BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
England and Wales High Court (Technology and Construction Court) Decisions |
||
|
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Hadley Design Associates Ltd. v The Lord Mayor and Citizens of the City of Westminster [2003] EWHC 1617 (TCC) (09 July 2003) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2003/1617.html Cite as: [2004] Masons CLR 3, [2003] EWHC 1617 (TCC), [2004] TCLR 1 |
||
[New search] [Printable RTF version] [Help]
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137, Fetter Lane, London, EC4A 1HD |
||
B e f o r e :
____________________
| HADLEY DESIGN ASSOCIATES LIMITED |
Claimant |
|
| - and - |
||
| THE LORD MAYOR AND CITIZENS OF THE CITY OF WESTMINSTER |
Defendants |
____________________
Clive H. Jones and Adrian Pay (instructed by C. T. Wilson, Director of Legal and Administrative Services, for the Defendants)
____________________
Crown Copyright ©
Introduction
"FEES FOR CONSULTANCY SERVICES
The City Council wishes to engage the service of consultant surveyors or architects for the following service:-
CHURCHILL GARDENS ESTATE PIMLICO (40 Blocks of Flats)
The inspecting and reporting on the above mentioned Estate with recommendations and estimates of cost to repair or replace as necessary the existing windows, the preparation of tender documents for the said remedial work and the supervision of work on site, including valuations, certifying and final accounts.
It should be noted that the scale of this project is such that a programme spanning up to five years is envisaged.
You are invited to submit your tender for fees for this work, stated as a percentage of the final account sum (including loss and expense but excluding any arbitration or court award). In so doing you should note that if any instructions to you are withdrawn at any stage before commencement of a contract for the work on site, fee will be paid as follows:-
a) If no tender has been received. The appropriate work stage percentage of your submitted estimate of the cost of the scheme.
b) Where tender has been received. The appropriate work stage percentage of your submitted estimate or of the lowest tender, whichever is the lower.
Any engagement would be in accordance with the RICS Conditions of Engagement for Building Surveying Services (1981 Edition) work stages C-H, except for the following amendments:-… "
"Further to the recent discussions with Mr. Warhurst I confirm your appointment to carry out surveys of all of the blocks (39) on the above Estate to ascertain and report to me the condition of the windows, external doors and staircase screens. Your considered report is to make recommendations for repair or replacement of all found defective, with estimate of cost and give a view on the order of priority. You are also to check on incidence of spalling or cracking concrete on the external faces of the buildings and similarly report with recommendations and estimate of cost.
The terms of the engagement are as set out in my letter dated 10 February 1984 and it is initially on a time basis, with the hourly rates applicable being those set out in your tender offer dated 5 March 1984…..
Please confirm acceptance of this appointment,…
It is likely that you will later be appointed for full service in running the contracts for the work which you recommend, in which case, of course, the overall fee arrangement reverts to the quoted percentage."
"I think it appropriate to retrospectively formally confirm the instruction to you to specify, invite tenders and supervise the urgent work now in progress by VAT Watkins Ltd. for the removal of all loose or suspect concrete and examination of the brickwork in all of the blocks. The fee for this service, in accordance with the terms of your tender for work on the Estate, is 6.75% of the cost of construction, inclusive of normal expenses, and with the Conditions of Engagement as stated in the letter on invitation."
"our appointment for the major works to the remaining blocks be at a fee percentage of 8% of the total contract sums. This figure is to be inclusive of Quantity Surveyor services, Structural Engineers' services and normal out of pocket expenses, excluding testing and advertising."
"Regarding your fee proposals for the remainder of the Estate to include structural engineering services. Your proposals are at the moment a matter of discussion, but to avoid delay could you please proceed with the preparation of tender documents for the next phase (i.e. Keats and Shelley Houses). Please note that until I gain approval for your revised fees, your commission is not to include structural engineering services.
Hopefully I will have an answer to your proposals with [sic] the next two weeks."
"CHURCHILL GARDENS ESTATE
PROPOSED AGREEMENT
I attach hereto draft documents which I hope will form a satisfactory agreement in respect of services on the above Estate.
Would you kindly peruse these documents and advise me of your observations at your earliest convenience."
"Churchill Garden Estate
Proposed Fee Agreement
I refer to my meeting yesterday with Mr. Wickersham and Mr. Berry concerning the above and in particular the Council's proposal that we should directly employ the Structural Engineer but that the Engineers professional indemnity should rest directly with the Council. I am informed that this proposal would not be acceptable to Insurers as the Client and the party to be indemnified must be one and the same. It would therefore appear that, if the Council requires the Engineers indemnity to rest directly with itself, there is no alternative than that the structural Engineer be a direct appointment."
"Re: Churchill Gardens Estate
I refer to my recent discussions with Mr. Wickersham concerning all encompassing fees for Building Surveying and Structural Engineering Services on the above estate.
Our tendered fee of 6.75% was accepted by yourself in 1984 and, following our initial report which brought to light the concrete problems, you appointed Messrs. Bowden, Silett [sic] and Partners to provide all necessary engineering services. Earlier this year we were requested to put forward a proposed fee for structural engineering services and to express this as a percentage of the total contract sum and not relative to the structural engineering element in isolation and, taking into account the estimated costings available to us at this stage, we calculated this element to be 1.1% of the estimated total contract sums. Our proposal was put forward prior to any work commencing on site and the Engineers have since found from experience gained on Chaucer House that the areas in which structural engineering assistance is required are approximately double that which they had initially estimated. You will also be aware that the engineers were unable to carry out a detailed survey of the majority of the structure of the blocks prior to preparation of tender documents as the Council was not prepared to expend monies at that stage on the provision of cradles and/or scaffolding which would have enabled closely detailed inspection of the structure.
I understand that our original proposal for revised professional fees incorporating the structural engineering element and based upon information which was then available to us and which amounted to 7.85% of the final account sum has been approved but in view of our recent findings and the likely cost to us of encompassing structural engineering services, I am now seeking your approval to a revised total percentage of 8.75%, this being made up of our original 6.75% tendered fee plus the proposed 2% engineering fee put forward by Messrs. Bowden & Sillett.
Should this revised proposal prove acceptable we are intending to employ Messrs. Bowden, Sillett and Partners to provide the structural engineering input; they are currently employed directly by yourselves in respect of Chaucer House and I understand that their fee agreement with yourselves amounts, in round terms relative to the total contract value, to a similar percentage to that proposed within our all encompassing fee. On this basis there would therefore be no additional percentage increase in respect of fees above the level which has already been approved for Chaucer House.
I would finally reaffirm that the professional indemnity liability of the structural engineers can only relate to their direct Client and therefore your choice of a direct appointment or otherwise may be decided by this requirement of their insurers.
I look forward to receiving your instructions in the near future in order that we may finalise the complete documentation for Keats and Shelley Houses and shortly thereafter invite tenders."
"CHURCHILL GARDENS ESTATE PHASE 2 KEATS & SHELLEY HOUSES
At its meeting of 13 October 1986 the Contracts Management Board approved your appointment as lead consultants for the above at a total fee levy of 8.05% for full Building Surveying, Quantity Surveying and Structural Engineering Services. Formal documents will be prepared and sent by the City Solicitor in due course.
I note your advice with regard to pursuing the option to negotiate the Phase 2 with the Phase 1 contractor and hope to be in a position to give formal instructions shortly. Negotiations should obviously not commence until you receive such instructions.
I suggest we meet on 22 October at a convenient time to discuss programme and document preparation generally I must emphasize [sic] that the Phase 2 documents must be as accurate a reflection as possible of the final scope of the works and I feel this is reasonably to be expected on Phase 2 bearing in mind the experience gained from executing Phase One."
"CHURCHILL GARDENS ESTATE PHASE 2 – (KEATS AND SHELLEY HOUSES)
Further to the communications between the City Council and your firm, I enclose a copy of the formal Agreement.
Please insert, where indicated the full names and qualifications of each partner and let me have the document back as soon as possible. Upon receipt of the same, I will have the Agreement engrossed to be executed by the parties."
"RE: Churchill Gardens Estate
I refer to your letter of 19 December 1986 received by ourselves on 24 December 1986, to our several discussions with Mr. Antonio and various other discussions with Mr. Berry and Mr. Wickersham of your Housing Department, and now return herewith one copy of the Draft Fee Agreement with our initial comments marked by hand.
As pointed out to Mr. Antonio I conducted discussions during the course of the summer with both Mr. Wickersham and Mr. Berry, but it would appear that a number of the points which were agreed in principle during these discussions have not yet been incorporated in this Draft Fee Agreement. The major points in this respect relate to sub-consultants and to the date of payment of fees and it was agreed that this would be within 28 days of receipt of our monthly invoices which would, in value, relate pro rata to the certified amounts under the building contract.
I would also point out that we are uncertain as to our professional indemnity insurers reaction to the proposal for collateral agreements with sub consultants and I would therefore naturally be grateful to receive your proposals in respect of the form of collateral warranty.
Furthermore we have not yet received a draft of the finalised Brief relating to the complete estate and until we have had sight of this we are naturally not in a position to comment as to how the terms of this might affect the remainder of the agreement.
In order to speed up the process of agreeing this matter, may I suggest that a meeting be convened as soon as possible between representatives of your own Department, the Housing Department, our Practice, the Quantity Surveyors and the Structural Engineers.
I look forward to hearing from you in the near future."
"CHURCHILL GARDENS ESTATE PHASE 3
Now that your appointment for the rolling programme of works at Churchill Gardens Estate has been finalised I can instruct you to proceed with phase 3 of the works. I have prepared a short list of essential requirements for consultancy services which is attached. This is intended to amplify the brief contained in the formal agreement and highlights certain areas of service which the City Council regards as particularly important. The blocks to comprise phase 3 are also listed.
The City Council naturally reserves the right to alter the scope of these proposed works in the light of financial or management consideration.
In view of the size of this phase and its importance to the City Council I expect the highest professional standard to be exercised at all times."
The 1987 Contract
"The City Council agrees to engage the Consultants subject to and in accordance with this Agreement and the Consultants agree to provide the Services, subject to and in accordance with this Agreement."
The drafting of the clause is not particularly elegant, but it is tolerably clear from it that not only did "the Consultants", defined as meaning HDA, agree to provide "the Services", but also that it was to provide "the Services" that the Council engaged HDA.
"the services which the Consultants are to perform under this Agreement."
That was not a particularly helpful definition. Happily more light was shed on what exactly HDA had agreed to do by clause 4 of the 1987 Contract, by which it was provided that:-
"The Services to be provided by the Consultants at each stage shall comprise those of the Services set out in the Brief which is annexed hereto and marked "A" as may be necessary in the particular case. As part of the Services expressly set out in the Brief the Consultants shall give to the City Council such advice and assistance within the field of the relevant professional consultant as may be reasonably required in connection with the Services from time to time by the City Council."
"1. PROJECT TITLE
Churchill Gardens Estate
London SW1
2. ADDRESS OF THE PROPERTY (IES)
As listed on the attached schedule..
5. DESCRIPTION OF PROPOSED WORKS
Repairs, refurbishment and necessary improvements to the external fabric of the blocks listed in the attached schedule including inter alia roofing, concrete and structural repairs, window replacement together with any related ancillary works…
7. SERVICES REQUIRED
The Services shall include those matters contained in Sub-Clause 2.1.1 of the Conditions of Engagement for Building Surveying Services published by the Royal Institution of Chartered Surveyors as amended by the City Council's Conditions of Appointment.
Without prejudice to the generality of the foregoing the Services shall include the investigation of window replacement as a cost-effective alternative to repair with submission of a feasibility report if not already executed suitable for laying before the Housing Committee.
8. SCOPE OF SERVICES
The Services shall include architectural and related services if any building surveying, quantity surveying and all engineering services…."
The schedule attached to the Brief listed all 37 blocks of flats on the Estate.
"The Sections, Clauses and Sub-Clauses of the Conditions of Engagement shall be varied and construed in accordance with the following notes amendments additions and insertions:"
The making of variations to "the Conditions of Engagement" is obviously not a worthwhile exercise unless, as so varied, the conditions were intended to be incorporated in the 1987 Contract.
"The Scope of the work is as defined in the Brief."
"Postponement or Determination
The agreement between the surveyor and his client may be postponed or terminated by the client, or terminated by the surveyor at any time on the expiry of reasonable notice, at which time the surveyor shall be entitled to remuneration in respect of that part of the original instruction which has been completed (see paragraph 3.5 below). Where the construction of works is cancelled or postponed on the client's instructions or when the surveyor is instructed to stop work indefinitely at any time, the engagement shall be deemed to have been terminated."
"In the first sentence of this Sub-Clause the words "(see paragraph 3.5 below)" are deleted and the following words shall be inserted "(see Clause 2.1 of the Professional Charges for Building Surveying Services as amended herein)".
Reasonable notice shall be one month.
The second sentence of this Sub-Clause is deleted.
Postponement of the Works shall not be a reason for termination of the engagement unless such postponement exceeds 12 calendar months from the date of written instructions from or on behalf of the Client to the Surveyor to postpone or indefinitely postpone the Works.
If a commission which was postponed is resumed before the end of the said 12 months the Services shall be resumed as if there had been no break in them and the Surveyor shall not be entitled to any payment for any extra work caused to him by the postponement unless the City council [sic] shall so agree in writing at the time of resumption. "
"Any disputes arising between the surveyor and the client shall be referred to the arbitration of a person to be agreed between the parties, or failing agreement within fourteen days after either party has given to the other a written request to concur in the appointment of an arbitrator, a person to be nominated at the request of either party by the President of the Chartered Institute of Arbitrators."
Termination of the 1987 Contract
"RE: MAJOR WORKS CHURCHILL GARDENS ESTATE
I act as solicitor to this authority. I have been asked to write to you by the Director of Housing.
I refer to the Agreement between this Authority and yourselves dated 1st July 1987. Pursuant to Clause 1.7 of the Agreement I hereby give you one month's notice of the termination of this contract.
This authority requests that you continue to provide your services pursuant to the Agreement in respect of the instructions issued to you up to the date of this letter including services on all phases of major works up to and including phase 4C. I should be grateful if you would confirm your consent by return in this regard.
I confirm that you will be required in any event to pursue at no cost to the City Council the rectification of defective works executed under your supervision. An updated schedule of defects currently known to us will be sent to you within the next 7 days."
The claims made in this action
The alleged foundations for the principal claim
"There were implied terms of the 1987 agreement, arising as a matter of law, or necessary in order to give business efficacy thereto:
11.1 That the Defendants would not purport to terminate the 1987 agreement for any reason other than the commission by the Claimant of such breach thereof as would, under the general law, entitle the Defendants to terminate the same;
11.2 That if (which is not admitted) the Defendants were enabled by reason of the 1987 agreement to terminate the same on some ground, or for some reason, other than such breach thereof by the Claimant as would, under the general law, entitle the Defendants to terminate the same, the Defendants would be entitled to terminate only:
11.2.1 If the purported termination were, in all the circumstances, a fair and/or reasonable exercise of the said power of termination and/or were made in good faith; or
11.2.2 If the Defendants had and/or could show, in all the circumstances, good and/or reasonable and/or serious cause for the said purported termination; or
11.2.3 If the said termination were not, in all the circumstances, capricious and/or arbitrary and/or unreasonable; or
11.2.4 If the said purported termination resulted from avoidable conduct on the part of the Claimant, which threatened the legitimated commercial interests of the Defendants under the 1987 agreement;
11.3 That, in the event of a purported termination of the 1987 agreement by the Defendants, the Defendants would give the Claimant good, substantial, consistent and credible reasons for the said purported termination, so as to enable the Claimant (other than in a case of a breach qualifying as repudiatory under the general law) to perform such corrective action as was reasonably possible within a reasonable time."
"12. Further or in the alternative, if (which is denied) the Defendants had any power of termination arising under or by reason of the 1987 agreement other than a power of termination arising on or by reason of the commission by the Claimant of a repudiation thereof, the exercise by the Defendants of that said power of termination was constrained by law in the following manner and/or was lawful only if performed subject to the following requirements imposed by law:
12.1 That the Defendants would be entitled to terminate only:
12.1.1 If the purported termination were, in all the circumstances, a fair and/or reasonable exercise of the said power of termination and/or were made in good faith: or
12.1.2 If the Defendants had and/or could show, in all the circumstances, good and/or reasonable and/or serious cause for the said purported termination; or
12.1.3 If the said purported termination were not, in all the circumstances, capricious and/or arbitrary and/or unreasonable; or
12.1.4 If the said purported termination resulted from avoidable conduct on the part of the Claimant which threatened the legitimate commercial interests of the Defendants under the 1987 agreement;
12.2 That, in the event of a purported termination of the 1987 agreement by the Defendants, the Defendants would give the Claimant good, substantial, consistent and credible reasons for the purported termination, so as to enable the Claimant (other than in a case of a breach qualifying as repudiatory under the general law) to perform such corrective action as was reasonably possible within a reasonable time.
12A. The Claimant will rely in support of the facts and matters pleaded in the immediately preceding paragraph on section 3(2)(b) of UCTA, which provides that, where one party deals on the other's written standard terms of business:
"As against that party, the other cannot by reference to any contract term …
(b) claim to be entitled:-
(i) to render a contractual performance substantially different from that which was reasonably expected of him, or
(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all
except in so far as (in any of the cases mentioned in this subsection) the contract term satisfies the requirement of reasonableness."
In the circumstances of the Claimant's legitimate expectation set out in paragraph 9.10 above, the Claimant will contend that a clause purporting to authorise the Defendants to terminate without reason on one month's notice purports to permit partial or different performance from that which the Claimant expected. Insofar as the precise terms of the statute are found not to cover this case, the Claimant will contend that the spirit thereof should be treated as a platform for invalidating or restricting the operation of such an oppressive clause in the circumstances of the present case."
The reference to "UCTA" was a reference to Unfair Contract Terms Act 1977.
The meeting on 31 July 1986
"36. Between Mr. Bailey's receipt of the draft agreement and my meeting with David Wickersham, Mr. Bailey, Mr. McClinton and I met to discuss it. Mr. Bailey had already written his own queries on the draft and I then added further queries which we raised during our discussions. Following this meeting I met with Stuart McClinton and added further points on which he required clarification. These notes were to act as an aide memoir [sic] to remind me to raise them with David Wickersham. In my meeting with David, I made a further set of notes on the agreement recording what was discussed and agreed between us.
37. I explain below all of the manuscript notes made on the copy agreement. Some Mr. Bailey made when going through it on his own, some I made when going through it with Peter Bailey, some I made in my meeting with Mr. McClinton and the rest I made in my meeting with David Wickersham. For ease of reference I have marked up in Roman numerals on a copy of the annotated agreement, all of the manuscript notes. I have not marked up the ticks but can confirm that save where I state otherwise these were all marked by Peter Bailey….
80. (xxi) There are two sets of notes at clause 1.7. The first one says: "Tender based on whole estate over five years. If stop short how do we recover other abortive costs".
81. I made this note at my meeting with Mr. Bailey. We knew that the earlier stages of the project would not be profitable and the project would only generate a real profit for our practice towards its latter stages. Therefore if for any reason the contract came to an end prematurely, HDA may be penalised by having front loaded its investment in the project in the interests of a later return. I wanted to know what compensation Westminster would be offering us to reflect this loss should the situation arise. This is what I meant by recovering the abortive costs and I made the note to remind myself to discuss the issue with David Wickersham.
82. The second note says: "Only if HDA default or Westminster does not have enough money".
83. This note I made in my meeting with Mr. McClinton when he raised the question of the circumstances in which it was intended the twenty-eight day notice period would apply. He had said that in his experience of building contracts, he had not come across a situation where a client could simply terminate a contract at will. Habitually, there would have to be default on the part of the contractor for this to be operable. We therefore assumed that the same applied here but we agreed that I was to check. I expressed my concern to Mr. McClinton about Westminster running out of money as this had previously been suggested and I was concerned that if this happened they may use this clause….
89. (xxii) [which Mr. Wright told me in his oral evidence was a note made during his meeting with Mr. Wickersham and Mr. Berry] The second note here says: "1.7 David W said that this would only apply if Programme stopped for more than a year or if Westminster sold the estate – private – or ran out of money which is unlikely as money had been set aside in budgets. Also, if HDA not did perform or went into liquidation etc.
90. It continues: "Westminster want HDA to look after whole estate. May be lots of little other jobs – including windows, roofing, decs etc."
91. When we came to discuss this clause, I said to David Wickersham that I was happy with the 28 day clause but only on the understanding that it would only apply if HDA defaulted on the contract. He said that the alternative would be if Westminster didn't have enough money and we agreed that it applied only in those two circumstances. He said Westminster would be very unlikely to run out of money because it was budgeted for. On that basis I was happy with this clause and I told Mr. McClinton and Mr. Bailey this when I discussed it with them after my meeting with Mr. Wickersham and they were reassured.
92. (xxiii) This note [beside the provision that paragraph 1.8 of the RICS 1981 Conditions should be deleted] says: "How would disputes now be settled". I wrote this in my meeting with Mr. Bailey because I was not clear, if this part of the RICS did not apply, how disputes would be settled.
93. (xxiv) This note says: "1.8 Disputes settled by RICS or arbitration"
94. This is what David Wickersham said when I asked him in the meeting and I agreed."
"As my correspondence shows – and I refer to my letters to Westminster dated 1st August and 11th August 1986 … - the only controversial issue as far as I was concerned arising out of the 1987 Agreement was this issue of the appointment and responsibility for PI insurance of the structural engineers. The termination clause was simply not an issue. I had agreed with David Wickersham the narrow circumstances in which the 28 day notice period would apply. I had no reason to suspect that the agreement meant anything else. I did not see the need for HDA to take its own legal advice. What had been agreed was in my view straightforward and understood in exactly the same way by both parties."
It does not seem to me that those comments are remotely satisfactory. If the question of the circumstances in which the appointment of HDA could be terminated was as significant as Mr. Wright now contended, with it being necessary for him to clarify the issue specifically with Mr. Wickersham, then logically it was important enough to require confirmation as to what had been agreed, if anything had, in at least one of the letters written by Mr. Wright shortly after the meeting. The absence of confirmation is therefore, it seems to me, a powerful indication that in fact nothing was agreed as to the circumstances in which the Council could terminate the appointment. It may also be significant that the focus of at least one of Mr. Wright's comments was not what Mr. Wickersham was alleged to have said, but what Mr. Wright considered the provision for termination under discussion actually meant. The significance which I am inclined to think that the focus of that comment has is that during his cross-examination Mr. Wright showed himself, in my judgment, to have a weak grasp of the basic principles of the law of contract. In particular he asserted repeatedly that he considered that from the time HDA was appointed to undertake a survey of the blocks of flats on the Estate and to produce a report the Council had engaged HDA to undertake all surveying work involved in any works recommended as necessary as a result of the survey because the undertaking of a survey was the first stage in the undertaking by a surveyor of building surveying services in accordance with the RICS 1981 Conditions.
"CHURCHILL GARDENS ESTATE
MAJOR WORKS PROGRAMME
We wish to acknowledge receipt of your letter of 15 February concerning the above to which we had not replied earlier as we have yet to receive the schedule of alleged defects to which reference is made in the last paragraph of your letter and upon which we shall comment on receipt.
We further acknowledge the confirmation received from Council Officers that the reason to determine the contract dated 1 July 1987 is purely to "market test" the current level of professional fees which may be tendered for such a project and we are pleased that our performance to date has warranted our inclusion on this tender list.
You will be aware that, following competitive tendering, and the successful implementation of the first two phases, Westminster City Council requested that we enter into this contract in 1987.
We would confirm that we would be pleased to continue to provide our services on the basis of the contract between ourselves. Indeed, we would point out that HDA remain totally committed to the completion of the Major Works Programme on Churchill Gardens Estate in accordance with our appointment and request that you reconsider your decision to terminate our contract. However, on the basis that you wish to proceed with the determination, which comes into effect on 15 March, we look forward to receiving your immediate proposals in respect of the consideration which you feel appropriate to cover the financial loss which we shall sustain as a result of your decision."
It seems to me that, if ever there was a time to make the point that the termination of the 1987 Contract was in breach of an understanding between the parties that it would only be determined in limited circumstances, it was in that letter, in which the Council was being invited to reconsider the decision to terminate. Mr. Wright was challenged in cross-examination with the failure to make that point in the letter. His response was that he was concerned that the suggestion that work which HDA had supervised was defective might mean that there was in fact, even on his understanding of the circumstances in which the 1987 Contract could properly be brought to an end, a proper reason to determine it. He also said that in his letter he was trying to induce the Council to agree to the proposition that the reason for termination was the desire to market test the current level of professional fees for a project such as that in progress on the Estate. Those two points are not obviously mutually consistent. The first envisaged a fear that the termination of the 1987 Contract was indeed for one of the causes which Mr. Wright now said was permitted, while the second proceeded on the basis that there was no genuine reason for termination at all.
"MAJOR WORKS – CHURCHILL GARDENS ESTATE
We refer to your letter of 15 February, to our reply of 7 March and to your response of 11 March 1996.
We are extremely concerned about the possible repercussions of the situation in which you place ourselves, and indeed yourselves, and wish to confirm that we still await the schedule of alleged defects referred to in your letter of 15 February.
In the spirit of the goodwill that has always existed between ourselves, we are presently continuing to provide our services in respect of the Major Works Programme in accordance with our appointment and would request your immediate proposals in further response to our letter of 7 March."
"MAJOR WORKS – CHURCHILL GARDENS ESTATE
Thank you for your letters dated 7 and 19 March. My apologies for the delay in replying.
Mr. David Wickersham, a quantity surveyor for the Director of Housing will be contacting you shortly in order to discuss the updated schedule of defects mentioned in the penultimate paragraph of my letter to you dated 15 February.
The City Council does not consider it appropriate to reconsider its decision to terminate as requested by you in the final paragraph of your letter dated 7 March. It is my view that termination has taken place pursuant to the conditions of contract and accordingly, you have no claim for any financial loss as a result of determination."
Again, one would have thought that receipt of a letter in those terms would have provoked HDA to respond with a reference to the alleged agreement as to the circumstances in which the 1987 Contract could be determined had it been Mr. Wright's belief at the time that the agreement as to which he spoke in his evidence had actually been made. There was no such response. When, some months later, HDA instructed solicitors, Messrs. Hill Taylor Dickinson, to write to the City Solicitor on its behalf, again there was no reference to any alleged agreement made with Mr. Wickersham on 31 July 1986. The allegation that there had been such an agreement was not even made in the original version of the Particulars of Claim in this action.
"RE: MAJOR WORKS – CHURCHILL GARDENS ESTATE
Further to our meeting last week, I confirm that the City Council is considering the conclusion of your services on Churchill Gardens Estate following completion of Phase 4c. In such circumstances, a request to commence services on Phase 5 would not, of course, be forthcoming.
You will appreciate that considerable time has passed since your firm started work on the Estate in the 1980s and working practices have changed substantially since your initial appointment.
Conclusion of your services would enable the City Council to restructure its services on the Estate in line with its Building Maintenance Services model, with which you are familiar.
I must stress that neither our meeting nor this letter should be construed as notice of determination nor, for that matter, a statement of intent. The purpose of our meeting and this communication is to advise you of the possibilities which the City Council is considering."
"MAJOR WORKS – CHURCHILL GARDENS ESTATE
I thank you for your letter dated 11 August, received on 16 August, concerning the Major Works Programme at Churchill Gardens Estate.
I consider that this project has progressed extremely well in terms of adherence to brief, budget, quality and programme, with the current phase following this pattern. Your records and your close liaison with ourselves will, I feel sure, fully support this view. We have built up a very good relationship with yourselves, the planners, the local estate office, tenants and lessees and other interested parties.
Our present team remains stable in respect of dual Director commitment since the inception of this programme, in respect of Associate Director and Tenant Liaison Officer involvement since Phase 3 and on-site Supervising Officer and Clerk of Works involvement since the commencement of Phase 4. This management team is supported both on site and at our Head Office by experienced qualified staff who have the benefit of a great deal of accumulated knowledge and stored data in respect of the Major Works programme. This continuity has enabled Hadley Design Associates to gain a unique appreciation of Churchill Gardens Estate in terms of the client and resident needs, the existing fabric of, and repairs required to, the buildings and the detail and supervision of the works. Our offices at Chaucer House, leased on the basis of our ongoing commitment to the Major Works Programme, will continue to provide an accessible on site facility for the administration of the Major Works Programme. You will appreciate that these factors have resulted in a reducing and now extremely straightforward input from your Project Liaison Officers.
We are immediately in a position to finalise general and specific details in order to make the necessary planning applications and prepare contract documentation in respect of ongoing phases in order that your programmed dates and expenditure can be met.
Hadley Design Associates are commissioned by the City Council in relation to the Major Works Programme for the whole of Churchill Gardens Estate and we would actively wish to complete this contract. Any delay at this stage surely cannot be in the best interests of the implementation of your Housing Programme, your budgetary requirements or the benefits to the Estate as a whole and we therefore very much look forward to receiving your ongoing instructions to complete the final phases of this programme."
The whole thrust of that letter was not that HDA had a contractual entitlement to undertake all of the surveying work necessary in connection with the repair and refurbishment of the blocks of flats on the Estate unless and until limited circumstances had arisen in which its appointment could be determined, but rather a plea that HDA had done well up to that point and it would be in everybody's interests for it to continue.
"34. In respect of clause 1.7, it was never my understanding that the meaning of this clause was that Westminster could terminate the project at will. Pursuant to the kinds of building contract with which we were familiar, a client could only determine a contract for a number of very specific reasons, which were generally repeated poor performance, financial insolvency and/or failure to act on architect's instructions. I had never come across a situation where a client could determine a contract at will, or because he did not like the price.
35. On the basis of my then experience in the industry, I formed the view when I read the draft agreement that Westminster's intention must have been that its 28 day notice period applied only in the usual default circumstances.
36. In all my years of practice (then and since), I have never had a client terminate a contract and, when considering this particular contract, I did not have in mind that it would ever be Westminster's intention to terminate at will. As far as I was concerned, we had built up a relationship of mutual trust. Westminster knew that we at HDA had made short term sacrifices in terms of profit and that we had specifically engaged staff and moulded our practice for the purposes of performing the contract. We knew that Westminster urgently needed the work done and that, by engaging HDA they had obtained the work from a reliable and trusted contractor and for an extremely competitive fee. However, in my view, the position in respect of the proposed notice clause needed to be checked before the agreement was signed because I would not have been prepared for HDA to have signed an agreement pursuant to which Westminster could give 28 days notice at will.
37. HDA meeting to discuss the draft agreement
I discussed the draft agreement with both Mr. Wright and Mr. Bailey some time between Mr. Bailey receiving the draft agreement from Westminster under cover of its letter dated 9 July 1986 … and Mr. Wright's meeting with David Wickersham on 31 July 1986. I discussed with both Mr. Bailey and Mr. Wright clause 1.7 in some detail. In particular we discussed my experience of the kind of circumstances which would give rise to the right by either party to give 28 days notice and the need to clarify what Westminster meant by this. Mr. Wright and Mr. Bailey both agreed that they would not be prepared to sign this agreement if Westminster could terminate it at will. They both agreed with me that Westminster must mean that they could terminate on 28 days notice only in the default circumstances. We all agreed that the point needed to be checked before the agreement was signed.
38. Mr. Wright agreed that he would check with Mr. Wickersham what were to be the events which would trigger the application of the 28 day notice clause and I understand that Mr. Wright made a note on his copy of the agreement to remind him to do this. Mr. Wright said that his particular concern was that Westminster could use this clause if they ran out of money and it was agreed that he would raise this point specifically in the context of the trigger events and that he would let us know when he had discussed it with Mr. Wickersham exactly what the trigger events were.
39. In the same clause as the 28 day notice period was a period for termination of the contract if the works were postponed for more than a year. I discussed this point also with Mr. Wright and Mr. Bailey. We came to the conclusion that, because of the nature of the project, this was very unlikely to arise in practice. The contract involved ongoing work and, even if not carrying out work on a new phase, we would always be involved in carrying out ongoing works because of the defects liability periods. We did not foresee that a postponement of more than one year would be a practical possibility.
40. Feedback following Mr. Wright's meeting on the 31st July 1986
When Mr. Wright came back from his meeting with Mr. Wickersham on the 31st July 1986, he assured me that Mr. Wickersham had said, first, that the 28 day notice period at clause 1.7 did indeed only apply on the operation of certain trigger events, secondly, that these were default or liquidation by HDA, or Westminster running out of money and, finally, that it would be very unlikely for Westminster to run out of money because the project was budgeted for. I was reassured by this and happy to bind HDA to the contract upon this basis. If the 28 days clause had not had this agreed meaning, I would not have agreed to commit HDA to the agreement."
"7. CHURCHILL GARDENS ESTATE – CONSULTANT'S FEES
7.1 The Sub-Committee considered a report of the Director of Housing setting out the existing situation regarding consultants on Chaucer House (Phase 1) and which made proposals for dealing with consultant's fees on the remainder of the estate.
7.2 RESOLVED: That Contract Standing Order 5 be waived and authorised that Hadley Design Associates be appointed as consultants dealing with both building and quantity surveying and incorporating structural engineering services for the negotiated fee of 7.85% of the value of the works, subject to the City Solicitor being satisfied that satisfactory contractual terms are agreed with Hadley Design Associates including:-….
(h) that the City Council should have an absolute determination provision as regards future stages of the project."
Mr. Wickersham's evidence in his witness statement made for the purposes of the trial before me included:-
"5.7 At that time I kept notebooks with me in which I would jot down anything I felt it useful to record. Entries would remind me of things I considered important or would prompt me of actions I needed to take. Referring to the notebooks which cover 31 July 1986 I find that I made no record of the meeting with Mr. Wright. The fact that I made no notes supports my belief that it was an informal discussion. HDA's letter dated 1 August 1986 does not indicate otherwise nor does the subsequent letter from HDA dated 11 August 1986.
5.8 It is now contended by Mr. Wright that I agreed or represented on behalf of the City Council that clause 1.7 would be exercised only in certain, limited circumstances. I believe that this contention was first made in the Reply to the Defence. I certainly do not recollect any such contention being made orally before then and have not found it being made in any correspondence or other documentation prior to the commencement of proceedings.
5.9 This places me in the position of having to deal with a contention made in respect of a meeting which was some 17 years ago. I have to do so when there is no reference to the contention in the contemporaneous correspondence. The contention was not made in the letter from Mr. Wright dated 1 August 1986. Nor was it made in HDA's letter dated 6 July 1992 which was written in reply to the City Council's letter dated 29 June 1992. Nor was it made in answer to my letter dated 11 August 1995. Nor was not [sic] referred to in any of the protracted correspondence following termination. It is clearly at variance with the fact that the termination clause as initially drafted survived unqualified in the final drafting of the 1987 agreement.
5.10 Looking back I can make the following general observations. First, I was aware at that time that the City Council was insisting on there being an absolute determination provision. Second, I would not in those circumstances have had any authority to do anything which prevented the operation of clause 1.7 as drafted. Third, I would not have exceeded my authority and made any agreement or representations which did so. Finally, if Mr. Wright had indicated that clause 1.7 as drafted was unacceptable to him, I would have reported to the Contracts Management Board just as I did subsequently on 29 September 1986 when reporting the difficulty securing collateral warranties and on 13 October 1986 following Mr. Wright's request that his fee be increased."
" RE: CHURCHILL GARDENS ESTATE – PHASE IV
I am pleased to inform you that the City Council has accepted your Firm's tender dated 22nd August 1991 in respect of lead consultancy services for the above project.
In view of the nature of the contract the City Council will require you to enter into a formal Contract under seal.
I am preparing the Contract and will forward this to you as soon as possible."
In fact a copy of the contemplated formal contract was sent to HDA by the City Solicitor under cover of a letter also dated 10 September 1991. That contract was in short form. The material provisions were simply these:-
"WHEREAS the Surveyors have agreed with the City Council to provide professional lead consultancy services (hereinafter referred to as "the Services") as set out in the Brief embodied in the booklet entitled Fee Tender documents (which together with the documents set out in the Schedule hereto is hereinafter called "the Contract Documents")
NOW WITNESSETH as follows:-
1. In consideration of the remuneration referred to in the Contract Documents the Surveyors will perform the duties thereunder required of them at the time and in the manner therein mentioned
2. Should there be any conflict between these presents and the Contract Documents these presents shall prevail."
The documents listed in the schedule to the form of agreement included what were described as "Conditions of Appointment, marked "C"", which were to a significant extent in similar form to, but not by any means identical with, the 1987 Contract, including, in particular, the incorporation of the RICS 1981 Conditions with the modifications to paragraph 1.7 made in the 1987 Contract. I shall refer in this judgment to the conditions referred to as "the Conditions of Appointment" and to the agreement made in 1991, together with the documents incorporated in it, as "the 1991 Contract".
"RE: CHURCHILL GARDENS ESTATE SW1
APPOINTMENT OF HADLEY DESIGN ASSOCIATES
Further to my telephone conversation with John Martin yesterday afternoon, I enclose herewith a copy of the relevant section of our Agreement in respect of works at Churchill Gardens Estate. Our appointment clearly states that the works "means the programme of works or any part or parts thereof intended to be undertaken at the Churchill Gardens Estate", and was, of course, fee tendered on this basis.
We look forward to receiving your further instructions."
The alleged telephone conversation between Mr. Wright and Mr. Anthonio
"In late 1986/early 1987, I had a number of conversations with Ken Anthonio of the legal department about the proposed contract and terms discussed with David Wickersham. Ken Anthonio telephoned me to say that he had details of the terms of agreement reached between David Wickersham and I and wanted to confirm that I agreed everything before it was finalised. I explained to Ken Anthonio who confirmed his agreement, the major amendments that David Wickersham and I had made, including the percentage "on account" fee arrangement and the termination clause. In this latter respect, I told Ken Anthonio that David Wickersham and I had agreed that determination (aside from if the programme stopped for a period of more than one year which was specifically provided for in the agreement) could only be exercised on the default or liquidation of HDA or if Westminster ran out of money. I said that on that basis I was happy to enter into the agreement. Ken Anthonio agreed the termination clause only applied in those circumstances."
"2. During 1987 my involvement with the contract between the Council and Hadley Design Associates ("Hadley Design") dated 1st July 1987 was very limited. I have seen a letter dated 2nd July 1987 from the Council to Hadley Design that thanks them for the return of "the Formal Agreement signed and sealed on behalf of your Firm". The letter was sent by me and my involvement was limited to dealing with the formalities required to exchange contracts.
3. I would have been given a draft of the contract containing all of its terms by my Head of Section, Chris Rowe, and told to prepare the contract to be sent to Hadley Design for their signature and for the Council to sign. This would have involved me getting the agreement typed, the typing checked and the agreement sent out by post.
4. I was not involved in the drafting of the agreement, in negotiating the agreement or with any of the committee meetings that would have been required to consider and approve the agreement on behalf of the Council. My role was purely formal and minor….
6. I have been referred to the Re-Amended Particulars of Claim and understand it to be alleged that I had a telephone discussion with Mr. Wright in or about February 1987 concerning the terms of a draft agreement which became the 1987 agreement.
7. I do not remember ever having spoken to Mr. Wright. In any event I would not have discussed the terms of the agreement. That was not for me to do. This was not only because I had no authority but also because I would not discuss terms for which I had no responsibility. Someone dealing with the formalities does not suddenly start discussing or explaining or negotiating the terms of the contract.
8. It is alleged that I went over terms previously discussed with Mr. Wickersham. I would not have known what was discussed by Mr. Wickersham. If Mr. Wright had sought to discuss the terms with me, I would have referred the matter to a more senior member of the department or to Mr. Wickersham. I would have made a note of this and sent it to the person to whom I made the referral.
9. It is alleged that I went through certain of the other clauses that I considered to be relevant and supposedly led Mr. Wright to understand that certain words had been changed because of local authority policy in respect of fees. This is just incorrect. I would not have known which clauses were relevant and would not have known about such changes. Such matters were completely outside my involvement and knowledge and I would not have dealt with them.
10. I am afraid that Mr. Wright's recollection is in error."
Conclusions in relation to the case relying on a collateral contract or estoppel
The alleged implied terms
"On behalf of BT Mr. Hobbs submitted that the meaning of the contract, particularly the meaning of clause 18.1, was quite clear. BT could terminate on a month's notice at any time with or without reason, and no matter how great the loss such termination might, to BT's knowledge, cause the customer. There was, he said, no inconsistency, as the learned judge had thought, between the power to suspend for operational reasons under clause 6 and the power to terminate under clause 18. He argued that the factual matrix was irrelevant, since this was a standard form contract applicable to many millions of customers and the meaning of the contract did not vary depending upon the peculiar circumstances of those who happened to be parties to it. Furthermore, he said that there was no room for implication since terms were to be implied into the contract only if they were necessary and not because they were thought to be reasonable. In other words, Mr. Hobbs propounded with great skill what could fairly and not pejoratively be described as an old-fashioned classical argument based upon a literal approach to the text of the contract. That may prove to be a good argument. It is certainly a view of the matter which has been accepted by judges on other occasions albeit in the absence of full argument.
For my part, however, I share the judge's reservations. It is relevant to bear in mind that BT is a public telecommunications operator licensed by the Secretary of State under Telecommunications Act 1984 to provide a public telecommunications service. It is subject to the oversight of the Director General of Telecommunications who has certain powers if BT should fail to comply with its licence. It is quite plain, as one would expect, that BT is indeed obliged to observe the terms of its licence. The terms of the licence are not, as I have pointed out, part of the contract with the consumer, but they are, nonetheless, as I consider, an inescapable part of the background which falls to be considered…..
It is therefore correct, speaking very generally, to regard BT as a privatised company, no longer a monopoly, but still a very dominant supplier closely regulated to ensure that it operates in the interests of the public and not simply in the interests of its shareholders should those be in conflict. Against that background I am, for my part, by no means sure that the classical approach to the implication of terms is appropriate here. As Lord Cross pointed out in Liverpool City Council v. Irwin [1977] AC 239, 257, implied terms can find their way into contracts either because the law lays down a general rule that in contracts of a certain type a certain obligation should be implied, or on grounds of necessity for business efficacy. Thus, pure necessity is not the only ground on which a term can be implied and I can see strong grounds for the view that in the circumstances of this contract BT should not be permitted to exercise a potentially drastic power of termination without demonstrable reason or cause for doing so. "
"Reliance is placed by the Claimant upon the interlocutory decision of the Court of Appeal in Timeload Limited v. British Telecommunications plc [1995] EMLR 459 but:-
i) whilst that decision is interlocutory, the classical approach which was recognised and acknowledged (p466) is clearly not;
ii) the reason why there was an arguable case notwithstanding the classical approach was because of the statutory background applicable to BT (pp466 and 467) and that has no relevance to this case;
iii) there is no such statutory background here to override (even in argument) the classical approach;
iv) the classical approach of the House of Lords is binding."
"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
"If a term is to be implied, it could only be a term implied from the language of article 65 read in its particular commercial setting. Such implied terms operate as ad hoc gap fillers. In Luxor (Eastbourne) Ltd. v. Cooper [1941] AC 108, 137 Lord Wright explained this distinction as follows:
"The expression "implied term" is used in different senses. Sometimes it denotes some term which does not depend on the actual intention of the parties but on a rule of law, such as the terms, warranties or conditions which, if not expressly excluded, the law imports, as for instance under the Sale of Goods Act and the Marine Insurance Act … But a case like the present is different because what it is sought to imply is based on an intention imputed to the parties from their actual circumstances."
It is only an individualised term of the second kind which can arguably arise in the present case. Such a term may be imputed to parties: it is not critically dependent on proof of an actual intention of the parties. The process "is one of construction of the agreement as a whole in its commercial setting": Banque Bruxelles Lambert SA v. Eagle Star Insurance Co. Ltd. [1997] AC 191, 212E per Lord Hoffmann. This principle is sparingly and cautiously used and may never be employed to imply a term in conflict with the express terms of the text. The legal test for the implication of such a term is a standard of strict necessity…."
Unfair Contract Terms Act 1977 and alleged analogous principles at common law
"(1) This section applies as between contracting parties where one of them deals as consumer or on the other's written standard terms of business.
(2) Against that party, the other cannot by reference to any contract term - …
(b) claim to be entitled to render a contractual performance substantially different from that which was reasonably expected of him,…"
The expression "written standard terms of business" is not defined for the purposes of the section, although in s.14 of the Act the term "business" is defined as including "a profession and the activities of any government department or local or public authority".
"The argument accordingly turns on section 3(2)(b) and that I find more difficult. Mr. Hobbs submits that the subsection cannot apply where, as here, the clause under consideration defines the service to be provided and does not purport to permit substandard or partial performance. He says that the customer cannot reasonably expect that which the contract does not purport to offer, namely enjoyment of telephone service under a given number for an indefinite period. That may indeed be so, but I find the construction and ambit of this subsection by no means clear. If a customer reasonably expects a service to continue until BT has substantial reason to terminate it, it seems to me at least arguable that a clause purporting to authorise BT to terminate without reason purports to permit partial or different performance from that which the customer expected. If, however, section 3(2) does not in its precise terms cover this case, I do not myself regard that as the end of the matter. As I ventured to observe in Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1989] QB 433, 439, the law of England, while so far eschewing any broad principle of good faith in the field of contract, has responded to demonstrated problems of unfairness by developing a number of piecemeal solutions directed to the particular problem before it. It seems to me at least arguable that the common law could, if the letter of the statute does not apply, treat the clear intention of the legislature expressed in the statute as a platform for invalidating or restricting the operation of an oppressive clause in a situation of the present, very special, kind. I say no more than that there is, I think, a question here which has attracted much attention in Commonwealth jurisdictions and on the continent and may well deserve to be further explored here."
"Officers have very recently finalised Standard Conditions for Building Surveyors for issue with a further tender invitation for surveying services on the following classification of works:-
a) House rehabilitation;
b) Housing Estate modernisation in blocks of flats;
c) Housing stock major renovation (including window replacement, concrete and brick repairs, roof renewal, services improvements etc.);
d) Private housing Works in Default/Means of Escape;
e) Housing stock external joinery repairs and cyclical redecoration."
It seemed from the evidence of Mr. Wickersham that standard conditions for building surveyors were in fact produced and used, but when this happened was unclear. Although Mr. Wickersham was not asked about them in terms, it seems to me that the Conditions of Appointment incorporated into the 1991 Contract may well be the "standard conditions for building surveyors" which the Council adopted. If that is not so, no other document was put before me which seemed to meet the description "standard conditions for building surveyors". If it is so, the fact that the Conditions of Appointment were expressly incorporated into the 1991 Contract, but not into the 1987 Contract, would seem to suggest that they had not been adopted at the date what became the 1987 Contract was drafted.
"It is conceded by Mr. Isaacs that the plaintiffs are not a "consumer" within the terms of the Act, but he relies on the submission that the plaintiffs dealt with the defendants on their written standard terms of business. I reject that submission. The plaintiffs allege in the action as their primary case that the contract was oral, rather than on the terms of the management agreement. However, if it is contained in that agreement, it is plain that its form was negotiated between the parties, in that the standard form of management agreement which the defendants possessed at the time (and I leave aside the question of whether such standard form of agreement would in any event amount to "standard terms of business" in the sense contemplated by UCTA) was subject to a number of alterations to fit the circumstances of the plaintiffs' case before its terms were finalised between the parties."
Although Potter J expressed no definite view as to what amounted to "written standard terms of business" for the purposes of Unfair Contract Terms Act 1977 s.3, his comments in the passage quoted seem to me to be consistent with the view which I have expressed earlier in this judgment.
"Mr. Dehn submitted that the question must be answered in the negative, on the ground that you cannot be said to deal on another's standard terms of business if, as was here the case, you negotiate with him over those terms before you enter into the contract. In my view that is an impossible construction for two reasons: first, because as a matter of plain English "deals" means "make a deal", irrespective of any negotiations that may have preceded it; secondly, because s. 12(1)(a) equates the expression "deals as consumer" with "makes a contract". Thus it is clear that in order that one of the contracting parties may deal on the other's written standard terms of business within s. 3(1) it is only necessary for him to enter into a contract on those terms.
Mr. Dehn sought to derive support for his submission from observations of Judge Thayne Forbes QC in Salvage Association v. CAP Financial Services Ltd. [1995] FSR 654 at 671 - 672. In my view, those observations do not assist the defendant. In that case the judge had to consider, in relation to two contracts, whether certain terms satisfied the description "written standard terms of business" and also whether there had been a "dealing" on those terms. In relation to the first contract he said (at 671):
"I am satisfied that the terms in question were ones which had been written and produced in advance by CAP as a suitable set of contract terms for use in many of its future contracts of which the first contract with [the Salvage Association] happened to be one. It is true that Mr. Jones felt free to and did negotiate and agree certain important matters and details relating to the first contract at the meeting of February 27, 1987. However, although he had read and briefly considered CAP's conditions of business, he did not attempt any negotiation with regard to those conditions, nor did he or Mr. Ellis consider that it was appropriate or necessary to do so. The CAP standard conditions were terms that he and Mr. Ellis willingly accepted as incorporated into the first contract in their predetermined form. In those circumstances, it seems to me that those terms still satisfy the description "written standard terms of business" and, so far as concerns the first contract, the actions of Mr. Jones and Mr. Ellis constituted "dealing" on the part of [the Salvage Association] with CAP on its written standard terms of business within the meaning of section 3 of the [Unfair Contract Terms Act 1977]."
It is true that the judge found that the Salvage Association did not negotiate with CAP over the latter's standard terms and that he held that, in entering into the contract, the Salvage Association dealt with CAP on those terms within s.3. I do not, however, read his observations as indicating a view that the "dealing" depended on the absence of negotiations. I think that even if there had been negotiations over the standard conditions his view would have been the same.
Scott Baker J dealt with this question as one of fact, finding that the defendant's general conditions remained effectively untouched in the negotiations and that the plaintiffs accordingly dealt on the defendant's written standard terms for the purposes of s. 3(1) …. I respectfully agree with him."
"75.In my judgment, neither of these authorities assists Mr. Broatch's submission. In both cases, the defendant telecommunications provider was contractually bound to provide a service. The question was whether the withdrawal of the service in the particular circumstances of the case was such as to render the contract performance (ie the provision of that service) substantially different from that which it was reasonable for the other contracting party to expect. The present cases are quite different. Here, there is no relevant obligation on the claimant, and therefore nothing that can qualify as "contractual performance" for the purposes of section 3(2)(b)(i). Even if that is wrong, by fixing the rate of interest at a particular level the claimant is not altering the performance of any obligation assumed by it under the contract. Rather, it is altering the performance required of the defendants.
76. There appears to be no authority in which the application of section 3(2)(b)(i) to a situation similar to that which exists in this case has been considered. The editors of Chitty on Contracts, 28th ed (1999) offer this view, at para 14-071:
"Nevertheless it seems unlikely that a contract term entitling one party to terminate the contract in the event of material breach by the other (eg failure to pay by the due date) would fall within paragraph (b), or, if it did so, would be adjudged not to satisfy the requirement of reasonableness. Nor, it is submitted, would that provision extend to a contract term which entitled one party, not to alter the performance expected of himself, but to alter the performance required of the other party (eg a term by which a seller of goods is entitled to increase the price payable by the buyer to the price ruling at the date of delivery, or a term by which a person advancing a loan is entitled to vary the interest payable by the borrower on the loan)."
77. In my judgment, this passage accurately states the law."
"…we would, were it material, imply a term that BSB should act with good faith in the performance of the contract. But it is not material."
The contractual arrangements at issue in that case were complicated and had been made in relation to the inherently risky undertaking of seeking to launch a satellite broadcasting system. The term to which Sir Thomas referred was not in the event implied, so the decision is no authority for the proposition for which Mr. Burr contended. That was also the position in Balfour Beatty Civil Engineering Ltd. v. Docklands Light Railway Ltd. The part of the judgment of the Court of Appeal in that case, again delivered by Sir Thomas Bingham, upon which Mr. Burr relied was at page 58 of the report. In the passage to which my attention was drawn Sir Thomas recorded the concession of counsel that the employer under a civil engineering contract by which it was provided that the entitlements of the contractor under the contract should be determined by the employer was bound to act honestly, fairly and reasonably in making his assessments. In the course of his comments which Mr. Burr put before me, Mr. Duncan Wallace observed that, "outside the United States there appears to be little or no authority on these points".
The reasons for termination
"I confirm that you will be required in any event to pursue at no cost to the City Council the rectification of defective works executed under your supervision. An updated schedule of defects currently known to us will be sent to you within the next 7 days."
He emphasised, as seems to have been so, that no schedule of defects ever was sent. However, he seems to have interpreted the reference to a schedule of defects as being to defects in the work done by HDA. In fact, as seems to me to be quite plain, the schedule of defects contemplated was a schedule of defective work done by the building contractor whose work HDA had been supervising. There was never any suggestion on behalf of the Council that the work done by HDA itself had been defective, although that was the effect of some of the complaints made by residents.
"I for one have not seen a professional consultancy so shabbily treated by a local authority in 22 years of practice, and I say that with some degree of having thought about the matter and having considered the way in which the evidence has come out."
(Transcript Day 4 page 64 lines 12 – 17)
It did not assist me.
The claim for additional fees
"Preparing and presenting to the client, for approval, a complete design for the scheme together with estimated costs and a timetable for the execution of the project."
"Where stages of the service are defined in the relevant Scale of Charges the appropriate stage payment shall be due for payment on completion of the relevant stage."
A new Table 3 of Scale of Charges BS1 was substituted in clause 12 of the 1987 Contract, which read:-
"Stage Stage Fee
A, B and C 10% of x% of approximation of cost (per Stage B)
D 20% of x% of estimated building cost (per Stage D)
E, F, G and H(i) 25% of x% of estimated building cost (per Stage D)
H(ii) – H(vii) 45% of x% of final account sum including loss and/or expense but excluding any arbitration or Court award; provided that no sum for loss and/or expense shall be included which arises from any default on the part of the Surveyor."
"The lead consultant is to obtain all statutory approvals and consents necessary to achieve the programme for the project."
Conclusion
