventional to work through schedule 2 of UCTA in order to consider whether or not the terms are reasonable, although that is not an exhaustive list: see Overseas Medical Supplies Limited v Orient Transport Services Limited [1999] 2 Lloyd’s Rep 273.

I take as my starting point in my consideration of UCTA the judgment of Chadwick LJ in Watford Electronics v Sanderson CFL Limited [2001] EWCA Civ 317 where he said:

“Where experienced businessmen representing substantial companies of equal bargaining power negotiate an agreement, they may be taken to have had regard to the matters known to them. They should, in my view be taken to be the best judge of the commercial fairness of the agreement which they have made; including the fairness of each of the terms in that agreement. They should be taken to be the best judge on the question whether the terms of the agreement are reasonable. The court should not assume that either is likely to commit his company to an agreement which he thinks is unfair, or which he thinks includes unreasonable terms., Unless satisfied that one party has, in effect, taken unfair advantage of the other - or that a term is so unreasonable that it cannot properly have been understood or considered - the court should not interfere.”

In the present case, there is nothing to suggest that the defendant somehow took unfair advantage of the claimant. Both commercial organisations are relatively substantial and, even if the defendant is a subsidiary of a much larger group of companies, there is no evidence that this made any difference to the parties’ overall commercial equality. There was also no suggestion that Mr Bailey did not know what he was agreeing to when he accepted the relevant terms: on the contrary, as set out in paragraph 25 above, I find that he generally understood them and, as an experienced businessman, found nothing there that was odd or unacceptable.

As to the particular matters in schedule 2 of UCTA, I find:

During her closing submissions, Ms Day rightly pointed out that Mr Susman did not challenge Mr Baker’s evidence as to the reasonableness of these terms. Although, on Day 4, Mr Susman introduced the topic into his cross-examination of Mr Baker, the exchanges were limited to the extent to which Mr Baker was assisted by a solicitor in the preparation of these passages of his witness statement. There were no questions about the detail. In any event, I consider that, for the reasons that I have given, Mr Baker’s explanation as to how and why these terms were reasonable is supported by the authorities. Furthermore, and to the extent that it was itself an issue, it does not seem to me that Mr Baker’s evidence on this topic is in some way flawed or of no utility, simply because a solicitor helped in the preparation of his witness statement.

Accordingly, I conclude that the three clauses in question, which all purport to exclude or limit liability in various ways, do not fall foul of UCTA. The exercise by reference to Schedule 2, and the other matters to which I have referred, demonstrate that they are generally reasonable. I now turn to deal with the issues raised by each clause in greater detail.

Exclusion Through Effluxion Of Time: Clause 11

The relevant part of clause 11 provides that:

“All claims by the CLIENT shall be deemed relinquished unless filed within one (1) year after substantial completion of the Services.”

In reliance upon this, the defendant’s primary submission is that any proceedings had to be issued by 15 July 2009 (a year after termination) and the failure to commence such proceedings in that time period bars the claimant from bringing this claim at all.

I accept that 15 July 2008 is the relevant date for the purposes of this clause. The claimant terminated the defendant’s retainer on that day. The defendant was therefore unable to complete any further services, thereby making 15 July 2008 the date on which all claims had to be ‘filed’. Further and in any event, the services were substantially complete by 15 July 2008: see Section 6 above.

I also accept as a matter of principle that the parties to a contract can vary the ordinary six year limitation period: see, by way of recent example Inframatrix Investments Limited v Dean Construction Limited [2012] EWCA Civ 64 and Ener-G Holdings v Philip Hormell [2012] EWCA Civ 1059. In Inframatrix the term was also one year from the date of the last performance of any services. The Court of Appeal held that the term was enforceable, and that its purpose was to provide a clearly identifiable limitation period for both parties.

However, I consider that there is a critical difference between the term in Inframatrix and the term here. There, the term provided that no action or proceedings were to be brought after the expiry of one year. Here, the clause requires “all claims” to be “filed” within one year. The defendant maintains that this is essentially the same as commencing proceedings within one year, but for the reasons noted below, I find myself unable to accept that submission.

In the High Court, proceedings are commenced when a claim form is issued in accordance with CPR 7.2(1). The word ‘filed’ relied on in clause 11 is not, therefore, apt to describe the commencement of proceedings in this jurisdiction. In particular, the ‘filing of claims’ is not a process recognised by English court procedure. Although ‘filing’ is defined at paragraph 2.3.9 of the White Book 293, and there are numerous references to filing documents of various sorts in the CPR, those all pre-suppose that the proceedings have already been commenced.

Ms Day rather scoffed at the suggestion that there was any ambiguity about this clause and reiterated that it was plainly intended to refer to the commencement of proceedings. But I am not so sure. For example, pursuant to the Pre-Action Protocol suitable for TCC claims, the prospective parties go through a lengthy process before proceedings are even commenced. It is designed to try and bring about a settlement between the parties of any outstanding claim between them. The process is commenced when the claiming party sends a Letter of Claim (paragraph 3 of the Protocol, at C5-006 of the White Book 2013). (Footnote: ⁶) It seems to me that the words in clause 11 can properly be read as a reference to the sending of the Letter of Claim under the TCC Pre-Action Protocol, rather than the commencement of proceedings in court.

It is of course axiomatic that exclusion clauses of this type have to be construed strictly. They also have to be construed contra proferentem. On either approach, it seems to me that I have to give the claimant the benefit of any doubt arising from the words used by the defendant in their standard terms and conditions. In those circumstances, I am unable to construe this provision as requiring the claimant to issue proceedings within a year of the termination of the defendant’s services.

Unfortunately for the claimant, that is not the end of the matter. Ms Day had a second submission based on clause 11 to this effect: if, contrary to her primary submission, the ‘filing of all claims’ meant something less than the commencement of proceedings, it must at the very least encompass the provision of a properly particularised Letter of Claim (as defined in either the Professional Negligence or the TCC Pre-Action Protocols) within the year. She said that that did not happen and that, accordingly, the clause operated to prevent any recovery now.

In my view, Ms Day was on much stronger ground in respect of this alternative argument. During the calendar year following the termination of the defendant’s services on 15 July 2008, the claimant indicated a possible claim on only one occasion. That was in the letter dated 29 May 2009 (paragraph 168 above). This was a general and unparticularised notice of a claim that might be made in the future. The Letter of Claim, which complied with the Professional Negligence Pre-Action Protocol, was not sent until 2 June 2010 (see paragraph 169 above), well outside the period prescribed by this clause. Accordingly, on Ms Day’s secondary submission, the issue became whether or not the letter of 29 May 2009 could be said to comply with clause 11. If it did, the clause does not provide the defendant with any defence. If it did not, then it seems to me that the provision provides the defendant with a complete defence to this claim.

For the reasons that I have already given, I consider that the clause in the present case, with its reference to “all claims by the Client shall be deemed relinquished unless filed within one year…” is designed to provide some form of certainty. Whilst it is going too far to say that the clause required the commencement of proceedings, I consider that it did require the provision of something akin to the Letter of Claim in the Pre-Action Protocols. That would require, amongst other things, “a clear summary of facts on which each claim is based” and “the basis on which each claim is made, identifying the principal contractual terms and statutory provisions relied on”. As a matter of the words used in clause 11 (“all claims”), it seems to me that it must mean something more than simply the intimation that, at some point in the future, a (wholly unparticularised) claim might be made. And the use of the word ‘filed’, which also denotes a degree of formality, suggests the actual making of a claim, rather than a generalised notice of such a claim.

For these reasons, it seems to me that Ms Day’s secondary submission is made out. The letter of 28 May 2009 did not comply with clause 11, properly construed. It was at most a notice, not the actual making (or filing) of ‘all claims’. And, although the letter of 2 June 2010 did comply with clause 11, it was not provided within the year stipulated by clause 11. In those circumstances, and on those facts, I consider that clause 11 operates to prevent any recovery in these proceedings.

Exclusion Of Consequential/Indirect Damages (Clause 10)

Introduction

Clause 10 makes plain that the defendant “shall NOT be responsible for any consequential, incidental or indirect damages.” The defendant contends that the pleaded claim in this case, for loss of profit, is either a claim that is too remote in law at all, or is a claim for consequential or indirect damage and is therefore excluded by operation of this clause.

As is well known, a party seeking to recover damages for breach of contract can recover under two broad categories of loss pursuant to the rule in Hadley v Baxendale [1854] 9 EXCH 341. The first category, or limb, encompasses losses which are the direct and natural consequence of the breach. The second category or limb encompasses indirect losses which do not arise in the natural course of events, but which were nevertheless within the contemplation of the parties to the contract at the time that the contract was entered into.

Traditionally, the cost of putting right the thing itself, such as the cost of remedial works or the cost of replacement, was thought to fall within the first limb, whilst claims which arise out of the contracting parties’ knowledge that any breach would have particular consequences (because of separate arrangements and the like), came under the second limb. A claim for loss of profit would usually fall into this category. But ultimately it is a question of fact as to what, in every case, can be regarded as the direct and natural consequence of the breach and what is recoverable only because of the particular knowledge of the contracting parties at the time that the contract was made.

Cases both new and old demonstrate that loss of profit can sometimes be categorised as direct loss. Recently, in McCain Foods Limited v Eco-Tec (Europe) Limited [2011] EWHC 66 (TCC) the loss of profit was held to be direct loss because the system which the claimant bought from the defendant did not work, and the judge concluded (at paragraph 84 of his judgment) that, since the system would have resulted in revenue, the loss of the revenue was the natural and direct loss caused by the inability to commission the system. And in the older case of Victoria Laundry (Windsor) v Newman Industries [1949] 2 KB 528, the loss of profit caused by the delay in supplying the boiler was again found to be a direct and natural consequence of the breach.

I agree with Ms Day that a helpful explanation as to what might otherwise look to be a contradiction can be found in the judgment of Sedley LJ in Hotel Services Ltd v Hilton International Hotels (UK) Ltd [2000] BLR 235 at page 239. He said:

“An example of consequential loss might be injury to the profitability of the hotel itself. But when the contract is one of hire, the ‘thing itself’ is not the equipment but the use of the equipment, and if through breach of contract it becomes unusable and dangerous the natural or immediate loss is, it seems to us, the profit (if any) which it would otherwise be yielding and the cost of neutralising the danger.”

In other words, whether or not a loss of profit claim can properly be categorised as a claim for consequential or indirect loss may depend on the nature of the contract obligations.

Analysis

On behalf of the defendant, Ms Day’s primary submission was that the claimant’s loss of profit was not caught by either limb of Hadley v Baxendale. This submission was put in two ways. Either, at the time that the contract was made, the defendant did not know that the claimant was intending to sell he site on (paragraph 38 above); alternatively, the losses could be said to relate to the failure to sell to a special purchaser, SITA, a party who was not in the contemplation of either side when the contract was made in September.

I consider that this submission has force. For the reasons noted in paragraph 11 above, at the time that the parties were first contracting, the defendant did not know that the claimant was not the owner of the site. Moreover, the email of 20 September 2007 from Mr Murkin suggests strongly that it was only then that the defendant became aware that the claimant wanted planning permission so that they could sell the site on at an enhanced value. That was after the contract was made. In addition, the losses in this case are entirely bound up with the particular position of SITA, the only party who even commenced negotiations to buy the site, and who only became involved in November 2007. In those circumstances it seems to me that the loss of profit referable to SITA is probably not recoverable at all.

However, if I am wrong about that, and these losses are not too remote, then the question arises as to whether they are recoverable under the first or second limb of Hadley v Baxendale. This is critical because clause 10 makes plain that the defendant will not be liable for (amongst other things) ‘indirect damages’. I take the view that this is an important addition or clarification. Such words seem expressly designed to deal with the difficulty that can sometimes arise from the equation between ‘consequential loss’ and the second limb of Hadley v Baxendale. But it is unnecessary for me to resolve that issue here, because there can be no doubt that ‘indirect loss’ must be equivalent to loss only recoverable under the second limb of Hadley v Baxendale.

I consider that, if the claimant’s loss of profit is recoverable at all, it is recoverable under the second limb of Hadley and Baxendale. This is not a case where the thing itself (provided pursuant to a contract for purchase or hire) was defective and the loss of profit caused by its failure could properly be classified as a direct loss. Neither is it a case about the construction of a building or the carrying out of physical work on a site where, again, it is possible to see how the loss of profit might be a direct loss if the construction or the other work on site was deficient.

Instead, this was a contract pursuant to which the defendant was obliged to act with reasonable skill and care in completing a planning application on behalf of the claimant. The site was the subject of that planning application; it was not the subject matter of the contract. The defendant carried out no work to the site. Any loss of profit arising out of something going wrong with that application was an indirect loss because, in order to arise at all, it required an intention to sell the site to a third party; a possible contract with that third party that was adversely affected by the failure of or delay to the planningapplication; and a consequential inability to sell. These were all consequential and coincidental elements of the claimant’s claim for loss of profit in this case: they are a long way away from, say, the contract for the sale or hire of profit-making equipment which failed, and where the loss of profit would be a natural and direct consequence of that failure.

For these reasons, I conclude that the claim for loss of profit here does not arise naturally out of the allegedly botched or delayed planning application; instead it arises out of the alleged profitability of the site, which was not the subject of the contract between the parties. It is, I think, artificial to refer to the profitability of the planning permission as ‘the thing itself’, particularly in circumstances where, at the time of the contract, the defendant did not know of the plan to sell the site, let alone to sell it to SITA.

For these reasons, I conclude that this claim is, at most, a claim for the recovery of indirect loss and damage, and was therefore prohibited by clause 10 of the standard terms and conditions. Moreover, I consider that such a term was reasonable for the reasons set out in Section 13.2 above. Accordingly, even if I had otherwise concluded that there was a valid claim, I would have found that it had been excluded by the operation of clause 10.

Limitation Of Liability Pursuant To Clause 11

The first part of clause 11 limits AMEC’s liability to “the total compensation actually paid to AMEC for the services or £50,000 whichever is less.” Accordingly, even if they were wrong about everything else, the defendant maintains that its liability to the claimant was limited to the sum of £13,987.20.

It is not uncommon for those providing professional services to limit their liability: see Jackson and Powell paragraph 5-001. It is also common for those providing goods or services to seek to limit their liability to the value of the contract, particularly in circumstances where their goods or services are only a small component in an otherwise much larger machine or structure. In Shared Network Services Ltd v Nextira 1 UK Ltd [2011] EWHC 3845 (Comm), Flaux J said that “this form of limitation of liability by reference to an amount received under a contract by a party seeking to limit liability is, in my experience, quite common under various types of commercial contract, and there is nothing inherently unreasonable in this form of limitation.”

Of course, such a provision must satisfy the requirement of reasonableness. In The Trustees of Ampleforth Abbey Trust v Turner and Townsend [2012] EWHC 2137 (TCC) HHJ Keyser QC found that the liability cap of £111,000 odd (the amount paid under the contract) was unreasonable because the contract imposed on the defendant an obligation to take out professional indemnity insurance to a level of £10 million. It was therefore unreasonable for the defendant to limit its liability to £111,000 odd (paragraph 201 of the judgment). Of course, such a stark discrepancy does not arise here.

Section 11 (4) of UCTA provides that where a party seeks to restrict liability to a specified sum of money, regard shall be had to (i) the resources which he could expect to be available to him for the purpose of meeting the liability and (ii) how far it was open to him to cover himself by insurance. In the present case there was no evidence on either point. In my judgment, rather more important considerations relating to UCTA are those dealt with in Section 13.2 above. I therefore conclude that the term was reasonable.

I am, I think, supported in that view by Mr Susman’s contention that the term might have been reasonable if, instead limiting liability to the amount paid or £50,000 “whichever is less”, it had capped liability at the amount paid or £50,000 “whichever is greater”. In my view, the reasonableness of this provision cannot depend on whether the amount of the cap was the amount paid to the defendant or £50,000, whichever is greater, as opposed to whichever is less. The £50,000 is still both an arbitrary figure and a relatively modest amount. I agree with Ms Day that there can be no logical distinction between those two alternatives and that Mr Susman’s submission was, on analysis, at least a partial acceptance that the provision itself was reasonable. Thus, if I was wrong about clause 10, which excluded liability altogether, I would find that the defendant’s liability to the claimant could not exceed £13,987.20.

Although an issue was raised as to the precise calculation of this sum during the closing submissions, it is plain that £13,987.20 was the amount invoiced and paid to the defendant, excluding VAT. No point can arise on the basis that not all of this sum may actually have been paid: pursuant to the contract between the parties, it ought to have been paid, so the claimant cannot rely on its own failure to pay to argue that, in some way, the clause is unclear or unworkable.

COUNTERCLAIM

There is a counterclaim in the total sum of £9,324.65 exclusive of VAT. Broadly speaking, it appears that £5,338.25 is claimed for alleged additional work up to the submission of the planning application, and £3,986.40 is claimed for the handling of the planning application thereafter, and in particular in dealing with the responses to the consultations.

I can deal shortly with the claim for £3,986.40. I take the view that the work done after the planning application was submitted, and in particular the work done in responding to the consultees, was not additional work, but was part and parcel of the original contract workscope (see paragraph 30 above). There was nothing in the original contract to say that any necessary work to clarify any aspect of the completed application would be additional work; on the face of it, it was all part and parcel of making a full application in the first place.

In my view, the other difficulty with this part of the claim is that it could only be made if there was a change to the scope of the work pursuant to the procedure set out in clause 2 of the defendant’s terms and conditions. There was no notice from the claimant of any such change (necessitated by dealing with the requests for information etc), and no notice from the defendant to the claimant indicating that such a change had occurred in the period after the planning application had been made. Indeed, I note that the claimant did not accept the principle of this claim when it was set out first in the defendant’s letter of 18 April.

For all of those reasons, I reject the counterclaim in respect of £3,986.40, relating to the period after the planning application was made.

The claim for £5,338.25, which relates to the earlier period, up to when the planning application was made on 3 April 2008, suffers from many of the same defects. I can see no reason why some of this work was not also covered by the original contract sum, and for the same reasons.

There is one exception to that. It seems to me that the involvement of SITA did create extra work which was outside the contract. That fell under clause 2. What is more, I consider that this principle was accepted by the claimant at the time (see the exchanges at paragraph 96 above). In my judgment, those documents reveal an agreement in principle to pay these additional costs. Although the claimant sought to impose a completion date of 26 March as some sort of pre-condition for payment, that qualification was not accepted by the defendant. In any event, the events summarised in paragraphs 93 to 98 above, demonstrate that the 26 March date would probably have been met but for the further delays on the part of SITA. The defendant cannot be blamed for them.

Accordingly, I find that the defendant is entitled to additional sums that are solely due to the involvement of SITA. As to the amount claimed for this, I raised the matter with counsel during the closing submissions and I was taken to the defendant’s letter of 27 February 2009, which indicated that this part of the claim was worth £3,500 plus VAT. There was no other evidence on the point. I conclude therefore that a proper assessment of the additional work caused by the involvement of SITA is in the sum of £3,500 plus VAT. That is the only element of the counterclaim I allow.

CONCLUSIONS

For the reasons set out in Section 5 and Section 10.1 above, I consider that, whilst the defendant was in breach of contract in failing to complete some aspects of the supporting material by the end of November/beginning of December 2007, those failures were manifestly not the cause of the delay in completing the planning application itself. Accordingly, (in the absence of clause 11 and my finding at paragraph 301 above that the clause prevented any recovery at all) the defendant would have been liable in nominal damages to the claimant for those breaches of contract, which I would have assessed in the sum of £5. The defendant is not otherwise liable to the claimant in respect of delay; the critical cause of delay up to mid-December 2007 was the uncertainty over the proposed site layouts (and the proposals for the site generally), whilst all the delays after mid-December were due to the claimant’s decision to involve SITA in the planning process.

For the reasons set out in Section 10.2 above, I reject all the allegations as to the quality of the planning application made by the defendant on the claimant’s behalf. Accordingly, save for the matters noted in the preceding paragraph, there were no breaches of contract on the part of the defendant, and the claim fails.

For the reasons set out in Section 11 above, I find that (even if the defendant had been in breach of contract as alleged) the claimant’s case on causation fails at every stage. In particular, I find that the proposed sale to SITA did not go ahead in May/June 2008 for reasons which were wholly unconnected with the defendant and/or with the quality or timing of the planning application. In addition, I find that it was the claimant who was responsible both for the failure of the negotiations with SITA, and the claimant who caused the later delay in the grant of the planning application because of the decision to terminate the defendant’s contract and withdraw the original application.

For the reasons set out in Section 12, I reject the claimant’s case on quantum. If I had found substantive breaches and if I had upheld the claimant’s case on causation, I would have been unable to say that the claimant had demonstrated any loss of profit. In particular, I find that the costs of implementing the planning permission outweighed any additional value which the granting of permission had provided.

For the reasons set out in Section 13 above, I find that clause 11 acted as a bar to this claim on the alternative basis contended for by the defendant, namely that there was no Letter of Claim within the prescribed period. I also find that clause 10 operated to exclude any claim for loss of profit in its entirety. Moreover, even if both those conclusions were wrong, any damages which the claimant had otherwise been able to recover would have been limited to the sum of £13,987.20.

For the reason set out in Section 14 above, I reject the defendant’s counterclaim save for the sum of £3,500 plus VAT which properly reflects the additional fees due to the defendant as a result of the involvement of SITA.

I would ask the parties to draw up an order reflecting the terms of this judgment. I have not dealt with any consequential matters, such as interest and costs.