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	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 >> Lloyds Bank Plc v McBains Cooper Consulting Ltd [2015] EWHC 2372 (TCC) (02 October 2015) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2015/2372.html Cite as: [2015] EWHC 2372 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Rolls Building, 7 Rolls Buildings London EC4A 1NL
		2nd October 2015

Mr. Justice Edwards-Stuart:

Introduction

1. This is a claim by Lloyds Bank pl c ("the Bank") against its project monitor, McBains Cooper, who was retained to advise it in connection with a loan made by the Bank for the development between 2007 and 2009 of a building in Church Road, Willesden, that was used as a church. There is also a claim by McBains Cooper for repayment of sums paid to the Bank following an adjudication in which an award was made in favour of the Bank.
2. The borrower was the exotically named Miracles Signs & Wonders Ltd ("the borrower"), a special purpose vehicle formed by a trust, the Miracle Signs & Wonders Ministry Trust ("the Trust"). Its pastor was a Mr. James Chukwu.
3. The Bank agreed to lend the borrower £2.625 million to assist with the development on the terms of a Facility Letter dated 30 May 2007. Over a year before that the Bank had retained McBains Cooper to act as the project monitor. The role of a project monitor is to check the progress and quality of the works and to approve the applications for drawdown submitted on behalf of the borrower and to make recommendations to the Bank as to the amount that should be paid against the drawdown request. Some witnesses described the project monitor as the Bank's eyes and ears in relation to the project.
4. Unfortunately it all went wrong. After about 21 months the Bank's facility was virtually exhausted and the development was far from complete. It appeared that neither Mr. and Mrs. Chukwu nor the congregation had sufficient funds to meet the balance of the costs of completing the development, which were thought to be in excess of £700,000. In those circumstances the Bank decided to cut its losses and realise its security in the form of a charge over the development property and two properties owned by Mr. and Mrs. Chukwu.
5. The Bank claims about £1.4 million, being the total amount of the sums advanced under the facility less the recoveries made from the sale of the various properties over which the bank had a charge. This sum takes into account the sums recovered following the adjudication.
6. The claim has a somewhat chequered history. Although the Bank realised in mid March 2009 that things had gone badly wrong, the claim form was not issued until July 2013, at a time when the dispute was the subject of an adjudication. Particulars of Claim were not served until 4 April 2014. In those Particulars of Claim an allegation was made for the first time that McBains Cooper had only visited site on two or three occasions instead of at monthly intervals, as the terms of its engagement required.
7. A remarkable feature of the case is that, until the conclusion of the evidence, each party strenuously asserted that it was not at fault and that what happened was entirely the fault of the other. It seemed to me that it was reasonably clear from the outset that neither party's position was sustainable, but it was not until closing submissions that each side accepted that it had fallen below the standard that was reasonably to be expected of it. It is now quite clear that this loan should never have been made by the Bank in the first place (a decision for which it cannot blame McBains Cooper) and that during the course of the work McBains Cooper gave advice that was unquestionably negligent.
8. The real issues that have emerged during the trial are ones of reliance and causation: to what extent did the Bank rely on the advice given by McBains Cooper and who is actually responsible for the loss sustained by the Bank?
9. The Bank was represented by Lord Marks QC and Mr. Luke Wygas, instructed by Clarke Willmott LLP, and McBains Cooper was represented by Mr. Sean Brannigan QC and Ms Jennie Gillies, instructed by Triton Global Ltd (trading as Robin Simon).

The background and summary of the claim

10. No 226 Church Road, Willesden, London NW10 9NR, used to be a bingo hall. In about the mid 1990s it was purchased by Mr. Chukwu and since then it has been home to an evangelistic church, run by the Trust. Its pastor, Mr. Chukwu, was keen to develop the building to provide function rooms, a bookshop, a nursery, an Internet cafe and self-contained accommodation units which would be available to rent on a weekly basis. The congregation was about one thousand strong.
11. Mr. Chukwu engaged a Mr. Simon Purdom, a former banker who had become a financial adviser, to assist them in putting together a proposal in order to obtain a loan from a bank for the proposed redevelopment. Mr. Chukwu was presented as an efficient manager of the church who would have no difficulty in running profit making enterprises, such as the provision of a venue for weddings, a nursery and so on.
12. Although Mr. Purdom seems to have been a persuasive advocate for the Trust, not everyone at the Bank saw the project in the same light. In an e-mail dated 8 November 2005 a Mr. Simon Cook, a Risk Manager in the Bank's Credit Sanctioning department (who was not called as a witness) said that he thought that the project was far too ambitious for such a small organisation with a modest income based entirely upon voluntary giving. In that e-mail he gave detailed reasons as to why he felt unable to support the proposal. This e-mail was sent to Mr. Andrew Mannering and Mr. Richard Hurdle, who were Relationship Directors at the Bank. Mr. Mannering, who took a different attitude to that of Mr. Cook, made it clear that he was "keen to do something here".
13. Mr. Mannering did not give up and sought permission to obtain valuations from Aitchison Rafferty and a review of the project by McBains Cooper. He proposed that Mr. Chukwu should deposit £125,000 with the bank prior to any drawdown.
14. One feature of the proposed development that proved to be controversial was the development of the third floor of the building. In about April 2006 those advising Mr. and Mrs. Chukwu took the view that the cost of doing this did not justify the likely return (in a report dated 12 June 2006 Mr. Purdom said that it would cost about £500,000 and add very little in terms of value). McBains Cooper were made aware of this decision.
15. Aitcheson Rafferty was instructed on 3 February 2006 to provide an opinion as to the market value of the site in its undeveloped condition, but with the benefit of the planning consent, and the gross development value ("GDV") of the completed development. It duly reported on 20 March 2006 with a market value of £1.45 million and a GDV of £3.5 million. This appears to have assumed that all four floors would be developed.
16. At the same time, also by a letter dated 3 February 2006, Lloyds instructed McBains Cooper to act as its monitoring surveyor in relation to the Works. It provided two initial reports: in August 2006 and April 2007. No complaint is made about these in this action.
17. On 30 May 2007, without (as I find) any further material input from McBains Cooper, the Bank sent the Facility Letter to the borrower. Thereafter, the borrower entered into a building contract in August 2007 with a contractor, Acre Contractors ("Acre"). In September 2007 the Bank made contact with McBains Cooper asking about the procedure for drawing down money from the facility.
18. Thereafter, McBains Cooper issued progress reports at regular intervals, starting with Progress Report ("PR") No 1, on 28 September 2007, and finishing with PR No 18 on 27 April 2009. In PR No 17, issued on 17 March 2009, McBains Cooper stated for the first time that there were not sufficient funds in the facility to complete the development. This caused consternation in the Bank and, in September 2009 the Bank wrote to the borrower demanding repayment of the loan.
19. The borrower was in no position to repay the loan and so the property was eventually sold. The bank lost about £1,400,000, which it claims from McBains Cooper in this action.
20. A major allegation by the Bank is that Mr. Symons, McBains Cooper's project monitor did not visit the site nearly as often as he should have done. Indeed, the Bank alleges that he visited the site on only three occasions in 18 months, instead of visiting it prior to issuing each progress report. In fact, the Bank goes a step further and alleges that McBains Cooper was reckless in preparing and submitting its progress reports in these circumstances. This is denied by McBains Cooper. One implication of making this allegation is that, if it succeeds, the Bank may be able to escape from the consequences of its own negligence. At least, that is its case.

The retainer of McBains Cooper

21. As I have already stated, this was by a letter dated 3 February 2006. Payment was to be by way of a fee for the initial assessment and thereafter a lump-sum (not specified) payable against each certified amount under the facility. The letter made it clear that the Bank did require McBains Cooper to monitor and certify all project costs. McBains Cooper countersigned the letter ("the Retainer") on 6 February 2006. The Retainer included the following terms:

"1.1 You warrant and undertake to the Bank that you have exercised and will continue to exercise all reasonable skill, care and diligence to be expected of a monitoring surveyor experienced in overseeing and reviewing projects of a similar size, scope and complexity to the Development and that you will perform your duties accordingly…

2. INITIAL REPORT

You will be required to provide an initial report on the Development in which you should, as a minimum, cover the areas indicated below.

...

2.1 verify all costs in the Borrower's Development appraisal with particular reference to construction costs and your considered opinion of levels of contingency employed in the Borrower's Development appraisal or cash flow and with regard to construction costs prepare your own estimate for the proposed construction works;

3. PERIODIC REPORTS

3.1 You are expected to inspect the site at least once a month (or as may be agreed with the Bank) and where you consider it appropriate to attend site progress meetings and also to review the minutes of such meetings. After your site inspection you are to provide an appropriate report which should include, but not be limited to, the following:

3.1.1 your own valuation of the construction works in progress;

3.1.2 a commentary on the progress of the Development with particular reference to quality control, any matters adverse to the Bank's position and their implication in respect of the completion of the Development and its timing;

3.1.3 a check on drawdown requests so as to ensure all constituent amounts are justified in accordance with the Facility;

3.1.4 a review of actual expenditure incurred against the cashflow statement and an update on the projections accordingly, confirming at the time of each drawdown in accordance with the Facility that the undrawn balance of the Facility will be sufficient to meet in full all cost to be incurred in achieving practical completion of the Development;

3.1.5 verification that the Professional Team and building contractor receive funds from the Borrower if payment under their contracts and appointments are not to be made directly by the Bank;

...

3.2 During the construction period you are expected to bring to the Bank's attention immediately (orally in the first instance, but to be confirmed in writing) any material change to the design, the building contract or any other contracts or other documents relating (directly or indirectly) to the Development."

22. It is, I think, common ground that the requirement in clause 3.1.1 that McBains Cooper should make its own valuation of the construction works in progress was an unusual one, although it seems that it was a standard term in the Bank's retainer of a project monitor. It is perhaps all the more surprising that such a term was included in the present case, since Mr. Symons, the appointed project monitor, was not a qualified quantity surveyor.
23. By this time the Bank had already offered Mr. Chukwu a facility in the sum of £1,500,000 under the terms of a letter dated 6 December 2005. Mr. Mannering noted in his witness statement, correctly, that this agreement provided that the Borrower, and not the Bank, was to bear the costs of the Bank's professional advisers.
24. Before I discuss the facts in any greater detail, I should give my impression of the witnesses who gave evidence.

The witnesses

Mr. Andrew Mannering

25. Mr. Mannering was a Relationship Director with responsibility for a small portfolio of clients, particularly small and medium-sized enterprises. He was the employee of the Bank who dealt directly with Mr. Chukwu and his adviser, Mr. Simon Purdom. It was Mr. Mannering's recommendation that led to the granting of the facility.
26. I found Mr. Mannering to be an unimpressive witness. His evidence on the principal issue, his reasons for recommending the facility, was wholly implausible. Mr. Mannering told the court that it was his view at the time that the facility would be sufficient to cover the "contractor's costs, the professional fees and possibly some of the interest and the Bank's fees" (Day 3/82). But eventually he said that the balance of the interest and the Bank's fees, to the extent of about £50,000 or £100,000 might have to be met by the borrower out of his own pocket (Day 3/148). He considered that Mr. Chukwu had sufficient assets to cover any overrun in respect of interest and fees. Mr. Mannering said that this did not give him any great concern because completion of the development was not dependent on the payment of either interest or the Bank's charge, and by then the Bank would have the security of the completed development.
27. Whilst superficially plausible, this evidence is wholly inconsistent with the terms of the Facility Letter dated 30 May 2007, which Mr. Mannering signed. This provided that the interest - at 2% per annum over the Bank's Base Rate, which was then 5.5% - was to be charged to the facility account quarterly in arrears. Further, the Bank's arrangement fee of £26,250 was to become payable when the first drawdown on the facility took place.
28. The effect of this was that the true sum available to fund the development was not the stated amount of the facility, £2.625 million, but that amount less the amount of the interest. The interest was likely to be at least £100,000^[1] and so the sum available to complete the development was no more than £2.525 million (excluding the Bank's charge of £26,250). This was less than the contract price of £2.54 million, leaving aside professional fees and the need for a contingency.
29. There was therefore no question of the facility being sufficient to fund the costs of the development or of the borrower paying off the interest after its completion as Mr. Mannering suggested. If his thinking really was along the lines that he described in evidence, then it was completely flawed and could not have withstood a moment's careful scrutiny. However, in fairness to Mr. Mannering, he was giving evidence about matters which occurred some eight years earlier and so his recollection may not be reliable. But, however one looks at it, there is no avoiding the inescapable conclusion that this development loan would never have covered the development costs (however narrowly described).
30. Another example, in itself fairly minor, that gives an illustration of the quality of Mr. Mannering's evidence concerned the provisional sums. McBains Cooper advised in the April 2007 report that there was a moderate financial risk because 12% of the tender consisted of provisional sums, particularly in the M&E works.^[2] When Mr. Mannering was asked in evidence what he understood by provisional sums he began to give an explanation of his understanding of preliminaries (Day 3/168). It came about in this way. He was asked if he knew what provisional sums were. The evidence was then as follows:

"A. I know what the word provisional sums are --

Q. Can you explain to his Lordship in one or two sentences what your understanding is of that?

A. Prelims are -- from my understanding of prelims in a building contract are certain scoping of works and costs that are incurred in advance of actually doing the work itself. In some cases that may be some basic groundworks, it may be some other planning bits and pieces, it could be the professionals drawing up a plan and that is my understanding.

MR. JUSTICE EDWARDS-STUART: Pause a minute. You are talking about prelims. We are talking about provisional sums.

A. Forgive me, then, I have misunderstood. Then maybe my understanding is not correct."

31. It was not until after I had given a brief explanation of what a provisional sum was that Mr. Mannering said that he had understood at the time that provisional sums were, in effect, estimates. In the circumstances, I am far from satisfied that Mr. Mannering did have a proper understanding of what was meant by a provisional sum.
32. Even if Mr. Mannering did understand at the time what was meant by "provisional sum", there is no evidence that he asked McBains Cooper any questions about the provisional sums referred to in their report in order to obtain a clearer idea of the extent of the risk presented by the fact that 12% of the contract sum was made up of provisional sums.

Mr. Nicky Humphrey

33. Mr. Humphrey was a Manager in the Commercial team at the Bank between 2007 and 2009, after which he became an Associate Relationship Manager. In relation to this project he was Mr. Mannering's assistant.
34. It appeared from Mr. Humphrey's evidence that in 2007- 2008 his ignorance of the working of building contracts was almost total. This was not his fault - he was, as he put it, brand new to the role. For example, he certainly did not know what was meant by a provisional sum (Day 4/176) and, perhaps more surprisingly, he did not understand the term "contingency" (Day 5/26). So far as I could tell, Mr. Humphrey's role in relation to this project was to review the McBains Cooper Progress Reports adopting what might crudely be described as a tick box approach. Mr. Mannering had told him to look out for four specific things in the reports, namely that McBains Cooper had: confirmed that the quality of the work was satisfactory, confirmed that its value was that stated in the report, confirmed that the anticipated cost of the works was within the amount of the Facility and, finally, stated whether or not there were any variations.
35. Apart from checking these four particular points, it did not appear from Mr. Humphrey's evidence that he examined the Progress Reports in any detail or attempted to understand what they said. Sometimes the reports came with attachments, such as the contractor's monthly application, but Mr. Humphrey said that he did not look at these. He said that he was not asked to look at them and so he did not: Day 4/208. In short, I formed the very clear impression that Mr. Humphrey's role in this project was little more than that of a postbox, although to some extent it was not even that because some of the mail never got beyond it.

Mr. Pravinkumar Kurji

36. Mr. Kurji was a director of Acre Contractors. He said that he attended site every day from 8 am until 10 am, when he would discuss progress and any problems with his site manager, Kumar Sahdev. The only exception to this routine was during the course of the asbestos work, which was carried out by specialist subcontractors.
37. Mr. Kurji struck me as an honest witness and he had no interest in the outcome of this litigation. He said that he only met Mr. Symons on two occasions. I discuss his evidence elsewhere in this judgment.

Mr. William Clark

38. Mr. Clark is a quantity surveyor and project manager who runs his own practice, Clark Associates, in Bristol. He has been in practice for about 35 years. Mr. Clark was engaged by the borrower as a quantity surveyor and contract administrator for the refurbishment works at 226 Church Road.
39. Although Mr. Clark was called by the Bank, so far as I could tell he had no interest whatever in the outcome of this litigation and I thought that his evidence was careful, measured and precise. His honesty was not questioned and the only challenge to his evidence was the reliability of his recollection about his contact with Mr. Symons and how often Mr. Symons attended site Progress Meetings. I thought that Mr. Clark was a scrupulously honest witness and I accept his evidence without reservation.
40. He explained his method of taking minutes at meetings and said that he was careful to note who had attended and who had not attended but had sent apologies. The minutes were circulated to those shown as being present or as having sent apologies and to anyone else who was specifically named under the heading "Distribution" at the end of the minutes.
41. He said that it would be very rare for him to fail to record as present someone who had attended a meeting. Having heard him give evidence, I am prepared to accept his evidence on this. He explained also that if he had arranged to meet Mr. Symons after a meeting, he would record this in the minutes in the section headed "Bank's Monitoring Surveyor" (which was included in every set of minutes). He did this on one occasion - in the minutes of the site Progress Meeting No 9 held on 2 July 2008.
42. Mr. Clark thought that he met Mr. Symons on site only once: that being the occasion recorded in the minutes of site Progress Meeting No 9. Mr. Clark had retained his diaries for the relevant period in which he noted his engagements. In a second witness statement, served shortly before he gave evidence, he explained that all engagements were entered into his diary, but were crossed out if subsequently they did not take place. If a meeting or an appointment was moved, this would be shown by an arrow pointing to the new date and time. He said that it was "pretty unlikely" that he ever met Mr. Symons, other than at a site Progress Meeting, without there having been an entry in his diary to that effect. I accept this evidence also.
43. However, Mr. Clark was prepared to concede that it was possible that he might have met Mr. Symons on site without there being a corresponding entry in his diary and that he may have failed, on perhaps one occasion, to record him as having attended a site Progress Meeting. However, he firmly rejected the suggestion that he might have done this on more than one occasion. Mr. Symons is shown as having attended one site Progress Meeting only, and that was on 29 January 2009. Although I regard Mr. Clark's concession as somewhat generous, I accept that it is possible that Mr. Symons might have attended one other site Progress Meeting at which his attendance was not recorded. However, in the absence of reasonably cogent evidence that indicates that Mr. Clark made an error, I would reject any submission to the effect that Mr. Symons attended any meeting at which his presence was not recorded.
44. Whilst, for reasons that I give in more detail below, I consider that Mr. Clark's diary is a fairly reliable record of his appointments, I consider that it is more likely that an appointment which took place was not entered in the diary than that a person who attended a site Progress Meeting was not shown as having done so. But, as Mr. Clark pointed out, his office was in Bristol and so he did not often visit the site on days when there was not a site Progress Meeting. He said that he might visit the site if he was in the London area for other reasons, but if this happened I would expect that other event to be shown in his diary. I will return to this point later in this judgment.

Mr. Peter Arman

45. Mr. Arman worked in the Corporate and Commercial Business Support Unit as an Area Director of South West and South Central. He had been with the Bank for 37 years. In December 2007 he was a Credit Sanctioning Manager at Commercial Credit in Bristol.
46. He said that, as a rule of thumb, the Bank would generally be prepared to fund cost overruns that were not the fault of the borrower to the extent of about 10% of the facility in order to achieve completion, subject to solvency of the borrower and the existence of adequate security (Day 5/121).
47. Mr. Arman was asked a lot of questions that were put on a hypothetical basis. Perhaps understandably, he was often reluctant to commit himself to an unequivocal answer. However, overall I thought that he was a witness who gave his evidence fairly.

Mr. Andrew Downes

48. Mr. Downes is a Senior Manager in SME Banking Credit, Commercial Banking Risk in the Bank's Risk Division. He is a chartered accountant who formerly worked for KPMG. In 2008 he was based in Bristol in the Property Team, Commercial Credit, Risk Management. His job mainly involved sanctioning facilities relating to property. He became involved in the Church Road property when he was asked to assess the renewal application in August 2008.
49. I felt that Mr. Downes was a little reluctant to engage with the questions that he was asked by Mr. Brannigan. However, he did agree that if, in September 2008 he had been told by Mr. Mannering that the development costs would be substantially in excess of the facility, he would have concluded that there should be no more lending by the Bank until it was clear who would be paying for the shortfall (Day 5/174). It seems that Mr. Mannering did not mention at this stage the fact that the borrower was intending to carry out the work to the third floor (Day 5/156).
50. When Mr. Downes was shown Mr. Mannering's file note of 17 April 2007, which included no allowance for professional fees, he said that it was quite clear that under Mr. Mannering's proposal the borrower was to pay the professional fees (Day 5/188). However, when I showed him a progress report which indicated clearly that about £100,000 had been drawn down in respect of professional fees, he had no explanation (Day 5/191).

Mr. Riccardo Diana

51. Mr. Ric Diana is a Director in Global non-core. This involves the management of assets held by the Bank. He has worked for the Bank for 33 years. He struck me as a careful and authoritative witness.
52. At the time of his involvement in this case he was a Relationship Director in the Bank's Business Support Unit ("BSU"). His role was to take on cases in financial distress and, where possible, to turn them round. He said that he would expect a development loan of this nature to be passed over to BSU in circumstances where it had become apparent that there were insufficient funds left in the facility to complete the development. He said that this loan would never have been agreed in the first place if the credit sanctioners had appreciated that the facility of £2.625 million made no allowance for professional fees (Day 6/36-37).
53. Mr. Diana also made the general point that, where the borrower is to contribute to the cost of the development, the borrower's money goes in first. He said that it would be very rare for it not to happen that way (Day 6/4, 20-26). Again, I accept that evidence which was consistent with that given by the lending experts.
54. Mr. Diana said that he had had numerous conversations with Mr. Mannering following PM No 17. He said that Mr. Mannering told him that there had been many discussions about the third floor in the early stages leading up to the making of the loan but that he had no knowledge that the third floor "was actually being built out" (Day 6/10). This evidence is supported by the fact that this was the Bank's case until very shortly before the trial. Mr. Diana said also that if Mr. Mannering was aware that the third floor was being built out, he (Mr. Mannering) should have told his credit partner in the credit department (Day 6/18).

Mr. Julian Symons

55. Although Mr. Symons was the principal witness for McBains Cooper, for logistical reasons he was called out of order and was the first witness to give evidence. He is a Chartered Building Surveyor, who qualified in 2000. He is not a quantity surveyor, which is the discipline from which project monitors are usually drawn. He left McBains Cooper in August 2014 and is now Director of Development at Cordea Savills.
56. Mr. Symons was on the whole a precise witness who answered questions directly and without any prevarication. He did not give evidence in a manner that suggested that he was being anything but straightforward. For example, he described his obligations in his own words in the following terms (Day 1/148):

"Our own valuation required us to critically appraise and analyse the valuation once the quantity surveyor had had his chance to review it with the contractor. We use that as the basis for our assessment of the appropriateness of the valuation based on the works undertaken on site. We would obviously then compare that with the basic documents, such as the contractor's own analysis which we obviously had, and that would be the basis for what we would certify within our report."

That is not, in my view, the evidence of someone who is deliberately seeking to minimise the responsibilities of his role.

57. As I mention later in this judgment, much of his evidence as to what he did was based on reconstruction from the contemporaneous documents. This was not his fault because the allegation that he only visited the site three times during the project was first raised in April 2014 when the Bank served its Particulars of Claim. Mr. Symons was at a serious disadvantage in that he no longer had access to the day books that he kept at the time.
58. Having listened carefully to his evidence and read and re-read the transcript of it, I am satisfied that Mr. Symons was not a dishonest witness as the Bank has on occasion asserted. However, I am quite satisfied that he did not attend all the site project meetings that he says he did, and in this respect I regard his evidence as unreliable. However, I think that he may well have genuinely persuaded himself to believe what he now says.
59. He had, I consider, an approach to his role which has been described appropriately, I think, as "contractual". For example, he did not feel that he was required to report costs in respect of additional work as a variation until a formal variation instruction had been issued by the Contract Administrator. Similarly, in relation to delays, he did not report the fact that there were likely to be cost implications because he said that there was no point in doing so until he knew what the cost would be. I consider that there is some force in this point. However, overall I have concluded that his approach involved too much focus on form over substance. He should have made it clear in his progress reports when he became aware of events that were likely to result in an increase in the development costs.
60. Throughout the project he worked on the assumption that the development was being part funded by the borrower. Whilst there were some grounds for assuming this, I consider that he was at fault in not pressing the Bank for details of the agreement that it had entered into with the borrower.
61. The Bank contends that Mr. Symons was reckless in preparing progress reports without having first visited the site. Mr. Symons conceded quite readily that he would be taking a risk that his progress reports would not be accurate if he did not go to the site prior to preparing them. However, it was not put to him at any stage that any of his progress reports were inaccurate in terms of the quality or value of the work carried out, or by including sums for work that had not been carried out or as to the progress of the work.
62. The complaints by the Bank in relation to recklessness extend also to the confirmations that were given as to the adequacy of the facility, the failure to report that money was being drawn down in respect of variations and the inclusion of costs of work to the third floor in the drawdown applications. It is also alleged that McBains Cooper were reckless in failing to report that there were inevitably going to be substantial claims for loss and expense arising from delays. This last allegation was not pleaded.
63. I will have to consider whether the allegation of recklessness is made out in relation to these matters.

The experts

Mr. Richard Payne

64. Mr. Payne is a director of Turner and Townsend. He runs the Funding Advisory service, which covers technical diligence and project monitoring. He has previously been in charge of Monitoring Surveying departments at Turner and Townsend and, prior to that, at Currie and Brown. He has a BA (Hons) in quantity surveying. He has acted as a project monitor in a number of substantial projects.
65. The presentation of Mr. Payne's evidence was somewhat disrupted by the production on the morning when he gave evidence of a table correcting figures in a corresponding table in his report. He said that he had been aware of errors in the previous table for about a week and that he had prepared a revised table that had been sent to the Bank's solicitors and counsel at the end of the previous week (he was giving evidence on Wednesday). It emerged during this questioning that Mr. Payne has only limited experience of acting as an expert witness.
66. In fact, this was fairly clear from the manner in which he gave evidence. I did not find him to be a particularly impressive witness, but in the event much of his evidence (at least, as reflected in the joint statement) was not seriously challenged. However, there was a challenge to parts of his oral evidence where he appeared to be resigning from matters that he had agreed with his opposite number, Dr Giordano, and which were recorded in the experts' joint statement (see, for example, Day 6/62-63, 67-68). In the joint statement the project monitoring experts had agreed that the Bank could have deduced from PM No 6 that facility funds were being expended for the third floor works. However, having confirmed this statement in cross examination, in re-examination Mr. Payne retracted it (Day 6/17-118). This was not satisfactory.
67. In relation to McBain Cooper's confirmation of the adequacy of the facility in the initial progress reports, he said this (at Day 6/6465):

"A. They put, they reported the construction costs, but they also reported confusingly, that there was enough money in the facility to cover, to complete the project. Therefore, you would deduce cover the construction costs, so, yes, they reported in one way that there was insufficient money, and in another way they reported that there was sufficient money. It wasn't clear.

Q. We will look at that in more detail.

MR. JUSTICE EDWARDS-STUART: It wasn't just not clear, Mr. Payne, it was flatly contradictory on its face, wasn't it?

A. My Lord, yes."

68. Importantly, Mr. Payne accepted that the Bank should have asked McBains Cooper whether the work to the third floor was being paid for from the facility (Day 6/70). He accepted also that this concession, whilst made in the joint statement, had not found its way into either of his two reports (Day 6/70-72). Mr. Payne agreed also that in the majority of cases a development facility would include professional fees as well as the contractor's costs (Day 6/79).
69. Overall, I have not derived a great deal of assistance from Mr. Payne's evidence, although I have relied on his revised table of expenditure, which shows the expenditure on variations and the third floor separately, which I found to be helpful.

Dr Joseph Giordano

70. Dr Giordano is a founder of Bargate Consulting who has a BSC(Hons) in Quantity Surveying, an MSc in Economics and Finance and a doctorate in the Built Environment. He is the lead author of the RICS Guidance Note on Project Monitoring.
71. I have to say that I was not impressed with his report, in which he concluded that McBains Cooper did not fall below the standard expected of a reasonably competent project monitor in carrying out its obligations to the Bank. I was not impressed because, even without hearing the evidence, this was never a sustainable conclusion in the light of the statements made in the progress reports about the adequacy of the facility to meet the costs of the development.
72. However, Dr Giordano took a much more realistic view when giving evidence and did not attempt to defend the indefensible. By the conclusion of the evidence I did not consider that there was very much difference between the views of the two experts on project monitoring.

Summary of conclusions in the light of the expert evidence of the project monitors

73. In the end, I consider that fairly little in this case turns on the evidence of the expert project monitor's. The following conclusions in relation to the performance by McBains Cooper of its obligations under its retainer are, in my view, inescapable:

i) There is no basis for criticising the advice given in the two initial reports: it could perhaps have been expressed more clearly and succinctly, but the content cannot be challenged.

ii) Whatever the scope of McBain Cooper's obligation to carry out its own valuation of the works, there is no allegation of any breach of it and so, in terms of causation, it is irrelevant.

iii) The confirmation of the adequacy of the facility given in PRs Nos1-8, whilst demonstrably self-contradictory on its face, was given negligently - as McBains Cooper now concedes.

iv) McBains Cooper should have advised the Bank of any significant variations to the building contract, or to any circumstances that were likely to result in a significant variation for which the borrower (and hence the Bank under the facility) would be liable.

v) McBains Cooper should have advised the Bank as soon as the borrower included costs of works to the third floor in any application for drawdown under the facility.

vi) McBains Cooper should have taken much more vigorous steps to obtain (a) at the outset, a copy of the Facility Letter and (b) at regular stages during the project, a cash flow to complete or a costs report.

Mr. Collin Cumberland

74. Mr. Cumberland has been in banking for over 40 years, the first 26 of which were with Barclays Bank, where he was involved in corporate, commercial and private banking. He then joined Bank Leumi (UK) in 1998 and remained there until 2012. Since then he has acted as a consultant.
75. Mr. Cumberland, rather like Dr Giordano, expressed a number of conclusions in his written report which were manifestly unsustainable. However, when he came to give evidence he said that he had had a change of view on one aspect of the case. This was that he no longer believed that the amount of the facility was sufficient to complete the development. He said that his original view was based on his belief that the professional fees in relation to the development were to be paid not from the facility, but from the current account (Day 7/51).
76. Yet again, this change of view was communicated to Mr. Brannigan at the last minute. It meant that a number of paragraphs in Mr. Cumberland's report had to be changed but no revised draft was available. This, understandably, left Mr. Brannigan in a position of some difficulty.
77. However, I thought that Mr. Cumberland's oral evidence was considered and moderate and, as a result, quite impressive. By the time that his evidence had finished, I do not think that there was any material difference of view between him and the Bank's expert, Mr. Hamilton.

Mr. Stewart Hamilton

78. Mr. Hamilton spent 23 years in banking prior to establishing a financial consultancy. He joined NM Rothschild & Sons in 1968, where he was principally concerned in unsecured and secured lending to corporate and private clients. After 12 years he left to become a manager at A P Bank Ltd (later Riggs AP Bank Ltd), where he established and ran the Business Development Department. Five years later he assumed responsibility for the Commercial Loans Department before moving on to becoming a director. About ten years later he joined City Merchants Bank as a director responsible for assets, where he also became Deputy Managing Director. He left in 1991 to form his own consultancy.
79. I found Mr. Hamilton to be a knowledgeable, precise and careful expert. Very little of his evidence was successfully challenged.

The Joint Statement of the lending experts

80. At paragraphs 9-11 of their Joint Statement, the lending experts said this:

"9 A reasonable and competent lender would correct any error which had been made by a monitoring surveyor regarding the amount of the loan facility made available by the lender.

10 The Defendant had drawn attention to the consideration or implementation of the construction of the Third Floor in each of its Progress Reports from Progress Report 4 onwards and had stated that it understood that the costs of the Third Floor works would be met from outside the Claimant's Development Loan facility.

11 Mr. Mannering should have obtained, but did not obtain, details of:

11.1 the proposed Third floor Extension when first advised by the Defendant that this was being considered;

11.2 the costs of the proposed Third Floor works; and

11.3 the source and availability of the funding of the Third Floor works

and reported this information to his Credit Office with a recommended course of action, but did not do so."

81. By the time that he gave evidence Mr. Cumberland agreed with Mr. Hamilton that it should have been obvious to the Bank that in the light of the figures in McBains Cooper's Draft (Revised) Initial report, the facility would prove to be inadequate.

The valuation experts

82. The two valuation experts did not give evidence. It was agreed that I should consider their written reports, together with any joint statements, to the extent that this would be necessary for the assessment of any damages.

The events leading up to the grant of the Facility Letter dated 30 May 2007

83. McBains Cooper provided an Initial Report to the Bank on 17 August 2006. It was addressed to a Mr. Richard Hurdle and was prepared by Catherine Brooking and Mr. Symons. Mr. Symons met Mr. Mannering, who by then had taken over the account, in September 2006 to discuss the report. After further costings for the building works had been obtained as a result of negotiations between Clark Associates and the proposed contractors, Acre, Mr. Clark prepared a report which he sent to Mr. Chukwu, with a copy to McBains Cooper. The outcome of the negotiations was that Acre provided a further revision to its tender in the sum of £2,540,059 with a contract period of 60 weeks.
84. Mr. Simon Purdom, who was representing Mr. and Mrs. Chukwu and the borrower, then submitted a supplementary report to the Bank dated 29 March 2007 seeking a proposed facility of £2.625 million. A copy of this does not appear to have been sent to McBains Cooper.
85. Thereafter Mr. Mannering asked McBains Cooper to produce a further report updated to include the new costs information provided by Clark Associates. Under cover of an e-mail dated 6 April 2007 Mr. Symons sent a Draft (Revised) Report to Mr. Mannering.
86. At paragraphs 32 and 33 of his supplemental witness statement, which was served on 9 June 2015, Mr. Mannering said this:

"32. I recall having a conversation with Mr. Symons on receipt of the report which covered the summary of the Revised Initial Report. I recall going through the summary of the report on the telephone with him and him satisfying me that the development cost could be completed within the budget. I do not think that I went through the rest of the report with Mr. Symons, as I remember focusing on the summary part of the report.

33. I confirmed our conversation in my e-mail dated 07/09/2006 11:01."

87. There are two odd things about these paragraphs. First, the e-mail to which Mr. Mannering referred did not follow the revised report, which was prepared in April 2007, but followed the Draft Initial Report of August 2006. Mr. Mannering appears to have made the mistake because the revised report still retained, on its title page, the date of August 2006, which had been carried over in error from the initial report. After being pressed, Mr. Mannering accepted that he had made a mistake.
88. Second, in my view, what Mr. Mannering said at paragraph 32 was in any event not an accurate summary of what is recorded in that e-mail. It was in the following terms:

"Dear Julian

Thank you for your time last week talking me through the draft report. To summarise our conversation (and hopefully not put words into your mouth) I believe that we have suggested the following

( The church has tentatively lined up the following builders

...

( ACRE has agreed a fixed price in line with the figure produced by the church's QS

( Acknowledging the deficiencies with a "fixed priced contract", you would be happy to sign off on the costs if

( The contingency were increased to 5% (from the existing 2.5%) and

( We as a Bank understood and accepted that if we were to go to tender to do the project (having entered into possession) or if additional work were found (say additional asbestos) costs could escalate by another £200K

( I am happy to report that we accept this

( I am liaising with Simon Purdom and Colin Ligman @ Burges Salmon in respect of collateral warranties and believe that we are close to agreement on this point

( Will Clarke (sic) will not be undertaking further work on the project and I believe that an initial conversation has taken place with Catherine about your firm acting for the church as well as the Bank. I acknowledge the comments on certification and assume that the Architect can cover this off. However, should they wish to instruct you in this respect, what process needs to be followed?

I hope I have covered the issues we discussed and that, subject to the above you are able to "sign off" the development. Please do not hesitate to contact me if you would like to talk this through."

89. It is clear to me that the "costs" on which McBains Cooper was being asked to "sign off" were the costs provided by Acre in its current quotation, which it was prepared to do provided that a contingency of 5% was added to the price. There is no mention of professional fees and in my judgment this e-mail is recording a discussion about the adequacy of the contractor's price and McBains Cooper's recommendation as to the need for a sufficient contingency and nothing more. It is interesting also that the possibility of the discovery of additional asbestos was recognised many months before the facility was granted.
90. If, in paragraph 32 of his supplemental witness statement, Mr. Mannering was suggesting that he agreed with Mr. Symons that the development could be built for the sum quoted by the contractor plus a 5% contingency, then that is quite unrealistic. Mr. Mannering must have been aware at the time when he sent this e-mail, indeed I find that he was aware, that professional fees would have to be added to the contract price in order to arrive at the basic cost of carrying out the work. The summary of the position in relation to professional fees in the initial report was in virtually identical terms to the corresponding summary by McBains Cooper in the revised report, so nothing changed. Mr. Mannering accepted in evidence, as he had to, that the fees of the consultants would have to be paid as the work progressed.
91. In its Draft (Revised) Report of 6 April 2007 McBains Cooper had advised that the fee quotations received to date totalled £72,750. As the report made clear, these quotations were from only three of the five consultants who would be engaged. McBains Cooper advised, in terms that were perhaps understated, that the allowance for professional fees of £75,000 in the summary of the development costs was likely to be exceeded. The two consultants whose fee quotations had not been received were Clark Associates, the Contract Administrator and Quantity Surveyors, and Pearce and Associates, the Mechanical & Electrical Consultants. On any view, a reasonable allowance for these further fees would not be less than £50,000 (at its crudest, by taking the estimate of £75,000, dividing it by 3 and multiplying it by 5). A slightly more sophisticated approach would suggest that the fees of Clark Associates were likely to be of a similar order to those of the architects, £50,000, and the fees of Pearce and Associates were likely to be of a similar order to those of the Structural Engineer, £20,000. If Mr. Mannering did not appreciate this, he had only to ask - but he did not do so.
92. Taking into account the revised tender figure from the contractor of £2.54 million and adding a contingency of £127,000 as recommended by McBains Cooper, the development costs set out in the revised report amounted to about £2.89 million - before making any upward adjustment for interest to reflect the increased contract price. On a like for like basis, this can be compared with the figure of £2.347 million originally forecast (ie. £2.246 m + £100,944 contingency). In addition, this revised figure took no account of the inevitable increase in the allowance for professional fees. Making conservative adjustments to reflect the increased interest charge and the full amount of professional fees would add a further £75,000.^[3]
93. In these circumstances, following receipt of McBains Cooper's report of April 2007 I find that Mr. Mannering knew the following:

i) That the revised tender price that had been received from Acre was £2.54 million (in fact, the price subsequently agreed was £2,556,937).

ii) That this price included no allowance for contingencies.

iii) That although it was the Bank's policy for commercial lending to include an allowance of 10% for contingencies, McBains Cooper was prepared to recommend that 5% would be sufficient (ie. £127,000).

iv) That the professional fees of three of the five consultants amounted to a little under £75,000. That this figure was too low because the fees of two consultants had not been included. In the absence of any figures, I consider that a reasonable but conservative assumption was that an allowance of at least £50,000 should be allowed for these.

v) That the amount of the facility granted by the Bank would include interest, which would be deducted from the amount of the facility as it accrued (quarterly in arrears). Mr. Mannering knew this because this was the basis on which the previous facility had been offered in December 2005 and there was no suggestion that the proposed facility should be on any different terms as to the payment of interest.

vi) The borrower would also incur other costs, including the Bank's charge, a valuer's fees and the expenses of McBains Cooper.

vii) That in a project of this type there was a risk that additional work might have to be carried out and that the costs could escalate by up to £200,000. As far as this aspect is concerned I am not aware of any change in circumstances between Mr. Mannering's e-mail of 7 September 2006 and the position after receipt of the revised report in April 2007.

94. As it was, the contract sum and known (but understated) professional fees alone totalled £2.615 million, without any allowance for a contingency, as Mr. Mannering accepted in the course of his evidence. He had been advised that the contingency should be 5%, or about £127,000. Further, the true amount of the loan available to the borrower was not £2.625 million but was about £2.525 million: this was because the interest which, on a contract price of £2.5 million, would be at least £100,000, was to be deducted from the amount of the facility. Thus on these figures there was a shortfall of at least £200,000 (ie. £2.615m + £0.127m - £2.525m): it would probably be over £250,000 once a proper allowance was made for professional fees.
95. I find that each of these facts, save possibly for the increased sum in respect of professional fees (which he probably ought to have appreciated), was known to Mr. Mannering. His evidence initially was that the Bank only ever believed that it would require a potentially a modest contribution from the customer for the interest, possibly £40,000 or £50,000 (Day 3/80). However, under pressure, he revised this to a "recollection" that the Bank anticipated that "there might be a requirement for £50,000 to £100,000" (Day 3/148). This, he said, was to be a cash injection from either Mr. Chukwu or the congregation at the end of the build and he agreed that it might be of the order of hundreds of thousands of pounds (Day 3/186). Later in his evidence he said that he expected the funds to be available "in the currency of the build with my secondary position being at the end of it" (Day 3/198).
96. This gradual shifting of his "recollection" in the course of cross examination made his evidence not only unconvincing but also implausible. Further, his evidence was completely at odds with the terms on which the Bank would grant the facility, namely that the interest would be deducted from the total amount of the facility quarterly in arrears. Yet in none of Mr. Mannering's internal notes did he mention the fact that there would have to be a substantial injection of cash from the borrower in order to complete the development. But, inevitably, this is what he was driven to admit in the course of his evidence. I find that Mr. Mannering's evidence of an anticipated overspend of about £100,000 - albeit not in relation to interest - is supported to some extent by a presentation prepared by Mr. Purdom dated 1 October 2006, in which he said this:

"That a £100,000 guarantee be provided by James Chukwu to cover any future overspends or higher costs should a new builder need to be appointed partway through the build. On this basis the bank accepted the potential future overspends issue."

In the light of this I conclude that at this stage - which was, of course, more than six months before the facility was granted - the Bank and Mr. Purdom: (a) anticipated that there might be an overspend of £100,000 in respect of construction costs; (b) the Bank would have a guarantee from Mr. Chukwu of £100,000 in order to meet any such overspend; and (c) in the event of there being such an overspend the Bank would have recourse to this guarantee. Unless this guarantee was to be secured by a cash deposit, a demand by the Bank under the guarantee might not produce cash immediately; for example, Mr. Chukwu might have to sell a property in order to meet his obligations. In these circumstances, it seems to me that the Bank must have contemplated the possibility that any overspend during the course of the work - for example, resulting from a variation instruction - might have to be funded by the facility in the short term pending reimbursement by Mr. Chukwu.

97. However, by the time the facility was granted on 30 May 2007 the figures had changed. They were now those set out in McBains Cooper's Draft (Revised) Report. Although Mr. Mannering may have believed at one stage that there would be an overspend of about £100,000, I find that when the facility was granted he realised that it would be a great deal more - for the reasons that I have given, he knew that there would be a shortfall of the order of at least £200,000.
98. At this point in the story I propose to jump ahead for a moment. In an internal e-mail dated 26 September 2007 Mr. Mannering informed a colleague, Mr. Kelvyn Morris, that the security for the advance included "Cash on a side account of £125K" and, a little later, that "We hold cash of £92K on side account with further amount due". From this it appears that Mr. Mannering's intention was that the Bank was to have £125,000 as a cash deposit - presumably to meet the originally anticipated overspend - although, as at 26 September 2007, this deposit amounted only to £92,000.
99. The security required by the Facility Letter included a charge from the borrower over a cash deposit in an amount of £175,000. However, towards the end of 2007 Mr. Chukwu approached the Bank with a view to releasing the cash on deposit so that he could use it to finance the development of his private properties. Following this Mr. Mannering had the Church Road site revalued and this revaluation produced a revised GDV of £4 million. Mr. Mannering proposed that the terms of the facility should be varied so that the only security provided, apart from the charge over the property at Church Road, would be a guarantee from Mr. and Mrs. Chukwu in the sum of £365,000 secured by "a second mortgage over 165 Whitchurch". In a File Note dated 23 December 2007 Mr. Mannering showed the value of 165 Whitchurch Road as £875,000, although the figure that appears in every other document is £850,000. Mr. Mannering was forced to explain this as a typing error. In any event, the property was shown as subject to a first mortgage of £390,000 leaving equity of £485,000.
100. It is a very unsatisfactory feature of this part of the story that, very soon after this File Note was written, Mr. Mannering received a revised valuation for 165 Whitchurch Road in the sum of £580,000 - an enormous drop from the previous valuation. In an e-mail dated 3 January 2008 to Mr. Mannering, Mr. Purdom enclosed the revised valuation suggesting that the figure of £580,000 might have been an inadvertent transposition of the numbers from the previous valuation of £850,000.
101. It appears from the documents that this reduction in the valuation of 165 Whitchurch Road was not reported to Commercial Credit until 4 March 2008. Mr. Humphrey explained that they had contested the valuation with the valuers who had "refused to budge", although Mr. Chukwu and Mr. Purdom remained adamant that the original valuation was correct. Mr. Brannigan was, in my view rightly, very critical of the delay in notifying Commercial Credit of the reduction in the valuation given that it had formed part of the proposal to vary the terms of the security that Mr. Mannering had put forward on 23 December 2007.
102. Reverting to what actually happened in the period leading up to the grant of the facility, in an internal File Note of 17 April 2007 Mr. Mannering recorded the current position: this was that McBains Cooper was happy with the "revised costing" of £2.54 million, subject to contingency. In the light of this his proposal was that the building loan should be £2.625 million (to include contingency). He noted that the ongoing loan, by which he meant the loan that would be made following completion of the development, was to remain at £2.25 million and that any amount over this would be funded by the congregation or Mr. Chukwu.
103. In reality, therefore, Mr. Mannering's recommendation of this proposal for a facility of £2.625 million overlooked the facts, all known to him, that: (a) under the terms of the facility about £100,000 of it would be deducted by way of interest; (b) there was no allowance for professional fees; and that the contingency (which, by subtraction, was £85,000) was less than that recommended by McBains Cooper. The adequacy of the contingency was particularly important in the light of the known risk that further asbestos might be discovered.
104. In this action the Bank makes no complaint about McBains Cooper's Draft (Revised) Report of 6 April 2007. It is right not to do so. Whilst I would accept that the report could have been better presented, I see no room for criticism of the advice that it contained.
105. In its closing submissions the Bank accepted - for the first time - that in some regards it fell below the standard to be expected of a reasonably competent bank. In particular, it admitted that, in the light of the Draft (Revised) Report of April 2007 Mr. Mannering should have realised that the overall cost of the project would exceed the facility of £2.625 million. Since, as I have already explained, Mr. Mannering accepted in cross examination (Day 3/148) that he anticipated that there might be a shortfall between the amount of the facility and the total development costs of some £50,000 to £100,000, which would have to be raised either by the congregation or Mr. Chukwu, I have concluded, not only for this reason but also for the other reasons that I have already given, that Mr. Mannering not only should have known that the cost of the project would exceed the amount of the Facility but that in fact he did know this.
106. Whether or not Mr. Mannering spoke to Mr. Symons following receipt of the revised report in April 2007 is in issue. In spite of his admission about the timing of the e-mail of 7 September 2006 Mr. Mannering said in evidence that he still recalled having a conversation with Mr. Symons following receipt of the revised report. He said that he had a conversation with Mr. Symons in which he explained that he had received sanction for a facility of £2.625 million, which was the amount of funding requested by the borrower, and that Mr. Symons said that he considered that this was sufficient to complete the development (Day 3/128). I reject this evidence, which is not only wholly unsupported by any contemporaneous document, but is inconsistent with the advice that McBains Cooper had just given in its April 2007 report, for the reasons that I have already explained.
107. If anything, the contemporaneous documents suggest that no such conversation took place. On 21 September 2007, several months after the issue of the Facility Letter, Mr. Humphrey sent an e-mail to Mr. Symons in which he introduced himself as Mr. Mannering's assistant and asked about the procedure that the Bank would need to follow to advance the second stage of funding. Mr. Symons replied as follows, on 24 September 2007:

"Thank you for your e-mail. We have been waiting for an update on this job as, as you know, it has been some time since we have received any info, although I have been in touch with Andrew intermittently.

The situation as far as we are concerned, is that we were awaiting further, revised information from the Borrower reflecting a revised scope of works with a reduced costing. We made a number of comments as part of our review and the Borrower's team were reviewing things.

If possible, we would like the opportunity to review any revised info on behalf of the Bank prior to any release of funds as previously, the anticipated costs of the works were in excess of the available facility.

That said, the process of drawdown would normally be as follows:

( Copy of valuation of works and certificate sent to McBains Cooper for approval,

( McBains Cooper visit to site and meet with team to assess progress et cetera.

( Borrower forwards "Drawdown Request Letter" to Bank, copied to McBains Cooper detailing the amount of funds requested, a breakdown thereof including VAT elements and enclosing copies of backup invoices.

( McBains Cooper issue a report to Bank detailing Costs, Progress and Authorising Drawdown if appropriate.

It may be easier for us to have a conversation about this, if you wish."

108. The suggestion by Mr. Mannering that he told Mr. Symons about the increased facility (that is to say, of £2.625 million) and received an assurance that it would be sufficient is, in my view, contradicted by this e-mail. What Mr. Symons was saying in this e-mail was, effectively, that the last time that he looked at it the facility was not enough. The e-mail not only contained a clear request for any updated information in the possession of the Bank but also a gentle hint that it would be sensible for McBains Cooper to have a look at it before any release of funds. In evidence, Mr. Symons said that by the reference to "revised info" he meant the funding arrangement (Day 2/40-41).

The events from 30 May 2007 to the first drawdown

109. The request in the e-mail of 24 September 2007 for further information seems to have been completely ignored. Although Mr. Humphrey forwarded this e-mail to Mr. Purdom and Mr. Chukwu a little later on the same day, it does not appear that he forwarded it to Mr. Mannering. In cross examination Mr. Humphrey said that he would have told Mr. Mannering about the contents of this e-mail, although he could not recall having done so (Day 4/179). Neither Mr. Mannering nor Mr. Humphrey mentioned this e-mail in their witness statements. I think it is unlikely that Mr. Mannering saw this e-mail because if he had seen it I would have expected some reaction from him.
110. It may be that Mr. Humphrey, who by then had been with the project for less than six months, was unaware of the fact that McBains Cooper had not been told of the increase in the facility from £2.25 million to £2.625 million. It is not disputed that McBains Cooper was never sent a copy of the Facility Letter dated 30 May 2007, and there is nothing in the documents that suggests that Mr. Symons was informed by any other means that the facility had been increased to £2.625 million. I find as a fact that in September 2007, at the time of the exchange of emails with Mr. Humphrey, Mr. Symons was unaware of the increase in the facility from £2.25 million to £2.625 million. In fact, he did not find out until January 2009.
111. It is worth pausing at this point to consider the position as it would have appeared to Mr. Symons. He said in his witness statement (at paragraph 72) that it was clear to him that the Bank must have made arrangements with the borrower to fund the development costs up to a certain level. This is been criticised as an assumption that no reasonable project monitor in his position could have made. This criticism, coming as it does from the Bank, is unsustainable. In his report the Bank's lending expert, Mr. Collin Cumberland, addressed a criticism that the Bank had given McBains Cooper the impression that the project was only to be part-funded by the Bank. What he said, at paragraph 5.118, was this:

"I believe that the Bank was indeed only part funding the Development as professional and other fees were to be paid from the Borrower's current account and thus funded by the Borrower.

Therefore, overall, in acting as it did, in my opinion I consider that the Bank acted as a reasonably competent lender would have done at the time as the Defendant's impression that the Bank was part funding the Development was correct."

112. Although he subsequently changed his opinion, the day before he was due to give evidence, the fact that he expressed this view - in a report that was put forward by the Bank in support of its case - makes it difficult in my opinion for the Bank to say now that the belief that Mr. Symons said he held was not one that he could reasonably have held.
113. It is quite clear that, on the figures put forward by McBains Cooper in the revised report, that a proposed facility of £2.625 million - let alone one of £2.25 million - was never going to be sufficient to meet the costs of completing the project, particularly since interest was not to be rolled up and paid at the end but was to be charged quarterly to the facility account. It seems to me that, in the absence of any other information, the only assumption that Mr. Symons could make in the light of the information provided to him in April 2007, and which I find had not altered by September 2007, was that the Bank had made some arrangement with the borrower by which the latter would inject appropriate funds as and when required. I do not see how Mr. Symons can be criticised for assuming that Mr. Mannering had read the Draft (Revised) Report and had understood both its contents and its implications.
114. However, having received no satisfactory response to his e-mail of 24 September 2007, Mr. Symons should have pressed Mr. Mannering for an up to date report on the arrangement that had been reached as between the Bank and the borrower and asked for a copy of the Facility Letter. An important function of a project monitor is to advise his client, the Bank, as to the amount that it should release on each request for a drawdown from the facility. If the development is part funded only by the facility, then in order to do his job as the project monitor has to know what has been agreed as between the Bank and the borrower in relation to the injection of funds by the borrower. The expert evidence, which I accept, was to the effect that a bank usually requires the borrower's equity to be put in before any funds are drawn down from the bank's facility. Mr. Symons said that he thought that it was not uncommon for the borrower's equity to be provided towards the end of the development; but even if this view was supported by his own experience I do not accept that it reflects the general practice or that it was something that he could assume.
115. It is, perhaps, helpful to pause here and set out my conclusions are so far. These are as follows:

i) This loan should never have been made in the first place on the terms of the Facility Letter of 30 May 2007. On any view there was a shortfall of at least £200,000. By the conclusion of the evidence no-one really challenged this, save possibly Mr. Mannering.

ii) Mr. Symons was never provided with a copy of the Facility letter, or even told (until much later) that the amount of the facility had been increased from £2.25 million to £2.625 million.

iii) In failing to give this information to Mr. Symons, I consider that the Bank fell below the standard of a reasonably competent lender.

iv) In failing to elicit this information from the Bank, or at least in failing to make much more strenuous efforts to obtain it, I consider that Mr. Symons fell below the standard to be expected of a reasonably competent project monitor. The Project monitoring experts were agreed that it was "good practice" for a project monitor to request a copy of the loan facility agreement, which they would have expected to be provided in response to such a request. Mr. Payne, the expert instructed by the Bank, said that McBains Cooper should have repeatedly requested a copy of the facility in order to carry out their role properly. I agree with that view.

The visits to site by Mr. Symons

General

116. Before I turn to the issues in relation to the attendance by Mr. Symons at site Progress Meetings and the frequency of his visits to site, I should make some observations about the evidence and the nature of the material before the court.
117. As I have already noted, the allegation that Mr. Symons visited the site on only three occasions during the course of the project, which Mr. Symons asserts is untrue, was first raised with McBains Cooper at a relatively late stage, namely when the Particulars of Claim were served in April 2014. Surprisingly, perhaps, it was not made during the adjudication that was commenced by the Bank against McBains Cooper in mid 2013. This is in spite of the fact that the origin of the allegation appears to have been some comments made in an internal memo by the Bank's Business Support Unit on 29 September 2009 to the effect that McBains Cooper only visited the site on two occasions in about 18 months.
118. McBains Cooper has not retained the day books used by Mr. Symons in 2007 and 2008, which by the time of the adjudication no-one could find (Day 2/68). However, it is at least possible that McBains Cooper might have been able to find and preserve the day books if this allegation had been raised by the Bank in the latter part of 2009. In addition, if the allegation had been made at that time McBains Cooper would have been able to contact Acre with a view to inspecting the site visitors' book in order to establish when Mr. Symons visited the site. I am in no position to say what would have happened if such a request had been made, all one can say is that McBains Cooper was deprived of the opportunity of making it at an appropriate time.
119. If Mr. Symons had complied with the expectation in relation to site visits imposed by the McBains Cooper retainer he would have made about 18 visits to site during this project. The Bank now asserts that he made only three visits. Since making monthly visits to site was something for which McBains Cooper was being paid by the Bank, to make so few visits without any abatement of the monthly charge would have been verging on the fraudulent. This is, therefore, a very serious allegation.
120. In these circumstances, I consider that by raising this allegation so late (whether the reasons are good or bad) the Bank has put McBains Cooper in a difficult and, indeed, an unfair position. Accordingly some allowance must be made when considering the evidence deployed on behalf of McBains Cooper in response to it. Further, I must keep firmly in mind the salutary principle that the graver the allegation the more cogent the evidence required to satisfy one on the balance of probability that it is true.^[4]
121. The evidence available to the court in relation to site visits by Mr. Symons consisted of personal recollection, minutes of the site Progress Meetings, the diaries of Mr. Symons and of Mr. Clark and McBains Cooper's timesheets. I consider that a witness's personal recollection of routine visits and meetings made or held over six years before that witness came to make his witness statement is likely to be at best weak and at worst inherently unreliable, particularly in the case of those who have an interest in the outcome of the litigation. The mind is a sensitive instrument and it is not unknown for witnesses to come to believe over time the version of events that they want to believe. This is not necessarily the product of dishonesty; experience tells us that it can happen quite genuinely. I consider that to some extent this is the case with Mr. Symons. His evidence at the trial was that he attended about six site Progress Meetings and that he attended site prior to preparing almost every Progress Report (not every time because, for example, he accepts that he did not visit the site before issuing Progress Report No 15 on 19 January 2009).
122. I am quite satisfied that in the case of Mr. Symons his memory now of precisely when he went to site, and how often, is poor. I have little doubt that the evidence given in his witness statement is for the most part the product of reconstruction from the limited documents available to him, such as his Outlook diary and timesheets.
123. The minutes of the site Progress Meetings were taken by Mr. Clark. I have already discussed these above. In addition to my views about the reliability of Mr. Clark, there was evidence from Mr. Kurji that Acre's quantity surveyor, Mr. Patel, checked the minutes. In his witness statement Mr. Kurji described Mr. Patel as a person who was fairly punctilious in his attention to detail. Mr. Kurji's recollection was that Mr. Clark's minutes were always correct (Day 4/137-138). This evidence provides further grounds for my conclusion that Mr. Clark's minutes provide a reliable record of who was and was not present at each meeting.
124. For broadly similar reasons, I regard Mr. Clark's diary is inherently reliable also. He said in evidence that it was his habit to cross out events or appointments that did not take place and, if they were moved, to show this by means of an arrow in the diary pointing to the new date. Although I do not regard Mr. Clark's diary as quite as reliable as his minutes, as I have already said I consider that in general they can be relied on unless there is compelling evidence to the contrary.
125. By contrast, I do not consider that the Outlook diary for Mr. Symons can be relied on to the same extent. There were often entries for two activities at the same time, or which overlapped, without any indication of which one was attended by Mr. Symons. In addition, I am not persuaded that the descriptions of the activity were always wholly reliable: I suspect that, more often than not, the purpose of an entry was to keep free certain periods of time or to remind Mr. Symons of something that he had to do. The fact that events which did not take place were not crossed out suggest that the diary was intended to be prospective only, and was not intended to provide any sort of record of events. This conclusion is consistent with the evidence that Mr. Symons gave to the court (Day 2/47).
126. So, whilst the Outlook diary is helpful, I do not regard it as a very reliable indicator of what actually happened. The absence of an entry would suggest that an event probably, but not invariably, did not happen. The presence of an entry indicates that it is more likely than not that it did (save where there are two entries for the same time). However, in each case I regard the presumption as rebuttable if there is other reliable evidence that suggests the contrary.
127. Finally, I turn to the timesheets. These are undoubtedly the most unreliable documents of all, as Mr. Symons readily accepted. He explained that they were not the basis on which McBains Cooper billed the Bank, because its retainer was by way of a monthly fee. Mr. Symons said that the purpose of the timesheets was to enable McBains Cooper to form some idea of what its services were costing. He explained that they were not necessarily completed on a daily or even a weekly basis. They were supposed to be a record of the time spent in a monthly billing period against each project, and were filled in to show 7½ hours a day as a minimum: and Mr. Symons said that sometimes "chunks of time" might have been added at the end of the month (Day 2/67, 103). Unfortunately, since all the entries relating to other projects were redacted in the copies of the timesheets before the court, it is not possible to check the accuracy of what Mr. Symons was saying. However, I see no reason to doubt his evidence that the purpose of the timesheets was to show how, in any month, a particular person's time was apportioned to the various projects in which he or she was involved, rather than to show what that person was doing on any particular day.
128. As to Mr. Symons' recollection about site visits generally, in his witness statement he said that throughout the course of the works he "would usually make monthly site inspections" (paragraph 52). He said that, typically, he reviewed the interim certificate that he received from Clark Associates prior to visiting the site and then dealt with the drawdown request upon his return (paragraph 59). He said that he often telephoned Mr. Humphrey whilst walking back from the site to Dollis Hill tube station (paragraph 60). He agreed that he could not produce his monthly Progress Report without first making a site visit, unless there had been no progress on site during the relevant period and a report was required purely for the drawdown of, for example, professional fees (Day 1/147-148).
129. Mr. Brannigan made the point that Mr. Symons would be taking a great risk by asserting that he had visited the site as often as he said he did when there might be in existence records that would show who visited the site and when. It is common for contractors to keep visitors books at a site entrance and Acre was no exception. In fact, these records are no longer in existence. This point might have had more force if this was not exactly what Mr. Symons did in relation to the site meetings. In the adjudication he asserted that he attended every site meeting except for two (when he was away), even though he must have known that there were minutes of these site meetings - because they had been sent to him.
130. So who bears the burden of proof? The Bank accepts that it has the burden of proving its pleaded case that Mr. Symons did not attend site every month. However, it asserts, correctly, that in many cases McBains Cooper has advanced a positive case as to when Mr. Symons attended site. The Bank submits that in those circumstances "logic demands" that the initial task for the court is to determine whether or not McBains Cooper has established that case. It follows from this, submits the Bank, that where the court rejects the evidence put forward by McBains Cooper in relation to an alleged visit on a particular occasion, that is of itself powerful evidence that no such visit took place. The Bank submits that it would be an unusual course for the court to conclude that Mr. Symons visited the site on or date or time different from that put forward in his witness statement or the Defence.
131. I am prepared to accept the Bank's argument to this extent: if I am satisfied that Mr. Symons did not attend the site on an occasion when he says that he did visit it, that is a conclusion that assists the Bank in discharging its burden of proof. But, as the Bank concedes, this is not an immutable rule. In my judgment, the court is entitled to consider the contemporaneous documentation as a whole, some of it not available to or considered by Mr. Symons when he made his witness statement, and to ask itself whether or not the Bank has established by suitably cogent evidence that Mr. Symons did not visit the site before preparing a particular progress report. It may be that the court will find, in relation to a particular progress report, that, taking the evidence as a whole, Mr. Symons visited, or may well have visited, the site prior to preparing that report albeit not on the date for which he has contended.
132. Putting it another way, if the court is unable to make a finding on the balance of probability as to whether Mr. Symons did or did not visit the site on a particular occasion, then the Bank will have failed to discharge the burden of proof in relation to that visit. I do not agree with the Bank that where McBains Cooper has not pleaded a positive case as to when Mr. Symons visited the site prior to a particular progress report, the court must find that no visit was made. This submission is based on the rule that where a defendant fails to deal with an allegation, he is to be taken as having admitted that allegation: see CPR 16.5(5). But this overlooks the facts that the Bank's allegation is that McBains Cooper "failed to visit the Property before issuing each Progress Report" (for example, paragraph 156(1) of the Amended Particulars of Claim) and that McBains Cooper's overarching position is that Mr. Symons did visit the site on almost every occasion prior to preparing his progress report (see paragraph 31 of the Amended Defence). In relation to each visit the Bank did not assert specifically that Mr. Symons had not visited the site: instead two paragraphs in standard form were included in relation to nearly every progress report. They were in these terms:

"No deduction was made from the sum certified by Clark.

McBains' file contains no cost report, no verification of any figures, no photographs and no details of any visits to the Property in relation to the [umpteenth] Report."

133. There was, therefore, no allegation on a report by report basis that Mr. Symons did not visit the site. Rather the case in this part of the pleading was that there was no evidence in the file to show that he did. For these reasons I reject the submission that McBains Cooper has not "dealt with" the allegation that it failed to make a visit to the site prior to the issue of each progress report. On the contrary, in a case where a grave allegation has been made so late I consider that the court must be astute to make an objective evaluation of the evidence as a whole and to reach its own conclusion in the light of that evidence.
134. I have dealt with the question of visits to the site in detail but, in order to keep this judgment to manageable length, my conclusions are set out in Appendix 1 to this judgment. For ease of reference, I have considered the position by reference to each site Progress Meeting. I should add that I took the unusual step of providing counsel with a copy of this part of the judgment in draft because time did not permit them to make detailed submissions on the evidence in relation to whether or not Mr. Symons did visit the site prior to preparing each progress report. Where appropriate, I have reviewed and revised that draft section following receipt of further submissions by the parties.

Summary

135. The conclusions of my findings as to the attendance by Mr. Symons at site meetings or on site that are set out in Appendix 1 can be tabulated as follows:

PM No	Meeting date	JS attended	JS site visit	Yes/No
PM No 1	14.8.07	No	27.9.07	Yes
PM No 2	25.10.07	No	25.10.07	Yes
PM No 3	30.11.07	No	19.12.07	Yes
PM No 4	30.1.08	No	30.1.08	No
PM No 5	27.2.08	No	?	?
PM No 6	10.4.08	No	[16.4.08]	Yes
PM No 7	30.4.08	No	15.5.08	No
PM No 8	4.6.08	No	4.6.08	No
PM No 9	2.7.08	No	2.7.08	Yes
PM No 10	31.7.08	No	11.8.08	Yes
PM No 11	28.8.08	No	8.9.08	Yes
PM No 12	2.10.08	No	13.10.08	No
PM No 13	30.10.08	No	30.10.08	No
PM No 14	27.11.08	No	15.12.08	Yes
PM No 15	29.1.09	Yes	Mid Feb 09	Yes
PM No 16	26.2.09	No	16.3.09	Yes

Notes:

1. Where Mr. Symons' attendance at a meeting was disputed, the "No" has been underlined.

2. The date in square brackets indicate my finding as to the date on which the site was visited (when it was not after the site meeting as Mr. Symons alleged).

136. In the case of PM No 5 I am unable to make a finding either way as to whether Mr. Symons did or did not visit the site prior to preparing PR No 5 on 18 March 2008, although I find that he definitely did not attend the meeting itself. To the extent that the burden of proof is on the Bank to prove that he did not attend the site prior to preparing that progress report, I find that it has failed to discharge that burden.

The consequences of a failure to visit site prior to issuing a progress report

137. According to the findings set out above, Mr. Symons attended the site on about 10 occasions between July 2007, when the work started, and the issue of PR No 17 on 17 March 2009. This was about once every other month.
138. It is the Bank's case that when compiling his progress reports Mr. Symons was reckless as to whether or not the statements that he made about the quality, value and progress of the works were correct. I was reminded that in the well-known case of Derry v Peek (1889) 14 App Cas 337, the relevant test for recklessness was set out by Lord Herschell, at 374, in the following terms:

"First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false."

139. Lord Herschell then went on to say that:

"Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states."

140. It is apparent from this, as one would expect, that the first ingredient of the allegation is proof that there has been a false representation.
141. The immediate difficulty facing the Bank in this respect is that there is no allegation, save in two respects, that the information that Mr. Symons gave in his progress reports about the quality, value and progress of the works was inaccurate. In particular, it is not alleged that Mr. Symons

i) advised the Bank to pay more for work (which had been properly carried out) than it was worth; or

ii) advised the Bank to pay for work which had not been carried out; or

iii) advised the Bank to pay for work that was defective; or

iv) failed to advise about any delays to the progress of the work.

All that has been alleged by the Bank is that Mr. Symons

"… simply approved all of Clark's valuation (sic) without applying any independent consideration as to whether it was appropriate to advise the Bank to pay the whole sum."

However, this is not an allegation that any of those valuations was wrong. Indeed, having seen and heard Mr. Clark I consider that his approach to valuation was probably pretty meticulous and in consequence, save where a valuation included work to the third floor, the applications for drawdown that he made on behalf of his client were probably justified. In these circumstances, I find that McBains Cooper made no representation in relation to any of the above matters that was false and so the Bank has no cause for complaint in respect of the accuracy of the statements. Of course, I accept that this may be because the Bank is in no position to make such an allegation, rather than because the recommendations made by Mr. Symons were correct. However, a professional man is entitled to be lucky.

142. The two respects in which the Bank complains about the content of the progress reports, apart from the confirmation as to the adequacy of the facility, are that Mr. Symons failed to report (a) variations and (b) potential prolongation costs as a result of delays for which the contractor was not responsible. I will have to discuss variations in more detail later in this judgment, but for the moment it is sufficient to note that whilst it is true that his attitude towards the reporting of variations could be described as "overly contractual", that was a view - however wrong - that he thought he was entitled to take. That does not amount to recklessness.
143. So far as potential prolongation costs are concerned, there is no pleaded allegation that in any progress report Mr. Symons failed to report the likelihood of increased costs through prolongation when he should have done. Although his conduct in this respect was criticised by the experts, and in cross examination, that is not a substitute for a pleaded allegation - particularly so where what is being alleged is recklessness, and not mere negligence. In the circumstances I consider that it is not open to the Bank to rely on this allegation.
144. Save for the repeated confirmation as to the adequacy of the facility, with which I deal elsewhere in this judgment, I am not satisfied on the evidence that Mr. Symons said anything in his progress reports that was incorrect or without believing it to be true. However, it is of course possible that where he prepared a progress report without having first visited the site, that report may not have been wholly accurate. But, for the reasons that I have now given, there is no instance where this has been shown to be the case. The allegation of recklessness, therefore, fails on the facts.
145. But I do find that McBains Cooper, through Mr. Symons, was in breach of clause 3.1 of its retainer. Although I consider that clause 3.1 did not contain an absolute requirement to visit the site once a month, I consider that it did impose a requirement to inspect the site at least once a month unless there was good reason not to do so. No such good reason has been advanced by McBains Cooper. Indeed, it could hardly have done so since its primary case was that Mr. Symons did visit the site prior to issuing almost every progress report and that accordingly it complied with its obligation.
146. It is clear also that McBains Cooper was in breach of its retainer because Mr. Symons did not visit the site prior to the issue of each Progress Report: I have found that on five occasions he issued a Progress Report without having visited the site to check the progress or quality of the work.
147. But whether or not these breaches of contract occurred is largely immaterial because in my judgment the Bank has not established that they caused it any loss. The Bank's real case is (a) that it was misled by inaccurate statements in the Progress Reports confirming the adequacy of the facility to meet the costs of the development, and (b) the failure by Mr. Symons to notify the Bank, from PM No 9 onwards, that sums were being included in the applications for drawdown that had been spent on the work to the third floor. As a result, says the Bank, it continued to advance money under the facility in circumstances where, if properly advised, it would not have done. These statements had nothing to do with any failure to make the required visits to the site.
148. I now turn to the progress reports and the statements in them that have given rise to complaint by the Bank. I shall also consider, where they are criticised, the recommendations as to the amount that should be permitted by way of drawdown.

The Progress Reports

The confirmation of the adequacy of the facility that was given in the Progress Reports

149. In Progress Reports Nos 1-4, the contract value for the works was stated as £2,540,059. In Progress Reports Nos 5-16 it was stated to be £2,556,937 (which was the price actually agreed). In Progress Reports Nos 1-8 the Total Facility was stated to be £2,250,000.
150. In each of Progress Reports Nos 1-8 McBains Cooper said this:

"We can confirm that, in our view, sufficient funds remain in the total facility at this time to complete the development."

Since, in every case, the stated amount of the total facility was about £300,000 less than the contract price, this statement was demonstrably wrong. Two of the many unusual features of this case are how it came to be made by Mr. Symons and why it was left uncorrected by Mr. Mannering.

151. By the end of the trial McBains Cooper conceded that this confirmation was negligently given. It was said that Mr. Symons included it by accident in the first Progress Report and then overlooked the need to remove it. In its opening submissions, McBains Cooper went no further than two say that "some criticism" could be made of Mr. Symons in making these statements without qualifying them as he did from Progress Report No 9 onwards.
152. In his witness statement Mr. Symons was unrepentant, although he accepted that with hindsight he could have added the words "as we understand that additional costs are to be funded from outside of the facility". But he maintained that this would not have had any bearing on the Bank's understanding of the position given what been said in McBains Cooper's revised report of April 2007 and in his own e-mail of 24 September 2007.
153. The admission by McBains Cooper that this statement was negligent is one that should have been made from the outset. Not only was the statement wrong on its face, but also it failed to explain what Mr. Symons really meant - which was something quite different, namely that the precise level of the facility was of limited relevance because the balance of the money was going to be provided by the borrower.
154. From PR No 9 onwards, by which time a decision had been made by the borrower to extend the project to include the works to the third floor, the statement became:

"We can confirm that, in our view, sufficient funds remain in the total facility at this time to complete the development, as we understand that additional costs are to be funded by the Borrower from outside of the Facility."

155. This, again, was a contradiction in terms but it did at least offer some form of explanation. Curiously, it attracted no comment from Mr. Mannering. At the very least, one might have thought that he would question why McBains Cooper had changed the wording.
156. In terms of the conduct of McBains Cooper, the making of these potentially misleading and confusing statements was, to say the least, very unsatisfactory. That state of affairs was in my view aggravated by the absence of any coherent justification by Mr. Symons for what he wrote.
157. In their joint statement dated 29 May 2015 the lending experts said this, at paragraphs 10 and 11:

"10. The Defendant had drawn attention to the consideration or implementation of the construction of the Third Floor in each of its Progress Reports from Progress Report 4 onwards and had stated that it understood that the costs of the Third Floor works would be met from outside the Claimant's Development Loan facility.

11. Mr. Mannering should have obtained, but did not obtain, details of:

11.1 the proposed Third Floor extension when first advised by the Defendant that this was being considered;

11.2 the costs of the proposed Third Floor works; and

11.3 the source(s) and availability of the funding of the Third Floor works

and reported this information to his Credit Office with a recommended course of action, but did not do so."

158. I accept these conclusions, which seem to me to be self-evidently correct. But also on the Bank's side of the fence is the troubling failure to correct the obvious error in the amount of the facility which was repeated in report after report and, in the light of it, to query a confirmation of the facility's adequacy that made no sense. At no point did either Mr. Mannering or Mr. Humphrey ask Mr. Symons to explain what he meant. In their witness statements, Mr. Mannering and Mr. Humphrey contradicted each other about what was done. At paragraph 170 of his first witness statement, Mr. Mannering said this:

"We noted, at the time, that the third paragraph of the letter referred to the contract value for the works as £2,540,059 whereas the fourth paragraph refers to the total facility of £2,250,000. I believe that Nicky raised this with Julian Symons by telephone. However, it did not concern us unduly because the contract sum was considerably lower than the facility and we accepted it as a typo. This error continued until report 15."

By contrast, at paragraph 41 of his witness statement, Mr. Humphrey said this:

"I did note that there was a discrepancy between the projected contract value for the works (£2,540,059) in paragraph 3 of the letter, and the total facility (£2,250,000) named at paragraph 4 of the letter. This was not a major concern at the time, as the Bank knew that the facility provided was actually £2,625,000 and I understood that McBains were aware of this. I presumed that it was likely that McBains had simply made a typographical error. Given that the figure in the report was actually lower than the facility, we did not pursue the point. Had it been higher, we would have sought a corrections/clarifications in order to avoid any risk of an overspend."

159. These paragraphs do not wholly explain why the Bank did not question why Mr. Symons was providing this confirmation of the adequacy of the facility when, on the figures set out in PR No 1, it was demonstrably wrong. If this is really what they thought, one might have thought that they would want the error corrected so that the statement made sense. Had Mr. Mannering raised this with Mr. Symons, I consider that it would have led Mr. Symons to explain that he had always understood that the facility was insufficient, which, in turn, would have provoked a discussion about the terms of the agreement with the borrower and the extent to which, and when, the borrower was to provide additional funding. Further, if Mr. Symons had seen a copy of the Facility Letter, he would surely have realised that interest was not being rolled up and paid at the end but was to be charged on a quarterly basis as the project proceeded.
160. I have considered the possibility that if, in this hypothetical conversation, Mr. Mannering had told Mr. Symons that the facility had been increased to £2.625 million - as he surely would have done - Mr. Symons might have said "Well, that's all right then" and left it at that. It seems to me to be most unlikely that Mr. Symons would have done that. Once he realised that his confirmation of the adequacy of the facility was being treated as an assurance that the amount of the facility - even the increased facility of £2.625 million - would be sufficient to cover the costs of completing the development, I cannot believe for one moment that he would have allowed matters to rest there.
161. I am sure that Mr. Symons would have gone back to the figures in the revised report and reworked them in the light of the increased facility and the current position in relation to professional fees. He would have asked for, and should have been provided with, a copy of the Facility Letter, from which he would have appreciated that interest was being deducted from the amount of the facility on a quarterly basis. Having considered the terms of the Facility Letter, and having reminded himself of the figures in the revised report, he would have realised at once that the development could not be completed for £2.625 million and that to give any confirmation to the contrary would be disastrous.
162. But all this is largely academic. The Bank has advanced no case on the basis that on some such scenario the loan would have been stopped in its tracks. Nor could it, for the very good reason that by then the Facility Letter had been issued and the building contract had been signed (on 31 August 2007). There is no suggestion that there had been any misrepresentation by the borrower that might have allowed the Bank to rescind the contract and so, if the Bank had refused to honour the facility and exercised its right to demand repayment of the loan at any time it would have laid itself open, at the very least, to a great deal of adverse publicity.
163. The evidence and the contemporaneous correspondence show that the Bank entered into the facility without any further reference to McBains Cooper. I have already rejected the suggestion made by Mr. Mannering in evidence that he received some assurance from Mr. Symons that the increased facility of £2.625 million would be sufficient. There is no evidence of any relevant contact with McBains Cooper until after the Facility Letter had been written and the borrower had entered into the building contract with Acre. The next event was the e-mail from Mr. Humphrey to Mr. Symons of 21 September 2007. PR No 1 was issued one week later.
164. Accordingly, by the time that Mr. Symons issued PR No 1 the Bank had already entered into its contract with the borrower. On the second page of the Facility Letter, under the heading "Repayment", there was this provision:

"The amount borrowed will be repayable in full on demand, but it is the Bank's present intention to make the facility available to you until 30 June 2008 (the "Repayment Date")."

165. Neither party has addressed me as to the extent to which this give the Bank an unfettered right to demand repayment at any time solely on the ground of a realisation by the Bank that it had made a mistake in granting the facility in the first place and in circumstances for which the borrower was not in any way responsible. On the facts of this case, such submissions were probably not necessary in the light of the evidence. The court heard from a Mr. Ric Diana, a director in Global Non-Core who had been with the bank for 33 years, who made it clear that the justification for terminating the loan and demanding repayment was that the "borrower didn't do as the Bank was expecting ...there was specific agreement that the third floor shouldn't be built out and the borrower initiated work on the third floor" (Day 6/29).
166. In addition, Mr. Diana said this (at Day 6/30-31):

"And the other question potentially is around should we have lent to a religious institution, bearing in mind the highly - the high reputation risk in relation to religious institutions, but also in relation to the PR impact, should we have actually had to pull the plug on this."

167. In these circumstances, it seems to me reasonably clear that the Bank would have thought long and hard before terminating a loan in circumstances where the borrower was not to blame for the state of affairs that had arisen. In my view, that would have been the position if, at the time when the first application was made for a drawdown which included the cost of works to the third floor, the matter had been reported immediately to the Bank by McBains Cooper. I cannot see how the Bank could legitimately make any great criticism of the borrower personally for an application made on its behalf by Clark Associates who may well have been unaware of the terms or limitations of the facility. Further, as Mr. Diana indicated and I accept, the adverse consequences in terms of public relations of the Bank effectively closing down a church were not to be underestimated. However, I can see that the Bank would probably react differently (as in fact it did) if its money had actually been spent on works to the third floor without it being told.

Why did Mr. Mannering not query the obvious error in Progress Report No 1?

168. As I have already explained, by the time the bank received PR No 1 it had already committed itself to the loan. That is not a situation for which it seeks to hold McBains Cooper liable in this action, and nor could it in the light of my conclusions about the revised report of April 2007 (although that did not stop the Bank from making an unsuccessful attempt to do so in the referral to adjudication in 2013).
169. It is clear from the documents that Mr. Mannering was very keen on this project.^[5] He had been advised that the development had a GDV of £4 million, the loan was secured against the property at Church Road and, in addition, he had the further guarantee, secured on property, from Mr. and Mrs. Chukwu. In these circumstances it is perhaps understandable that, in the heady days before the looming financial crash had become apparent, he felt confident that, even though the development costs would exceed the amount of the facility, the security was more than adequate. Of course, it would not have met the Bank's internal requirements, but that was not a problem, because those responsible in Commercial Credit for sanctioning the loan had either overlooked^[6] or were not aware of the true financial position. On the basis of the information provided by Mr. Mannering, they seem to have believed that the Bank's lending criteria had been met.
170. Against this background Mr. Mannering had every reason not to rock the boat. The confirmation of the adequacy of the facility given by Mr. Symons in PR No 1 must have been welcome. Although that confirmation was self-contradictory on its face, if anyone had asked about it that could have been brushed off by treating the figure for the facility of £2.25 million as a typing error, as Mr. Mannering asserted in his witness statement was his belief at the time. But, of course, the more often the incorrect confirmation of adequacy was given, the more implausible this excuse would become.
171. I find that this was Mr. Mannering's state of mind. He was not misled by the confirmation given by Mr. Symons of the adequacy of the facility into taking some course that he would not otherwise have taken; rather, he was content to let the sleeping dog lie. In truth, there was no other option. Absent a repudiatory breach of the terms of the Facility Letter by the borrower, the Bank probably had little alternative in practice but to continue to fund the development so long as the work that was being carried out fell within the scope of the facility.

Progress Reports Nos 2 and 3 (29 October 2007 and 15 January 2008)

172. Apart from the statement confirming the adequacy of the facility to meet the development costs, the Bank makes no relevant complaints about PR Nos 2 and 3. Whilst in the Particulars of Claim it is asserted that no deduction was made from the sum certified by Clark Associates, as I have already mentioned there is no allegation of any negligent over certification. It is not alleged that there was any varied work for which the Bank was being asked to pay and which had not been reported.
173. However, in PR No 2, Mr. Symons recorded that some additional asbestos had been identified, and in PR No 3 he said that the asbestos removal, including the additional work following the discovery of the additional asbestos, was complete. But in neither report was there any application for payment in respect of this work.
174. So far as the statement confirming the adequacy of the facility is concerned, the position remains as it was in relation to PR No 1.

Progress Report No 4 (26 February 2008)

175. The Bank contends, correctly, that this was the first progress report in which the application for payment included sums in respect of varied work. In this report Mr. Symons reported that removal of the additional asbestos discovered was nearing completion. It is not clear whether this was a reference to a further discovery of asbestos since PR No 3, or whether PR No 3 was incorrect in describing the asbestos removal as complete. The report was based on Acre's valuation No 4, in which the balance that Mr. Clark had certified as due to the contractor was £57,700.
176. The variations that were summarised in valuation No 4, as approved by Mr. Clark, were as follows:

"AI 5 666.25

Performance Bond 28,518.75

Removal of Asbestos 47,434.70"

The figure of £28,518.75 for the Performance Bond was the final sum payable, not the increase over the original estimate. That was about £11,000. The Bank accepts that it would have been prepared to pay (and in fact did pay) the sum in respect of the removal of asbestos and the increased amount in respect of the Performance Bond.

177. This leaves the variation that was the subject of AI 5 in the sum of £666.25. So far as I am aware, the work that was the subject of this variation has not been identified. In my judgment it can be disregarded: not only is the sum relatively modest but also the Bank has not proved that it was in respect of work which did not fall within the scope of the facility and which would have been properly payable.
178. Nevertheless, the Bank asserts that it was negligent of McBains Cooper to report, under the heading "Variations":

"We have not been advised of any Contract Variations to date. As noted above, we understand that the Client is considering an additional third floor of accommodation however, we have not viewed any details of this to date."

179. In my view, this assertion is well founded. I consider that additional construction costs in respect of work that falls within the scope of the facility can be regarded as "matters adverse to the Bank's position" within the meaning of paragraph 3.1.2 of the retainer. Further, a variation instruction that requires the contractor to carry out additional work is, in my view, capable of falling within the words "any material change to the design [or] the building contract" in paragraph 3.2 of the retainer. I accept that Mr. Symons may be correct when he says that this paragraph is only engaged when a variation instruction is actually issued. However, I do not think that anything turns on this because if additional work has been carried out, at the instigation of or with the approval of the contract administrator, with the consequence that there will be additional cost to the employer, that is capable of being a matter "adverse to the Bank's position" because it may reduce the facility to an amount that is insufficient to cover the full cost of the work.
180. The experts on project monitoring appeared to be in agreement that a project monitor ought to report any increases in costs as a result of variations, although Dr Giordano, the expert instructed on behalf of McBains Cooper, suggested that there might be a threshold stipulated by the bank of, say, £1000, below which variations would not be reported.^[7] I agree with and accept that view (Dr Giordano's reservation about a lower limit is not relevant on the facts of this case and so I need not say any more about it).
181. In the case of the work required to remove the asbestos, I consider that this was a matter "adverse to the Bank's position" because it had the effect that the contingency, £85,000 according to Mr. Mannering's proposal, was almost completely eroded.
182. However, none of this alters the fact that the failure by Mr. Symons to advise the Bank in PR No 4 of the amount of the costs that he was including in the recommended drawdown in respect of the asbestos and the Performance Bond caused the Bank no loss because it accepts that it would have paid those sums in any event.
183. I cannot see how the Bank can make any complaint of the terms in which Mr. Symons reported the borrower's proposal to carry out the additional work to the third floor. The astonishing thing is that the Bank, having been advised at an early stage that it was not cost-effective to carry out this work, appears to have done absolutely nothing when told about this. At the very least I would have expected Mr. Mannering to get on to Mr. Purdom in order to find out what was going on.
184. Mr. Cumberland agreed that what Mr. Symons said in PR No 4 was sufficient to enable the Bank to investigate and identify precisely how the third floor works would be funded (Day 6/116-117). Indeed, Mr. Mannering himself went further and said that the fact that the borrower was considering carrying out works to the third floor would have caused him to make enquiries, but it would not have caused him concern (Day 3/205-206).

Progress Report No 5 (18 March 2008)

185. Acre's valuation which preceded this report, No 5, showed that Mr. Clark had increased his valuation of the work of removing the asbestos to £115,603. This was an increase of almost £70,000 on the amount included in the previous drawdown. Again, there was no mention of it in the report.
186. But since this was a sum that the Bank now accepts it would have paid in any event, nothing turns on it.
187. In relation to delay, McBains Cooper said that they were now in receipt of a revised programme which showed a contract duration of some 87 weeks, with a revised completion date of 18 May 2009.
188. In so far as the work to the third floor is concerned, PR No 5 informed the Bank in unequivocal terms that the borrower was considering the addition of the work to the third floor, although this work had not by then been instructed. This report included, for the first time, a figure for the anticipated cost of this work, namely £250,000. Under the heading "Progress/Programme" Mr. Symons said this:

"We understand that the additional cost (sic) for the third floor accommodation are currently being quantified and are expected to be [in] the region of £250,000. The Borrower is expected to instruct these works shortly and it is understood that any such additional expenditure is, at present, to be funded separately from the agreed facility."

189. It is to be noted that in this passage Mr. Symons twice used the verb "to understand". As a matter of ordinary speech when a person says that he or she "understands" something to be the case, that implies that the knowledge is not first-hand: it suggests that it is something about which they have read or which they have heard from others. In my view, to say that one "understands" something to be the case is quite different from "confirming" that it is the case.
190. In evidence Mr. Symons said that his understanding of the position was that there were already additional funds in place, which had been deposited with the Bank by the borrower, to pay for the additional works to the third floor (see, for example, at Day 2/91, 153). He said also that it was his understanding, based on what he had been told by the Bank, that the Bank's money was always going to be used first and the borrower's money would be used at the end (see Day 2/115-116).
191. Each of the bank's experts, Mr. Payne and Mr. Cumberland, agreed that where a project was to be part funded by the borrower it was for the bank and the borrower to agree between themselves how and when the borrower's funds were to be provided. It will only be when that has been decided in principle that the project monitor would become involved to discuss the actual machinery by which the arrangement would be implemented: see Mr. Payne at Day 6/128-129, and Mr. Cumberland at Day 7/131-133.
192. Mr. Mannering said that he did not think that carrying out the third floor works would have had any adverse effect on the GDV because, as he saw it, the third floor works were to be carried out in a roof void (Day 4/36). He went on to say that in the first part of 2008, when the possibility of carrying out work to the third floor was being considered, he had a conversation with Mr. Purdom. He said that he was told that the client was in the process of raising funds by the sale of one of its investment properties, not being one over which the Bank already had security, and that these funds would cover the cost of the work to the third floor. Mr. Mannering said that this was consistent with the statements in the McBain's Cooper Progress reports (Day 3/216).
193. It was also Mr. Clark's belief that his client, the borrower, was going to raise additional funds which would pay for the third floor. In his evidence he said this (at Day 5/36):

"My understanding, my Lord, was that the borrower, my client, was going to raise additional funds which would pay for the third floor. Because the contract, the building contract, was between my client as the employer and the contractor; therefore, monies that were due to the contractor would be included within my monthly valuations and certificates."

Mr. Clark went on to say that this may well have involved these costs being funded temporarily by the facility whilst the property was being sold or the necessary funds were raised by other means. As to that suggestion, Mr. Diana said that it would be "highly irregular to run a facility like that" (Day 6/24). I accept Mr. Diana's evidence on this, which was in line with that given by the two lending experts.

194. A little later Mr. Clark said that his understanding was that his client was going to sell a property and/or raise funds overseas, but that he did not know when that money would become available (Day 5/38). In the meantime, if the borrower could not find the money to complete the development then it would have to come from somewhere else and that, presumably, would be the facility (Day 5/38-39).
195. I do not agree with the submission by Lord Marks that in PR No 5 McBains Cooper was making an unequivocal representation to the Bank that separate funds were available to the borrower at that time with which to pay for the work to the third floor. In my view it was a statement of belief, not a statement of fact. The only representation of fact was that the belief was honestly held. It was obvious both to the Bank and to McBains Cooper (on the basis of what it knew about the facility) that there was no money in the existing facility to pay for any of the work to the third floor so that additional funds would have to come from elsewhere.
196. In the light of the fact that both Mr. Clark and Mr. Mannering, each of whom was in direct contact with the client or his financial adviser (which Mr. Symons was not), said that it was his understanding that the third floor works would be paid for out of funds raised by Mr. Chukwu, I cannot see how the Bank can say that Mr. Symons was wrong when he said in his progress reports that his understanding was to similar effect. To this extent, therefore, I reject the Bank's case.
197. Lord Marks submitted that the words "at present, to be funded separately from the agreed facility" imply that the money would be provided as and when it was needed, as opposed to the work to the third floor being paid out of the facility until it was exhausted and that thereafter being paid for by the borrower. This is because the verb "funded" usually refers to how money is to be provided as a matter of cash flow, rather than the question of who, ultimately, is to pay.
198. Mr. Brannigan emphasised that Mr. Symons had said that the expenditure on the third floor works is "to be funded" separately from the agreed facility. Mr. Symons did not say at any stage that the works "were not being" or "had not been" funded separately. The problem with this submission, in my view, is the use of the verb "funded". I agree with Lord Marks that this expression is often used to mean a payment that is temporary and subject to reimbursement. In my view, to say that expenditure will not be funded by a particular party is commonly taken to mean that it is not to be paid for by that party, even on a temporary basis. But even if this is open to question, I consider that, at the very lowest, the statement was ambiguous and therefore capable of misleading the reader. On this point, therefore, I broadly accept the submissions made by Lord Marks.
199. So this brings me back to the question: what actually was the representation? In my view, for the reasons that I have already given a statement to the effect that "I understand that such and such as the case" is a representation that the stated understanding is honestly held. It is not a representation that such and such actually is the case. Here the situation was confused. Mr. Clark thought that the money would clearly come, at least in the long term, from his client. Mr. Symons said that he understood that there was money from the borrower on deposit with the Bank from which it could recoup any expenditure on the third floor. In one sense he was right about this. I have already explained how initially the bank required the borrower to have £125,000 on deposit but that this arrangement came to be varied at the end of 2007. There is no suggestion that Mr. Symons knew about this change in the arrangements for security.
200. It is certainly the case that no-one expected the Bank to be responsible for bearing the cost of the works to the third floor. The question is whether Mr. Symons had an honest belief on the basis of what he had been told by others that the borrower would be able to pay its share of the increased building costs, namely the costs attributable to the refurbishment of the third floor, as and when they fell due. This, therefore, is not a case of negligent misstatement. As I have said, the question is whether the statement that a particular belief was held was made truthfully, not whether what was said to be believed was in fact true.
201. The burden of showing that the statement was untrue is clearly on the Bank. Mr. Symons had no reason of which I can think not to be truthful. He had nothing whatever to gain from leading the Bank to believe that the borrower had immediate access to funds with which to pay the costs of carrying out the work to the third floor as they fell due, particularly when he could reasonably have assumed that the Bank already had arrangements in place to deal with the shortfall in the facility that was going to arise in any event.

Progress Report No 6 (16 April 2008)

202. This report contained the first reference to the decision to carry out the work to the third floor as having been taken. Although noting the revised completion date of 18 May 2009, the report recorded a further two weeks delay. The additional works to the third floor were estimated by the contractor to take a further six weeks. The additional cost had been estimated at £250,000.
203. By the time of this report Clark Associates had increased the valuation of the removal of asbestos to £123,080. Since the Bank has now admitted that it was aware that this would be additional to the original contract sum of £2.54 million, it must have accepted that at some stage - either under cover of this report or a later one - it received a copy of the contractor's valuation showing the removal of the asbestos and the increase in the charge for the Performance Bond in which these items were shown. PR No 6 was sent to the Bank under cover of an e-mail dated 16 April 2008, in which Mr. Symons said that a hardcopy with attachments would follow by post. It may well be that those attachments included valuation No 6.
204. At any rate, from this point onwards it became a certainty that the development costs would exceed the amount of the facility, leaving aside the original under allowance for professional fees.

Progress Report No 7 (15 May 2008)

205. Although this report recorded that the date of Practical Completion remained as 18 May 2009, it also reported that the Contract Administrator had acknowledged that there was to be an extension of time for part of the current delay because this was "attributable to Client influenced delays". To anyone with a passing knowledge of building contracts, this would have made it clear that this extension of time would also carry prolongation costs.
206. Nevertheless, I consider that this fact should have been specifically drawn to the attention of the Bank in PR No 7 and that, in failing to do so, Mr. Symons was in breach of his retainer. But, as I have already said, the Bank has made no claim in this action that McBains Cooper failed to report the financial costs of extensions of time and that this consequently caused a loss to the Bank. Lord Marks submitted that this, although not pleaded, "fed in" to the allegations of negligence and breach of contract that were pleaded. I did not understand what he meant by this. If what he meant was that unpleaded acts of negligence that emerge in the course of the evidence can be deployed in order to show that other conduct that is pleaded was negligent, as opposed to, say, a mere error of judgment, then I would not disagree with him. But in the context of this case, I am not certain that that takes matters any further.
207. It was accepted by the Bank that the contractor's valuation No 7, which was attached to the progress report, showed, under the heading "Variations", that the valuation of the work in removing asbestos was now just over £126,000. It showed also that the sum paid in respect of the Performance Bond was £28,518. Since this also appeared under the heading "Variations", it should have been apparent to Mr. Mannering that some or all of this figure represented an additional cost.
208. However, like its predecessors this progress report contained the statement that:

"We have not been advised of any Contract Variations to date. As noted above however, we understand that the Client has now instructed the works to provide the additional third floor of accommodation."

209. It is not at all clear why Mr. Symons thought it appropriate to report, under the heading "Variations", not only the instruction to carry out the works to the third floor but also the anticipated costs of those works, whilst making no mention of the costs of the instruction to remove the asbestos.
210. As McBains Cooper accepted in its closing submissions, it seems that Mr. Symons adopted a very "contractual" approach to reporting on variations. He took the view that in general he should only report on additional work if that additional work had actually been recognised by the Contract Administrator by the issue of a formal variation instruction. McBains Cooper went on to concede that proper criticism could be made of that approach because, whilst it might lead to reporting that was technically correct, it would not paint the full picture.
211. In my view, this concession by McBains Cooper was entirely appropriate. The fact is that, whether or not a formal instruction had been issued, once the work had been carried out and paid for with the approval of the Contract Administrator, a formal variation instruction was bound to follow at some stage. Not to report the additional cost on the ground that the contract had not been formally varied is, to my view, verging on the absurd.
212. Whether or not Mr. Symons sent the contractor's valuation with the hard copy of his progress report, I consider that in the progress report itself he should have drawn the Bank's attention specifically to the cost of the additional work in relation to both the removal of asbestos and the increased charge of the Performance Bond. The obvious place to do this would have been under the heading "Variations". Apart from anything else, I do not consider that Mr. Symons was entitled to assume that either Mr. Humphrey or Mr. Mannering would read the attachments to the hard copy of a progress report unless something was particularly drawn to their attention.
213. In the case of Mr. Humphrey, I regret to say that he would probably not have understood the contractor's valuations even if he had read them. His evidence suggested that the attachments were not as a rule seen, or at any rate read, by Mr. Mannering.
214. Nevertheless, I consider that following receipt of PR No 7 and its enclosures in May 2008, if not before, both Mr. Mannering and Mr. Humphrey should have been aware of the increased costs in relation to the asbestos without having to be told by Mr. Symons. I accept that they would probably not have picked up that the sum certified in respect of the Performance Bond included a further £11,000 over and above the figure in the contractor's tender.

Progress Report No 8 (18 June 2008)

215. In relation to this progress report also, it is accepted by the Bank that it received a copy of the contractor's valuation No 8 which was attached to the hard copy of the report, and so the same comments apply to this report also. The figures in respect of the cost of removing the asbestos and the increased cost of the Performance Bond had not changed.
216. This was the last progress report that contained the unqualified confirmation that sufficient funds remained in the facility to complete the development.

Progress Report No 9 (14 July 2008)

217. In the case of this progress report, the contractor's valuation that should have been seen by McBains Cooper is missing. Given the passage of time, I do not consider that any adverse inferences should be drawn from the fact that a copy of it was not found in McBains Cooper's papers.
218. As I have already mentioned, this was the first report which contained the new wording qualifying the confirmation of adequacy of the facility. Mr. Humphrey accepted in evidence that he understood this to mean that additional funds to complete the development would only be available if the borrower was putting something in, and that he would have told Mr. Mannering about this change in wording (Day 5/30-31). Mr. Cumberland agreed that any competent bank employee reading this would know that there was going to be a need for funds from the borrower in order to complete the development (Day 7/128-129).
219. Under the heading "Variations", the text was in much the same terms as in the previous report, although there was a final sentence saying that McBains Cooper were awaiting a Cost Report setting out the additional costs to date and the anticipated status of the Final Account.

Progress Report No 10 (12 August 2008)

220. The relevance of this report is that it was the first one which followed a contractor's valuation, in this case No 10, that is known to have included sums in respect of work to the third floor. It showed that about £10,000 had been allowed in respect of additional tripod piles (and related costs) that were necessary for the work to the third floor. There was also a reference to structural steel for the third floor, but in a helpful schedule of payments showing the amount in respect of works to the third floor that was included in each valuation, for PR No 10 Mr. Payne has included only the £10,000 in respect of the piling. That schedule shows also that this was the first payment in respect of work to the third floor that was included in any of the Interim Certificates issued by Clark Associates.
221. The fact that Mr. Symons knew that it was not the intention of the Bank to pay for the works to the third floor made it imperative, in my view, for him to question the inclusion of a sum in respect of work to the third floor in the application for drawdown submitted by Clark Associates. Even if he took the view that the Bank might be prepared to fund some of the works to the third floor on an interim basis whilst Mr. Chukwu raised the necessary funds, it was clearly a matter about which the Bank should be consulted. Not being a party to whatever arrangement he thought existed, Mr. Symons had no right to recommend payment for work to the third floor.
222. I would have thought that it goes without saying that it was contrary to the Bank's interests to pay for work that fell outside the scope of its facility. It was therefore the duty of Mr. Symons to take reasonable care to ensure that this did not happen. I think that one can reach this conclusion as a natural incident of the relationship of project monitor and bank, but if it has to be based on a breach of an identified obligation in the retainer, then it seems to me that it falls within paragraph 3.1.2.
223. It is said by the Bank that it was common ground that Acre's valuation No 9 would probably also have included an amount in respect of works to the third floor. That is so, but without seeing that valuation one cannot know whether or not Mr. Clark approved any such amount for payment, although he might well have done so. Further, without knowing exactly how the amount was described in the valuation it is not possible to conclude that Mr. Symons was negligent in failing to spot it: the descriptions of some items in the valuations were not always clear. I have already said that I am not prepared to draw any inference adverse to McBains Cooper from the fact that the valuation is missing, and so in these circumstances I am not prepared to find that McBains Cooper was negligent in recommending for payment the sum claimed in that valuation.

Progress Report No 11 (9 September 2008)

224. By the time this report was issued it looked as if the anticipated completion date was 10 August 2009, some 10 weeks later than the existing date of 18 May 2009. The additional time was said to have been the result of a combination of delays on site and the increased time required to carry out the works to the third floor.
225. Although the fact of this potential delay was reported in PR No 11, more or less in the terms set out above, yet again Mr. Symons made no mention of the likely financial consequences in terms of prolongation costs. As an experienced relationship director, Mr. Mannering could probably be expected to appreciate this but I do not consider that Mr. Symons was entitled to take that for granted. Apart from anything else, it might be shown to other people within the Bank who might not have understood these things. This was another progress report to which the contractor's valuation was attached.
226. The other important feature of this progress report is that the application for drawdown included further sums in respect of work to the third floor: Mr. Payne's figure, which I do not understand be challenged, is £30,596, making a little over £40,000 in all.

Progress Report No 12 (14 October 2008)

227. By this time this report was issued the amount claimed in the drawdown included a further £158,000 odd for work to the third floor.
228. For reasons which I will explain later in this judgment it is not at this point necessary to say any more about the contents of McBains Cooper's progress reports.

Progress Report No 13 (25 November 2008)

229. I mention this report only because it was the only other progress report to which the contractor's valuation was attached.

The events of September 2008

230. On 12 September 2008 Mr. Andrew Downes, a Senior Manager in SME Banking Credit, Commercial Banking Risk, sent an important e-mail to Mr. Mannering. It is necessary to set it out in full.

"Andrew

I appreciate your time explaining the background to this lend which is you may say may be more appropriately categorised as a refurbishment of an owner occupied building albeit the lending is being controlled on a development basis.

I also appreciate why you would prefer to keep this relationship and given your commitment to continue to put in the time and effort I am prepared to consider renewal as requested to 31 August 2009 on the basis that you are comfortable with agreeing with me an appropriate framework for an Active Medium Risk Strategy.

My thoughts are that we agree quarterly MRS reporting end Dec 08, Mar 09, etc to credit until the renovation/refurb is complete at which point we will need to consider appropriate timing for: a) an update report from Commercial Financial Services; and b) updated panel valuation, in order to consider whether we seek repayment/move to amortising basis.

Proposed Active Strategy - please review and confirm - to be quarterly reports to credit to provide full detail and comments on the following:

( Confirm security in place and no issues

( Hard lines £2,625k (excl VAT O/D as should be self-liquidating) to remain within 65% of updated GDV + LV of other security

( QS (McBains Cooper):

to request a revised cash flow of the construction costs from the developer and to report in future progress reports (No 12 onwards) on variances with the cumulative total of work certified to date and reasons why there are variances

to confirm in future progress reports (No 12 onwards) date of estimated completion as per revised programme and no of weeks project is behind/head of this version of the revised programme (notwithstanding future revisions)

to advise of any cost over-runs and estimate impact of contract variations where we noted that contract administrator has acknowledged Extension of Time attributable to client

( Customer to manage correctly and VAT O/D to remain within £100k limits - if necessary by introduction of customer contributions - lack of satisfaction with this to be a trigger for transfer to BSU

( Customer to pay for any cost-overruns and confirm sources of funds - lack of satisfaction with this to be a trigger for transfer to BSU

( Customer to provide quarterly MI/cashflow for both Miracles Signs Wonders Ltd and Miracles Signs & Wonders Ministry Trust as per report from Commercial Financial Services (29.03.07) - lack of satisfaction with this to be a trigger for transfer to BSU

( Bank approval required if customer requests variations to contract e.g. additional 3^rd floor accommodation

I will await your response before confirming sanction"

231. Somewhat surprisingly, Mr. Downes said in evidence that when he wrote this e-mail he was not in possession of a copy of the Facility Letter. It seems, therefore, that he was largely dependent on what he was told or given by Mr. Mannering and Mr. Humphrey. In this context, he was not told that it was clear from the outset that the facility would not be sufficient to complete the development, still less that about £130,000 had been spent - by way of an additional cost - on removing asbestos (Day 5/174-175). It is also quite clear from the terms of the last bullet point in the e-mail that Mr. Downes had not been told that the borrower had decided to carry out the works to the third floor: by this time not only had the borrower decided to do the work but £10,000 odd had already been drawn down under the facility in respect of it.
232. In evidence Mr. Downes said that he was only prepared to sanction the renewal of the facility on the basis that Mr. Mannering agreed to do the things set out in his e-mail (Day 5/163). It is a very unsatisfactory feature of the Bank's case that many of the steps required by this e-mail were either not taken at all or were taken only after significant delay.
233. For example, it is McBains Cooper's case that the requirements in the three bullet points that affected them were never communicated to Mr. Symons (or anyone else for that matter). In his witness statement Mr. Mannering said, at paragraph 272:

"...the conditions which related to McBains Cooper ...were communicated to them. However, I do not have a copy of that correspondence."

At the outset of his evidence he was asked whether he wished to alter that paragraph, in response to which he said that he wished to add the following words:

"I do not recall how they were communicated, and, if that was in writing, I do not have a copy of that correspondence."

234. I do not recall Mr. Symons being asked about this in evidence. In his witness statement he said that neither Mr. Mannering nor Mr. Humphrey took any steps to discuss the measures set out in the e-mail with him. In short, he says that he knew nothing about them.
235. I accept the evidence of Mr. Symons on this point because I consider that if those requirements had been communicated to McBains Cooper it would either have complied with them or explained in each progress report why it could not. Instead, the progress reports issued by McBains Cooper thereafter did not begin to comply with the requirements set out in the first and third bullet points.
236. A particularly important aspect in my view was the requirement for the borrower to be required to pay for any cost overruns and to confirm the sources of funds with which to do it. However, it seems that Mr. Mannering took no steps at all to discuss the funding of cost overruns with either Mr. Chukwu or Mr. Purdom: in evidence he was unable to say whether or not he had any conversation with Mr. Purdom or anyone else about the need to fund cost overruns and the sources of the funds (Day 4/93-94). There is not a single document that suggests that either of these things were done.
237. For reasons which I set out later in this judgment, I am satisfied that if Mr. Mannering had implemented these measures and reported back to Mr. Downes it would have become apparent, first, that there was a very significant shortfall between the amount of the facility and the costs to complete (excluding the third floor) and, second, that Mr. Chukwu and the congregation did not have the funds to meet a shortfall of the magnitude that existed. So far as the latter point is concerned, I did not understand the Bank to challenge the proposition that Mr. Chukwu and the congregation did not have the resources to meet a shortfall that was likely to be well in excess of £250,000.
238. In a later section of this judgment I will explain why I consider that if both Mr. Mannering and Mr. Symons had complied with their obligations the extent of the shortfall would have become apparent, and apparent not only to Mr. Mannering but to Mr. Downes and those in Commercial Credit.

Variations

239. There is an issue as to the extent to which the Bank paid for variations (apart from the asbestos removal, the fee for the Performance Bond and the minor variations totalling £666). For reasons which will become apparent later in this judgment, I consider that it is not necessary to consider the position after PR No 15.
240. In Acre's valuation 12, as at 25 September 2008, £5,706 was paid in respect of the works, involving the construction of new brick piers and other brickwork, which I understand to have been in connection with drainage. The same sum appeared in valuation 13, as at 30 October 2008, together with a further £5,000 in respect of "new drainage works". No other sums were paid in respect of variations up to and including PR No 14, which was issued on 18 December 2008. That included Acre's work up to 27 November 2008. So far as I am aware, no-one has suggested that this work had anything to do with the third floor or that it was not essential. I think it likely, therefore, that the Bank would have agreed to pay these sums.
241. In my view, it was the duty of McBains Cooper to identify all sums in respect of varied work that were included in the amounts certified by Clark Associates each month. There was nothing improper in Clark Associates including varied work in the sum certified for payment in an interim certificate. On the contrary, the contractor was entitled to be paid for varied work that it had been instructed to carry out.
242. However, the fact that a sum was certified by Clark Associates under the building contract did not mean, and could not be taken to have meant, that all the work certified necessarily fell within the scope of the Bank's facility. If, for example, the borrower decided to upgrade the quality of the door furniture, that was his prerogative. The Contract Administrator, in this case Clark Associates, would then instruct the contractor to procure the relevant materials and to delete the cost of the original door furniture and add the cost of the chosen door furniture. The difference in price would become payable by the borrower as part of the revised contract sum when the materials were delivered to site. The contractor would then be entitled to include that amount in its monthly valuation and to have that amount certified by the Contract Administrator. None of this has anything to do with the Bank.
243. However, when the borrower applies to the Bank to drawdown money under the facility, his application should be limited to the work that was in the scope of the facility. It is therefore an important part of a project monitor's role to check the application so as to ensure that it is confined to expenditure falling within the scope of the facility. Thus it was the duty of Mr. Symons to check every application carefully. If he was of the opinion that sums had been included in the monthly valuation for work that was, or might have been, outside the scope of the work covered by the facility, it was his duty to advise the Bank accordingly and not to recommend that those sums be included in the monthly drawdown.
244. Subject to the precise terms of the particular facility, a bank is in principle obliged only to permit drawdowns to the extent that the amount applied for is in respect of work that was within the scope of the facility. It would be the borrower's obligation to pay the balance.
245. If the borrower has the funds to pay for work that is outside the scope of the facility as and when they are certified, and does so, then no problems will arise. But a problem will arise if, having authorised varied work, the borrower is not in a position to pay for it or, at least, not at the time when payment is due under the building contract. If, for example, the contractor is not paid the full amount certified in an interim certificate, he may have the right to terminate the contract. It is usually a precondition of termination, as it is the case here under clause 28 of this form of contract, that the contractor must give notice of certain types of default by the employer which, if persisted in for 14 days after the notice, entitles the contractor to terminate the contract. It may also be terminated for insolvency.
246. Once this happens, or is likely to happen, the bank may find itself in a dilemma. It will be faced with the prospect of the contractor leaving site for non payment and the work coming to a standstill. This means that the development will not be completed and will not realise its GDV. The value of the bank's security will then be limited to the site value. If the development is well advanced when this happens, the bank may find that it has already paid out more than the value of its (reduced) security. In these circumstances it may be in its interests to fund the variations, keep the contractor on site and complete the development. The development should then have achieve the predicted GDV and so the bank can realise its (enhanced) security and recoup its expenditure.
247. In many situations, the decision that the bank has to take will not be an easy one. The options may be finely balanced. There may still be risks of further unforeseen extra work. Or the market may have fallen, so that the originally predicted GDV is no longer achievable. It is likely that, before making any decision, the bank will need to seek legal advice about the contractual position, valuation advice about the value of the security and advice from the project monitor as to the amount of the outstanding cost to complete. None of this can be done overnight.
248. However, since in this case the Bank has accepted that it would have paid for the additional costs of removing asbestos and for the Performance Bond, the only other variations that were paid by the end of 2008 amounted to the £10,706 that I have already mentioned. This appears to have been mainly in respect of drainage and, as I have said, I think it likely that the Bank would have agreed to pay it.

The events of September to December 2008

249. By 12 August 2008, in PR No 10, the total amount which had been recommended for payment up to and including that valuation was £818,919, of which

£138,185	was in respect of the Performance Bond, asbestosis and minor variations (about £666)
£2,500	was for works behind the stage
£10,000	was in respect of additional piling for the third floor

The Bank already accepts that it knew about and would have paid £138,185 in respect of the asbestos and the additional charge for the Performance Bond (the other additional variations were very minor). I regard it as inconceivable that the Bank would not also have agreed to pay for the additional £2,500 for the works behind the stage if it had been told about them.

250. The £10,000 for the piling in relation to the third floor was included for the first time in the contractor's valuation No 10 and was included in Clark Associates' Interim Certificate No 10 (so far as the documents show, because valuation No 9 is missing). To the extent that it is still in issue, I find that Mr. Symons should have noticed that this sum had been included in respect of works to the third floor should have drawn the attention of the Bank to it in clear terms.
251. If this had been done, I consider that Mr. Mannering would have disputed the Bank's obligation to pay it. I do not accept for one moment that the fact that this sum had been applied for would have caused him to lose trust in the borrower, at least not to an extent of recommending that all further payments under the facility be stopped. It is, I think, still the Bank's case that the mere fact of an application for drawdown that included sums for the third floor works would have caused it to withdraw the facility and make an immediate demand for repayment. In so far as this application for drawdown included this £10,000 in respect of the piling, I do not consider that, if it had been drawn to the attention of the Bank, it would have stopped all further drawdowns. I can see, by contrast, that if at some point the Bank discovered that payments under the facility had already been made in respect of works to the third floor under previous drawdowns, then its reaction might been different.
252. Reverting to what would have happened if Mr. Symons had pointed out to Mr. Mannering that the application for drawdown included this £10,000, I consider that Mr. Mannering would have asked Mr. Symons to take it up with Mr. Clark and instructed him to make clear that it was for the borrower to pay it. It is possible that Mr. Mannering would have taken it up himself direct with Mr. Purdom, but I regard that as less likely. However, whichever route had been taken, I do regard it as likely that it would have elicited a strong protest from Mr. Purdom - perhaps even calling for an extension to the facility to cover the work to the third floor.
253. Assuming that the matter had been taken up with Mr. Clark by Mr. Symons, I consider that the following things would have happened:

i) Mr. Chukwu and/or the congregation would have paid the £10,000 or reached some form of accommodation with Acre in relation to it.

ii) Further works to the third floor would have been put on hold pending resolution of how they were to be funded.

iii) Any further costs in relation to work for the third floor that had been carried out in the meantime (possibly some of the structural steel work, but in a sum less than the £30,956 that was paid following PR No 11) would also have been paid by Mr. Chukwu and/or the congregation.

Whilst have I have already found that Mr. Chukwu and the congregation did not have the resources to meet the inevitable and very substantial cost overrun involved in completing the development, I consider that it is likely that at this stage (which would have been before the extent of that cost overrun would have become apparent) they would have been able to meet the more modest costs that were certified in Interim Certificates Nos 10 and 11.

254. By the time McBain's Cooper issued PR No 11, on 9 September 2008, the only further cost in relation to the third floor was steelwork to the value of £30,956 to which I have already referred. As I have indicated, I consider that it is unlikely that the full amount of this would have been incurred if the question of the funding of the work to the third floor had been raised following the issue of PR No 10. By this time I would have expected that negotiations with Mr. Chukwu about the funding of the work to the third floor would have been on foot.
255. On this basis the amount recommended for drawdown in PR No 11 would therefore have been £1,058,378 (that is, £1,099,334 less £40,956 in relation to the third floor), less the sums already advanced under previous drawdowns. If, in addition to the £10,000 already incurred, further work had been carried out in relation to the third floor, for payment of which the contractor would undoubtedly be looking, that would have lent further urgency to the need to resolve the dispute as to how this work was to be funded.
256. At about the same time as the issue of PR No 11, Mr. Downes wrote his email of 12 September 2008 the terms of which I have already set out. This would have chimed with the discussions with the borrower about funding the third floor works which by then should have been started if Mr. Symons had reported the fact that the borrower was seeking to drawdown £10,000 in respect of piling works for the third floor.
257. It has always been the explanation of Mr. Symons for the fact that he confirmed the adequacy of the facility in his first eight progress reports that he knew that the facility itself would be insufficient to meet the costs of the development but that he was told, or at least assumed on the basis of what he had been told, that the balance of the funds was to be provided by the borrower. This was, of course, made explicit in later progress reports in the context of the works to the third floor.
258. I consider that, once it became apparent to Mr. Symons that in fact Mr. Chukwu and the congregation had only limited resources, he would have appreciated that the confirmations of adequacy that he had been given could not be justified. I would expect him to carry out a back of the envelope calculation in order to see what the extent of the shortfall was likely to be. That calculation would probably have proceeded as follows. First he would have checked what amount was actually available under the facility in the light of the terms of the Facility Letter. That would have produced this:

Net sum available under the Facility	Net sum available under the Facility
Facility	2,625,000
Less interest (assuming completion 1 June 2009)[8]	90,000
Balance available for drawdown	2,535,000

259. Next, he would have considered the costs to complete. I consider that these would have looked something like this:

Contract sum	2,556,937
Variations paid: asbestos works Performance Bond (additional cost) works behind stage other works (resin bolts, drainage)	127,000 11,000 2,500 12,600
Sub-total:	153,100
Professional fees, say	150,000
Total, say:	2,860,000
Original balance available for drawdown	2,535,000
Shortfall, say:	325,000

260. In addition, Mr. Symons would have known that there were other potential extras, such as the prolongation costs arising out of the claim for an extension of time and increases in the provisional sums.
261. Even if Mr. Symons had not done this on his own initiative, it seems to me inevitable that someone would have called for an estimate of the costs to complete both the existing work and the work to the third floor. In any event, if, as I strongly suspect would have happened, Mr. Purdom would have been calling for the facility to be increased - a request which, if somewhat bold, may not have seemed outrageous if the GDV of the completed development was £4 million (as the Bank's valuers had by then advised) - that would have been another reason to have an up to date assessment of the cost to complete.
262. At this stage the evidence indicates that the Bank would have been faced with a choice between two principal options. One was to cease funding forthwith, sell the property and realise any other security - principally the guarantee given by Mr. and Mrs. Chukwu. The other was to continue to fund the development by extending the facility. This would enable the Bank to realise the enhanced value of the completed development. If the assessment of the GDV (without the third-floor) at £4 million was correct, this might have been an attractive solution. It was, at least, one that merited careful consideration by the Bank.
263. In these circumstances I consider that it is likely that work on site would have continued, save for work related to the third floor. This is because I consider that the Bank would not have wished to jeopardise the option of completing the development by stopping the work prematurely. PR No 12 would have been issued around mid October and this would have brought the total drawdown up to £1,226,231 (ie. £1,408,582 actually claimed less sums in respect of the third floor works, namely £10,000 + £10,156 + £162,195). By the end of October 2008 I would have expected Mr. Clark to have produced a schedule of costs to complete. I find that this would not have been very different to the one that he produced as at 31 December 2008.
264. So, by the end of October 2008, two things would have become apparent. First, Mr. Symons would have assessed the amount of the likely costs to complete the original project (ie. without the third floor works) and this would have shown that the likely shortfall in the funds required was at least £325,000, if professional fees are taken into account. Second, Mr. Clark would have carried out a similar exercise. If he had done this, I consider that his figures would have showed costs to complete of about £3.4 million, of which about £550,000 would have been attributable to the third floor (in assessing these figures I have added back the £182,350 that, on this scenario, would not have been paid for the third floor but which, by then, had been paid).
265. Put very broadly, I consider that the costs to complete (excluding the third floor) would have been assessed by Mr. Symons and Mr. Clark at between about £300,000 and £400,000.

What would the Bank have done?

266. In spite of the evidence of Mr. Mannering's economy in disclosing the truth to Commercial Credit as events unfolded after March 2009,^[9] I consider that he would have had no choice but to disclose the true facts once it was made plain that there was a very significant shortfall, even so far as the existing development was concerned. I have little doubt that he would have attempted to put the blame squarely on McBains Cooper, citing the confirmations of the adequacy of the facility given in previous progress reports (which is what he subsequently did after the issue of PR No 17 in March 2009), but for present purposes that is irrelevant.
267. So in these circumstances I consider that it would have become clear to the Bank - in my view by early November 2008 - that the development could only be completed if the Bank was prepared to extend the facility by an amount of up to about £400,000. However, as things then stood the Bank had been advised that the GDV of the completed development was £4 million, so it would have appeared that there was a reasonable prospect that the Bank could recoup its investment if it decided to complete the development.
268. It was the evidence of some of the Bank's witnesses, for example Mr. Arman, that before stopping any further advances the Bank would have obtained a new valuation and discussed with the borrower how it could "exit the situation in a controlled fashion" (at Day 5/132). I do not consider that the Bank would have taken any decision without first obtaining independent verification of the costs to complete and an up to date valuations of the Church Road site and the GDV if the development (without the third floor) was completed. In addition, it would have investigated the repayment capability of the borrower (see the evidence of Mr. Diana at Day 6/26). It would probably have taken legal advice also.
269. By this time, of course, the financial crisis had occurred with all the uncertainty that surrounded it. I would expect such valuations to have been obtained by mid or late November 2008 so that by early December the Bank would then be in a position to make a final decision as to what do. In the meantime, I consider that - wishing to keep its options open - it would have continued to fund the development accept for the third floor.
270. I have to accept that all this is, to a large extent, speculation. But it is speculation based partly on what actually did happen from March 2009 onwards (as shown in the documents) and partly on the evidence of the witnesses and my assessment of what they would be likely to have done in the situation that I have described. However, to the extent that it is the Bank's case that it would have terminated the facility the moment it realised that funds were being requested to carry out the work to the third floor, I reject that assertion.
271. The question of what the Bank would have done is made more difficult to answer because by early December 2008 the Bank's security, in the form of its charge over the Church Road site, was substantially less than the amount that it had already advanced under the facility. This was approximately £1,450,000 if one excludes the £244,683 paid in respect of the third floor works up to 27 November 2008 - which, on the scenario that I have set out above, would not have been paid. In addition, substantial accrued interest had by then been deducted from the amount of the facility: by the end of November 2008 this was about £55,500. If the value of the Church Road site in an undeveloped (or partly developed) condition was about £800,000, the Bank would have been looking at a loss of about £700,000 (before expenses) if it terminated the facility.
272. It has never been part of any case advanced by the Bank that, if properly advised by McBains Cooper, it would have increased the facility in order to complete the development, even without the third floor. However, I consider that I should briefly consider this option.
273. I regard it as reasonable to assume that if, in November 2008, the Bank had taken external advice about the amount of the costs to complete and the likely value of the development if completed, it would probably have received advice in similar terms to that which it was subsequently given. The advice that it received, albeit a year later, was that the option of completing the development was risky: see the e-mail dated 3 November 2009 from Allsop LLP. The advice given then was on the basis that the contractor would have to be paid about £760,000 to complete the work, after which there would have to be a substantial fit out cost. Accordingly, it is not necessary to discuss this option any further.

Conclusions on causation

274. For the reasons that I have now given I consider that none of the breaches of duty by McBains Cooper caused any loss to the Bank until its failure to advise the Bank in PR No 10 of the fact that the current drawdown application included about £10,000 in respect of works to the third floor.
275. By the end of November 2008, assuming that the Bank moved fairly swiftly, the choices facing the Bank would appear to have been:

i) to terminate the facility and demand repayment, failing which to sell the building in its existing condition. This would produce a loss of about £700,000 (before expenses);

ii) to complete the development and then sell the property.

276. As I have already indicated, it is not the Bank's case that it would have adopted the second option. Similarly, McBains Cooper does not assert that the Bank should have done so. In my view, this is not surprising since it is very doubtful whether this would have been a better option. However, I shall say a little more about it below.
277. For the reasons that I have now given if McBains Cooper had properly performed its obligations under the Retainer, the Bank would have become aware of the true financial position in November 2008. It would have taken the decision to terminate the facility and call on the security. I find that this decision would probably have been taken in December 2008 if McBains Cooper had informed the Bank, as it should have done, in August 2008 that the borrower was seeking to drawdown £10,000 for the cost of piling work in relation to the third floor. On this basis, if the Bank had moved reasonably swiftly after it became apparent that Mr. Chukwu had no money, I find that it could have put the property on the market in the spring of 2009.
278. Since McBains Cooper did not advise the Bank, either then or at any time prior to the end of December 2008, that: (a) that the borrower was proposing to drawdown, or was actually drawing down, money from the facility in respect of work to the third floor; and (b) there was not enough money in the facility to complete the development, it is in principle liable for the losses sustained by the Bank after the end of November 2008. That is because I find that the Bank would not have permitted any further drawdowns on the facility thereafter.
279. The question that remains is whether the breach of duty by McBains Cooper was the sole effective cause of this loss. In my view it was not. My reasons are these.

Contributory negligence by the Bank

280. It is not in dispute that, from at least PR No 6, the Bank knew (because it was told so in the progress report) that the borrower had taken a decision to carry out the work to the third floor. I consider that the Bank was not entitled to rely on McBains Cooper's "understanding" that these works were to be funded separately from the facility without making enquiries as to the source of the funds. It was not the job of a project monitor to arrange the funding of the development: that was a matter between the lender and the borrower.
281. Further, I have already found that Mr. Mannering knew that the facility was insufficient to cover the costs of the development (without the third floor), particularly if interest was being deducted in accordance with the terms of the Facility Letter. Even if I had not found that Mr. Mannering knew this, I would have unhesitatingly found that he ought to have known it. In any event, Mr. Mannering should have complied with the requirements imposed by Mr. Downes in his e-mail of 12 September 2008 to instruct McBains Cooper to investigate and advise on the cost overruns to date, and to check (himself) that the borrower knew that it had to pay for any cost overruns and that it had the funds available to meet them.
282. If Mr. Mannering had done either of these things, it would have become apparent: (a) that there were insufficient funds in the facility to complete the development (even without the third floor); and (b) that Mr. and Mrs. Chukwu and the congregation probably did not have the funds available to pay the cost overruns on the original project, and certainly did not have the funds to carry out the work to the third floor.
283. This would then have led the Bank to reappraise the project and its funding in the manner that I have already described.
284. In assessing any apportionment of liability to the Bank for its contributory negligence I must have regard to both the blameworthiness and the causative potency of its actions. In my view, the lion's share of responsibility for what went wrong after August 2008 must rest with McBains Cooper. As Mr. Symons rightly accepted, it was engaged to advise the Bank as to the amounts that should be drawn down under the facility and to take reasonable care to protect the Bank from the loss it would suffer as a result of paying too much.
285. Nevertheless, Mr. Mannering deliberately failed to comply with the clear instructions given by Mr. Downes and that was a culpable failure. In those circumstances I consider that the Bank's own negligence was also a cause of the losses that the Bank sustained after 1 December 2008. In my judgment it should bear one third of those losses.

The amount of the loss

286. I understand that it is agreed by the valuers that the market value of the Church Road site in March 2009 was £800,000. This was the opinion of Mr. Rowlinson, the expert valuer instructed by the Bank. In the joint statement of the expert valuers, Mr. Alford, who was instructed by McBains Cooper, agreed that it was possible that a value of £800,000 might have been achievable. But it appears that Mr. Alford is now prepared to agree a market value of £800,000.
287. I have already concluded that, by the end of November 2008, the cumulative amount that would have been drawn down under the facility, excluding anything in respect of the third floor would have been approximately £1,450,000. To this must be added interest of about £55,500. In addition, I have already found that the Bank should then have put the property on the market in the spring of 2009.
288. On this basis, therefore, the Bank would have suffered a loss of about £700,000 (£1.5 million less £800,000), before expenses, as a result of its own decision to enter into the loan on the terms of the Facility Letter. For the reasons that I have given, nothing done by McBains Cooper caused or contributed to this loss.
289. The total loss suffered by the Bank is approximately £1,400,000, so about one half of this loss is attributable to the breach of duty by McBains Cooper and the Bank's own contributory negligence. Of this, I consider that McBains Cooper is liable for two thirds.
290. However, in the adjudicator's award dated 31 July 2013 McBains Cooper was ordered to pay £288,323.84, which it did on 20 August 2013. I have not heard any argument as to how this sum should be treated, but it seems to me that the Bank must give credit for it as, in effect, money received on account.
291. Unfortunately, I am not in a position to assess the precise amount of the loss suffered by the Bank, not least because I have only been given an approximate figure in the Bank's opening submissions as to what the loss is. The copy in the trial bundle of the Schedule of Loss attached to the Particulars of Claim is virtually illegible and so it is not possible for me to derive any figures from that.
292. In these circumstances I will have to leave the parties to agree, if they can, the precise amount of the loss. If this cannot be agreed, I will have to hear counsel.

Afternote

293. This judgment is already long enough, but I should explain that there are several topics which have been explored during the evidence but which I have so far not mentioned. For example, the extraordinary management of the accounts by, it seems, Mr. Humphrey. There was a separate account with the Bank which allowed the borrower an overdraft with a limit of £100,000 which was intended solely for VAT. However, odd sums of money were paid into it and out of it that had nothing to do with VAT. McBains Cooper's closing submissions included an appendix devoted to errors and anomalies in the Bank's accounts. Another example that I have already mentioned is the fact that interest was deducted from the facility account on a monthly basis, not quarterly in arrears as the Facility Letter stated.
294. Similarly, I have hardly touched on the events of March 2009 and onwards. Much of Mr. Brannigan's cross examination of the Bank's witnesses was directed to what they had been told by Mr. Mannering after the event, particularly in relation to the known inadequacy of the facility to cover the costs. As I have mentioned, one remarkable feature of the case is that until very shortly before the trial it was the Bank's case that it never knew about the carrying out of works to the third floor. Yet, even now, the Bank cannot say how and when it acquired the knowledge that it now accepts it had.
295. Rightly or wrongly, therefore, I have confined this judgment to those aspects of the evidence that affect the outcome.

LLOYDS BANK v MCBAINS COOPER APPENDIX 1

Progress Meeting No 1

296. This took place on 14 August 2007 and was not attended by Mr. Symons. On 17 July 2007 Clark Associates had issued an interim valuation for £116,303.
297. Mr. Symons says that he visited the site on 27 September 2007 to assess the progress of the works when he took some photographs. He issued his Progress Report ("PR") No 1 the following day, 28 September 2007, and three photographs showing the site were attached to it. I find that he did attend the site on 27 September 2007. I did not understand this to be contentious.

Progress Meeting No 2

298. This took place on 25 October 2007. In his witness statement Mr. Symons said that he attended the site "on or around" 25 October 2007. He is noted in the minutes as having advised Mr. Clark prior to the meeting that he would be unable to attend. The minutes of the meeting were dated 29 October 2007, a Monday, and McBains Cooper is not included in the distribution list.
299. PR No 2 was dated 29 October 2007 also. The Outlook diary for Mr. Symons records him as being in the office between 09:00 hours and 10:00 hours on that day and working on the project. According to a contemporaneous e-mail, he sent off PR No 2 at 09:39 hours on 29 October 2007. It is therefore most unlikely that by then he would have received a copy of the minutes of the recent Site Progress Meeting which were only issued that day.
300. In PR No 2, Mr. Symons described the progress on site in the following terms:

"Site set-up is complete and works are progressing on site with strip out of the building and preliminary demolition largely complete. Asbestos removal is also now largely complete following the completion of investigation work. Some additional asbestos has however been identified but the Contractor is remains (sic) generally on programme."

301. It seems to me likely that this information was derived from a site visit because it is not entirely in accordance with the report of progress that is in the minutes prepared by Mr. Clark. That refers to "substantial further asbestos" having been identified, a rather different emphasis to that given in PR No 2 and, if Mr. Symons had derived his information from Mr. Clark - for example, during a telephone conversation - one would have expected him to have recorded it in similar terms.
302. Lord Marks submitted that since the minutes of PM No 2 described the site as "virtually a no go area due to the continuing removal of asbestos", Mr. Symons would probably not have been able to gain access. However, I accept the observation by Mr. Symons that the reference to the site in the minutes probably meant the building itself and I see no reason why he should not have seen enough on a brief visit, together with what he may have been told, to enable him to give the brief progress summary contained in PR No 2.
303. In its closing submissions the Bank submitted that Mr. Symons "allegedly remembered that he could use the site hut during this visit", but in my view that is not a fair reflection of his evidence because a few answers later he said that he was unable to remember when the site hut was first brought onto the site (Day 2/83). The relevance of this being that Mr. Kurji said in evidence that when the asbestos was being removed there was no site hut on the site. In my view this is not a point that affects the credibility of the evidence of Mr. Symons.
304. The Outlook diary for 25 October 2007 shows that Mr. Symons had a site meeting on another project between 10:00 and 10:30 hours, which may explain why he was unable to attend the site meeting at Church Road. It shows also that he had a site meeting on yet another project between 14:00 and 16:00 hours. There was thus a potential window - between 10:30 and 14:00 hours - during which he could have visited the Church Road site. However, the timesheet for the week beginning 22 October 2007 does not record any time spent on the Church Road project.
305. After these documents had been put to Mr. Symons I asked him whether there was anything that made him confident that he had visited the site at around that time (Day 2/76). His answer was as follows:

"I can't be certain, but I do recall phoning in about the meeting and then attending site within that period, and I do remember, as I briefly referred to earlier, my Lord, the asbestos situation in that there wasn't - asbestos wasn't being removed from the entire site, or indeed the entire building, but there were certain areas that we were unable to access."

306. On balance, I consider that Mr. Symons probably did visit the site, albeit briefly, on 25 October 2007 and probably around the middle of the day. I do not consider that his progress report would have been written as it was if the information had been derived from Mr. Clark: indeed, Lord Marks put to Mr. Symons that what he had recorded as being the progress on site was inconsistent with what was said in the site minutes (a point that was repeated in the Bank's final submissions). At any rate, in so far as the burden of proof is on the Bank to show that Mr. Symons did not visit the site before issuing his progress report, I find that it has not discharged it.

Progress Meeting No 3

307. This took place on 30 November 2007 and was not attended by Mr. Symons. He said that he visited the site on 19 December 2007, where he met Mr. Clark and Acre's site agent. His Outlook diary for that day records a progress visit to the site between 11:00 and 12:00 hours. The timesheet for the same day shows 1½ hours spent on the project. However, the diary also shows that Mr. Symons had a site visit in the Finchley Road which was also between 11:00 and 12:00 hours.
308. Lord Marks showed Mr. Symons an e-mail that he sent at, according to his computer's clock, 13:02 hours on 19 December 2007 to Mr. Humphrey in which he responded to an e-mail from Mr. Humphrey timed at 13:38 hours on the same day. There is no way of knowing which computer's clock was correct. Lord Marks suggested to Mr. Symons that to produce his e-mail involved a certain amount of work so that Mr. Symons would not have had time to go to the Finchley Road site, then to the Church Road site and then to prepare the e-mail to Mr. Humphreys at some time after 13:38 hours on 19 December (if that was the correct time). Mr. Symons accepted that suggestion.
309. In fact, I consider that Lord Marks's question was put on a false premise. The table in the e-mail sent by Mr. Symons was an exact copy of the table that was in PR No 2. Three figures were set out in the e-mail below the table, two of which were taken straight from the table itself and the third, £17,994.38 in respect of VAT, was simply the sum of the VAT on the professional fees shown in the table, which at 17.5% came to £6,606.25, and the VAT of £11,388.13 shown in the table in respect of the contractor's works. In my view, little work was required to prepare this e-mail and I very much doubt if it took Mr. Symons more than about 10 or 15 minutes.
310. Dollis Hill is four stops away from Finchley Road by tube and it seems to me that if Mr. Symons left the Finchley Road site by, say, 12:30 hours, he could have arrived at the Church Road site by 13:00 hours, spent 15 minutes there and then been back in his office by 13:45 hours or, at least, shortly before 14:00 hours (he said that the journey time was about 30-40 minutes). This would be consistent with the fact that the timesheet recorded him as spending 1½ hours that day on the Church Road project, although for the reasons that I have already given these timesheets cannot be regarded as reliable. Work by the contractor had only recently resumed on site following the removal of the asbestos and so Mr. Symons would not have needed to spend a very long time on site - a short visit would probably have been sufficient.
311. In PR No 3 Mr. Symons noted that, following the discovery of additional asbestos, the work to remove it was complete. The position on 30 November, as recorded in the site minutes - 19 days before Mr. Symons said that he attended the site, was that instructions as to how to deal with this additional asbestos were still awaited. So the information in his progress report could not have come from the site minutes and I doubt very much if their author, Mr. Clark, would have had any reason to attend the site between then and 19 December 2007. Further, in his e-mail of 19 December Mr. Symons said that he understood that a payment had been made directly to the contractor, which he assumed to be in the sum of £181,378, being the value of the contractor's works at the time of PR No 2. It is not clear where this information came from; it might have been something that Mr. Symons was told during a visit to the site, but it is also possible that he heard this from Mr. Clark.
312. Of course, if the clock on the computer operated by Mr. Symons was correct, then he would not have had time to visit the site on 19 December 2007 and thereafter send an e-mail to Mr. Humphrey at 13:02 hours. As I have said, there is no way of resolving with confidence the question of which computer's clock was telling the wrong time.
313. On balance, I consider that it is more likely than not that of the clock on the computer operated by Mr. Symons was the one that was wrong and that the e-mail apparently timed at 13:02 hours was sent about one hour later (possibly at 14:02 hours). Taking the evidence as a whole, I conclude that Mr. Symons probably did visit site on 19 December 2007. Alternatively, given the state of the evidence I am not prepared to find that he did not visit the site on that day.
314. However, I consider that Mr. Symons was mistaken in thinking that he met Mr. Clark on site that day. Although Mr. Clark was prepared to concede in cross examination that he could have met Mr. Symons on site that morning, he had to be back to Bristol in time for a meeting at 3 pm that afternoon. His diary for 20 December 2007 had an entry showing a meeting at Church Road on 20 December 2007 with an arrow showing that it was moved to 11:00 hours on 19 December 2007. However, the entry was crossed out, which suggests that it was cancelled. In the circumstances, I consider it unlikely that Mr. Clark did attend a meeting at the Church Road site that morning, particularly given the meeting in Bristol fixed for that afternoon. Not only do I accept his evidence that this would have been "quite a challenge" (Day 5/79), but I consider that it was a challenge that he never in fact undertook.

Progress Meeting No 4

315. This was held on 30 January 2008 and there is a dispute as to whether or not Mr. Symons was present. The minutes do not show him as either present or as having sent apologies. It is noteworthy that the minutes record that Acre's Contracts Manager, Mr. Kumar Sahdev, was introduced to the meeting, having not attended one before. If Mr. Symons had been present one might have expected a similar introduction, since he too had not attended a previous site Progress Meeting.
316. The minutes of the meeting recorded, at paragraph 8.2.1, that a "low risk asbestos strip" had started the previous day and would probably take 6/8 weeks to complete. In PR No 4 dated 26 February 2008, Mr. Symons recorded the removal of the additional asbestos, presumably the "low level asbestos strip" that had been referred to in the minutes, as nearing completion. Clearly this information did not come from the minutes of PM No 4 on 30 January 2008, yet Mr. Symons does not say that he visited the site at any other time prior to the issue of PR No 4.
317. The Outlook diary for 30 January 2008 shows that Mr. Symons had an event in his office between 11:00 and 11:30 hours which, if it took place, would have clashed with the site Progress Meeting. The timesheet for that week has no time recorded for the Church Road project. On the basis of the evidence as a whole I can find no support for Mr. Symons's assertion that he attended the site meeting on 30 January 2008 and so I conclude that it is very unlikely that he either attended the site meeting or visited the site on that day.
318. The Outlook diary for the following week shows no entry relating to the Church Road project, although the timesheet records 1 hour spent on the project on Thursday, 7 February. Interim Certificate No 4 was sent to Mr. Symons by a letter dated 6 February 2008 (under cover of an e-mail timed at 16:03 hours), so it is certainly possible that he spent some time on 7 February 2008 considering and perhaps preparing a draft of his PR No 4.
319. Application for drawdown No 4 was sent to Mr. Symons on 12 February 2008. Mr. Symons says that he was on holiday between 18 and 22 February and his diary for 27 February shows a site meeting at Church Road between 11:00 and 12:00 hours. The timesheet records 1 hour of time on that day, but nothing for the previous two days when he must have spent time preparing PR No 4 which was issued on 26 February 2008. Mr. Symons does not say that he visited the site during the two weeks following receipt of application for drawdown No 4 on 12 February 2008 (which reflected work carried out up to 1 February 2008).
320. Is not possible to say how Mr. Symons derived some of the information set out in PR No 4, since it appears to have post-dated the state of the work recorded in the minutes of PM No 4 on 30 January 2008 - although the progress of the asbestos removal is information that could readily have been obtained in a telephone call. However, taking all the evidence into account I find that, as a matter of probability, Mr. Symons did not attend the site prior to the issue of PM No 4.

Progress Meeting No 5

321. On 27 February 2008, the day after the issue of PM No 4, site Progress Meeting No 5 took place. Mr. Symons says that he attended this meeting, although he is not recorded as attending and there was no challenge to the accuracy of the minutes of the previous meeting, which one would have expected if Mr. Symons had attended both meetings. Mr. Symons said in evidence that he was not "overly precious" about these things (Day 2/94), which I am prepared to accept. However, it is one thing to overlook one set of minutes which are incorrect because they do not show one's attendance at the previous meeting, but in my view it is quite another when this happens twice in succession. I regard it as unlikely that Mr. Symons would have said nothing if he had been left off the list of those present for two meetings in succession.
322. Mr. Symons did not receive the interim valuation certificate No 5 until 29 February 2008. A few days later he received a letter from Clark Associates enclosing Acre's "Revised Programme Rev 06, Cashflow and Schedule of Information Required". In his witness statement Mr. Symons says that this was the original cash flow forecast, which he had not previously seen. In this I consider that he is probably correct, because item 4.3 of the minutes of PM No 5 recorded that "the cash flow has now been provided". This is in contrast to the reference at item 3.1 of the same minutes to receipt of a "revised" Programme Rev 06 and Information Required Schedule "Revision 1" (my emphasis). On 7 March 2008 Mr. Symons received a drawdown notice, No 6, for £98,150.10. PR No 5 was issued on 18 March 2008.
323. The Outlook diary for 27 February 2008 recorded a site meeting at the Church Road site between 11:00 and 12:00 hours and the timesheet showed an entry for 1 hour on the same day. However, unless he was going to attend at the site meeting, it seems to me unlikely that Mr. Symons would have visited the site that day, because he had issued PR No 4 on the previous day and by then he had not received the latest interim valuation certificate from Clark Associates.
324. If Mr. Symons visited site at all prior to issuing his next report, I consider that it is much more likely that it was at some time after 7 March 2008, when he received drawdown notice No 6. The description of the progress on site given in PR No 5 was clearly not obtained from the minutes of the meeting that took place on 27 February 2008.
325. Lord Marks submitted that the probable source of the information in PR No 5 was a conversation with Mr. Clark. He said this:

"We say he must have got it from Clark over the telephone and we also say that at the time he did so, Mr. Clark - not Mr. Symons - must have had the valuation V5 in front of him."

326. Lord Marks then demonstrated how the description of the various activities in the progress section of PR No 5 followed the order of the items, and their state of completion, as they appeared in the valuation No 5. Further he said that the statement in the report that the removal of ceilings, the removal of internal walls and the demolition of staircases "are now progressing as is the removal of floor structures" could have been derived from the fact that these activities were shown in the valuation as being completed in part: that is because in the penultimate column of the table, which was headed "%", appear the word "Part". This was all very well until Lord Marks came to the item "Demolish Walls" which, according PR No 5 was still in progress. According to the valuation, it appeared to be complete because there was no entry in the % column - which, as Lord Marks put it, was the wrong way round. Against "Demolish Walls" was a figure of £20,000. So, on the approach contended for by Lord Marks, the suggestion was that Mr. Symons must have made a mistake. In fact, I do not think that there was a mistake. In the contractor's revised tender dated 9 May 2007 the price for the demolition of walls was £31,120. Accordingly, it looks as if the £20,000 shown in valuation No 5 indicated that the work was only partly complete and that Mr. Symons was right to describe the demolition of the walls as "now progressing".
327. It is, of course, possible that Mr. Clark was aware of this and so told Mr. Symons that, notwithstanding the absence of the word "Part" against the figure of £20,000 for the demolition of the walls, this item of work was only part complete. However, it is equally possible that, in spite of what was suggested by the valuation, Mr. Symons had been to site and had seen the position for himself.
328. Lord Marks submitted also that two following statements in the report, which concerned the installation of the temporary sway support and the situation in relation to the procurement of the piling and steelwork packages, could not have come either from the valuation or from the minutes of the last site progress meeting. With this I agree. Accordingly, Lord Marks went on to submit that the only source of this information could have been Mr. Clark. However, this submission fails for the simple reason that those statements repeat, almost verbatim, the corresponding statements in the previous progress report, PR No 4.
329. In these circumstances I am not persuaded by Lord Marks that the information contained in PR No 5 came from Mr. Clark in the way that he submitted. It is in my view equally possible that Mr. Symons reported that the demolition of the walls was still in progress because that is what he saw during a site visit shortly before he issued PR No 5.
330. There is no doubt that during the course of the project Mr. Clark and Mr. Symons spoke by telephone on a number of occasions: Mr. Clark said that he probably had about 10 such conversations with Mr. Symons during the course of the project, but that was obviously a very broad estimate. However, it does suggest that Mr. Clark's recollection was that they spoke about once every other month, rather than regularly on a monthly basis. It seems to me very unlikely that Mr. Clark would have been prepared to spend a lot of time briefing Mr. Symons in the level of detail suggested by Lord Marks when that was something which Mr. Symons was being paid to do and Mr. Clark was not. Mr. Clark was a man who was obviously fairly careful about how he billed his time and I would be very surprised if he had been prepared to indulge Mr. Symons in this way. I refer below to an occasion when Mr. Symons e-mailed Mr. Clark asking for a copy of a certificate and, also, for a brief update of current progress on site. Mr. Clark's response to this was not to have a long telephone conversation with Mr. Symons, but to send him the minutes of the last site progress meeting.
331. Lord Marks submitted that there was absolutely no explanation for the fact that the topics were dealt with in the progress section of the progress report in exactly the order that they were dealt with in the valuation. I disagree. It seems to me entirely logical that if Mr. Symons was doing his job properly he might well work through the valuation, item by item, and deal with the matters in the same order in his progress report.
332. I consider that Mr. Symons might well have made a brief visit to the site shortly before preparing PR No 5, but the state of the evidence does not enable me to make a positive finding either to that effect or to the contrary. Accordingly, I consider that the Bank has failed to discharge the burden of showing, as a matter of probability, that Mr. Symons did not visit the site between Progress Meeting No 5 and the issue of PR No 5.

Progress Meeting No 6

333. This took place on 10 April 2008 and the minutes were subsequently issued on 14 April 2008. Mr. Symons says that he attended it, but he is not shown amongst those present; however, but he was included, for the first time, on the distribution list. This read:

"All present plus apologies plus J Chukwu and J Symons at McBains Cooper."

334. It seems to me to be most unlikely that Mr. Clark would have specifically added Mr. Symons to the distribution list if he had been present. He would surely have added his name to those present, rather than leave him off the list of those who attended but include him by name on the distribution list.
335. The Outlook diary for 10 April 2008 has an entry for a meeting at the Church Road site between 10:00 and 11:00 hours on that day, but the timesheet for that week does not record any time spent on the project. The Outlook diary and the timesheet for the week commencing 17 April 2008 are not in the trial bundle - no doubt because it was not suggested by McBains Cooper that Mr. Symons went to site that week (since its case was that he attended site Progress Meeting No 6 on 10 April 2008).
336. By the time of the meeting Mr. Symons had received the latest interim valuation certificate, No 6, and the drawdown request and so, if he had attended the meeting on 10 April 2008, he could have issued his Progress Report very shortly afterwards.
337. In PR No 6, which was issued by e-mail at 18:15 hours on 16 April 2008, Mr. Symons noted that the removal of ceilings, internal walls and the demolition of the staircases were complete, as was the removal of the floor structures. This was not the position recorded in valuation No 8, in which these items (save for the walls) were still shown as partly completed. He noted also that installation of the temporary sway support had commenced. However, the minutes of site Progress Meeting No 6 recorded that the sway support construction would start next Wednesday (16 April) and that a letter of intent, in respect of the previous scheme excluding the third floor, had been provided to the steelwork subcontractor. For Mr. Symons to have been able to report that the ceilings and so on had been removed when this was not what was shown in the valuation, he would either have to have visited the site or been told this by someone who had. In relation to his comment that the work to the temporary sway support had commenced, he would either have to have been on site on 16 April (or have been told that by someone who had been on site) or, based on what had been recorded in the minutes, take a chance and assume that the work had started on the forecasted date. The latter seems to me to be unlikely: if he did not know for certain whether or not it had started, I would have expected him to say that the construction of the sway support was due to begin that day. That is precisely what he did in PR No 8 (see paragraph 54 below).
338. Lord Marks submitted that all this information must have come from Mr. Clark, who would have spoken to the contractors. It is said that Mr. Clark would have done this because he knew that he was going to have a conversation with Mr. Symons. I have to say that this sounds highly implausible - why should Mr. Clark do all this, when it was the very work that Mr. Symons was being paid to do?
339. Further, by a Contract Administrator's Instruction No 4, Clark Associates issued an instruction to proceed with the third floor steelwork on 15 April 2008.^[10] The terms of PR No 6, with its reference to the steelwork package having been finalised, suggests that when he wrote that report Mr. Symons was aware of this instruction. McBains Cooper was not on the distribution list for that instruction but Mr. Symons may have been told about it either by Mr. Clark or during a site visit.
340. I find that Mr. Symons did not attend the site Progress Meeting on 10 April 2008. However, it does look as if he visited the site on 16 April 2008 and then prepared his report that afternoon. It seems to me to be far more likely that Mr. Symons derived the information in his progress report from a visit to the site, rather than during a telephone call with Mr. Clark who had, it is suggested, in preparation for that telephone call, telephoned the site for an update on the progress of the works. I regard that as fanciful.

Progress Meeting No 7

341. This took place on 30 April 2008 and Mr. Symons was not present. During the first week of May 2008 he received both the latest interim valuation, No 7, and drawdown request No 7.
342. Mr. Simon says that he visited the site on 14 May 2008 and began work on PR No 7 on his return to the office that afternoon. The Outlook diary entry for that day indicates that he was in the office from 09:30 to 11:00 hours working on the drawdown. The timesheet shows that he spent two hours on the project.
343. On 14 May 2008, at 16:57 hours, he sent an e-mail to Mr. Clark in the following terms:

"DD 7 received as below. I have started to look at this and will ensure payment is available by the due date.

I do not appear to have received a copy of Interim Certificate No 7 which I read from your note was to follow under separate cover. Could you please forward this.

Also, a brief update of current progress on site would also be much appreciated."

344. Mr. Symons was unable to explain why he asked Mr. Clark for an update of current progress if he had already visited the site earlier that day (Day 2/141). On the following day Mr. Clark replied sending "further copies of Certificate No 7 and Meeting Minutes No 7 which reflects current position". About two hours later on the same day, 15 May 2008, Mr. Symons sent Progress Report No 7 to Mr. Humphrey and Mr. Mannering by e-mail. It is reasonably clear from the contents of the report that the description of the progress on site has been taken substantially from the minutes of Progress Meeting No 7 which Mr. Symons had been sent a little earlier.
345. I find that Mr. Symons did not attend the site on 14 May 2008, or at any other time during the first two weeks in May. It is common ground that he did not attend site Progress Meeting No 7 on 30 April 2008.

Progress Meeting No 8

346. This took place on 4 June 2008. Again, Mr. Symons is not shown as being amongst those present but is included in the distribution list. He says that he did attend the meeting and then visited the site afterwards.
347. His Outlook diary has an entry for a Progress Meeting at the Church Road site between 10:30 and 12:00 hours on Wednesday, 4 June 2008. However, no hours are entered against the project in the timesheet for that week.
348. Mr. Symons received Interim Certificate No 8 on 6 June 2008 and, during the following week, he received drawdown notice No 8 by e-mail on 11 June 2008, together with various supporting invoices. He issued Progress Report No 8 on 18 June 2008.
349. The description of the progress of the works in PR No 8 is very similar to that in the previous report, although the reference to the sway support in PM No 8 also mentions that the concrete has cured - but this is something that was stated in the minutes of site Progress Meeting No 8 which were issued on 10 June 2008. Interestingly, in relation to the piling works the report states that they "were to commence on 16^th June 2008". If Mr. Symons had visited the site during the previous two days he would have known whether or not the piling works had started.
350. I find that Mr. Symons did not attend the site Progress Meeting No 8. He does not say that he visited the site at any other time prior to the issue of PR No 8, but for the avoidance of doubt I make a finding that he did not do so.

Progress Meeting No 9

351. This took place on 2 July 2008. Mr. Symons is not shown as having been present, but under item 11.1 Mr. Clark noted that he was meeting Mr. Symons on site after the meeting. In the Outlook diary there is an entry for a meeting with Mr. Clark on site between 12:00 and 13:30 hours. There is a similar entry in Mr. Clark's diary. The timesheet records Mr. Symons as spending 2 hours on the project on 2 July 2008.
352. Mr. Clark said in his witness statement that his diary entry in the note in the minutes accord with his recollection. I therefore find that Mr. Symons did attend the site on 2 July 2008.
353. Mr. Symons did not receive the interim valuation certificate, No 9, or drawdown notice No 9 until the following week. However, Interim Certificate No 9 related to an application date of 1 July 2008 and so a visit to the site 2 July 2008 to inspect the progress of the work was entirely appropriate. PR No 9 was issued on 14 July 2008.

Progress Meeting No 10

354. This took place on 31 July 2008. It was not attended by Mr. Symons. He said that he visited the site on 11 August 2008, prior to preparing his progress report on the following day.
355. The Outlook diary records that Mr. Symons was in the office between 12:30 and 14:00 hours on Monday, 11 August 2008, with an activity described as "Interim Report". The timesheet shows him as having spent 2 hours on the project that day. At paragraph 139 of his witness statement he said this:

"On 11 August 2008, I visited the site prior to working on my progress report. Site works undertaken in the period included some substructure works such as the installation of ground beams and pile caps. I recall a discussion with Will Clark about whether the delays to finalising the decking and staircase packages was due to him trying to negotiate a price with Acre at a level acceptable to the Borrower, in view of the fact that he would have to fund the additional 3^rd floor costs. I do not recall Will Clark's response, however I do recall being of the opinion that as the quantum of the additional 3^rd floor works was evolving, he was coming under pressure to manage those costs very carefully."

356. Although this does not say in terms that the conversation with Mr. Clark took place on site, Mr. Symons said in cross examination that he remembered the conversation happening on site although he could not be 100% sure about the date.
357. PR No 10 noted that the steelwork package, which had been scheduled to commence at the end of July, "did not occur" but was scheduled to commence immediately. It noted also that works in the coming period were to include the removal of existing render, internal brickwork and preparation for the installation of floor decking and roof cladding. There is no reference to the removal of render or internal brickwork in the minutes of site Progress Meeting No 10 and so I consider it likely that this information came from site.
358. I am satisfied that Mr. Symons did attend the site on 11 August 2008, as he says, but, contrary to what he said in evidence, I do not accept that he met Mr. Clark on site that day. PR No 10 recorded that the Contract Administrator - Mr. Clark - had acknowledged that there was to be an extension of time for part of the current delay but as yet no details of this were available. As far as I can tell, this information could only have come from Mr. Clark and so I think it is likely that Mr. Symons did have the conversation with Mr. Clark that he described, although it might have taken place on the following day; but at all events I consider that it was a telephone conversation and not a face to face conversation on site.
359. A revised version of PR No 10 was issued on 22 August 2008, but this simply corrected two minor omissions (a missing reference and the insertion of VAT in respect of the broker's fees) which had no material effect on the contents of the report.

Progress Meeting No 11

360. This took place on 28 August 2008. Mr. Symons did not attend the meeting but is shown as having been sent a copy of the minutes when they were issued the following day.
361. Mr. Symons said that on 4 September 2008 he received drawdown notice No 11, with supporting invoices from Acre, S J Purdom, Clark Associates and A&N Architects, and that subsequently he visited the site on 8 September 2008 to check the progress of the works.
362. According to the entry in the Outlook diary, Mr. Symons was engaged in preparing the drawdown between 10:00 and 11:30 hours on Monday, 8 September. It shows him as being in the office from 11:00 to 14:30 hours. The timesheet shows that he spent 2½ hours on the project on Monday, 8 September, and ¼ hour on Thursday, 11 September. In an e-mail timed at 10:17 hours on 8 September, Mr. Symons told Mr. Clark that he was "completing the report to the Bank today". PR No 11 was subsequently sent to the Bank on the following day, under cover of an e-mail timed at 17:19 hours, which was sent to Mr. Humphrey and copied to Mr. Mannering.
363. The description of the progress on site in PR No 11 suggests to me that it was based on a fairly recent site visit, since it mentioned matters that were not recorded in the minutes of PM No 11, such as the "piling, casting of pile bases, shuttering and pouring of concrete bases all also largely complete".
364. I consider that what was described as "drawdown" in the Outlook diary for 8 September 2008 probably included a visit to site as Mr. Symons said. I do not consider that the 2½ hours shown in the timesheet, if correct, was insufficient to make a visit to site and to draft the progress report. PR No 11 looks as if it might have been prepared in some haste because the amount of the drawdown (£158,991.06) had been incorrectly carried over from the previous report. I therefore find, in spite of the Bank's submissions to the contrary, that Mr. Symons did visit the site on 8 September 2008 to check the progress of the work.

Progress Meeting No 12

365. This took place on 2 October 2008. Mr. Symons did not attend, but says that he received the minutes of the meeting on 7 October. By then he had received Acre's valuation No 12 and drawdown notice No 12, with supporting invoices.
366. He said that he visited the site on 13 October 2008 to check the progress of the work, when he noticed that the steel decking to the first and second floors was in place along with the concrete slab to the first floor.
367. The Outlook diary records of that from 09:30 to 11:00 hours on Monday, 13 October, Mr. Symons was working on the Interim Report in the office. The timesheet records 2½ hours on Monday and a further ½ hour on Tuesday, 14 October. PR No 12 was sent to the Bank by e-mail at 11:26 hours on 14 October 2008.
368. The contents of the report suggest to me that they have been taken from the description of the contractor's progress as recorded in the minutes of SM No 12: I can see nothing in PR No 12 that could not have been extracted from the minutes. The notes of the meeting have been slightly embellished, but as a matter of style rather than of substance. When Mr. Symons was asked by Lord Marks whether he did in fact visit the site on that day, rather than spent the time in the office as the diary suggests, he said (Day 3/5):

"Well, my answer is, my Lord, as I said in previous instances, I attended site, I always attended site, on most occasions I attended site before I did my report. To the best of my recollection and reconstruction, it was on that date and it would make sense that it would be before I did my report, the day before I actually sent my report out."

369. In spite of this answer, I am not persuaded that Mr. Symons did in fact attend the site on 13 October. It seems to be much more likely - and I so find - that he spent the time in the office, as the Outlook diary suggests, compiling PR No 12 from the site minutes and the other documents that were in his possession.

Progress Meeting No 13

370. This took place on 30 October 2008, held as usual in Acre's offices. At paragraph 161 of his witness statement, Mr. Simon says that he attended a site meeting on that day "at Acre's site cabin/office". He said that, at around this time, he recollected being able to view the third floor steel structure from ground level.
371. It was common ground that the cabin or office on site was far too small for a site meeting, which is why they were always held at Acre's offices, which were about 10 minutes walk away from the Church Road site. So, to the extent that Mr. Symons is to be taken as suggesting that the site meeting took place on site, he must be mistaken. The minutes of site Progress Meeting No 13 do not show Mr. Symons as having been present, although he is included on the distribution list for the minutes. The minutes were issued on 4 November 2008.
372. The entry in the Outlook diary for 30 October 2008 refers to a Progress Meeting at Acre's office, between 10:30 and 12:30 hours. The timesheet shows 2½ hours for that day.
373. Mr. Symons said that on about 3 November 2008 he received Clark Associates' Interim Certificate No 13 and Acre's amended valuation No 13. On about 18 November 2008 he received drawdown notice No 13, together with supporting invoices. PR No 13 was issued on 25 November 2008.
374. Once again, I can find nothing in the description of the progress of the work in PR No 13 that could not have been taken from the minutes of the site meeting held on 30 October 2008. Indeed, the description of the progress of the work in the minutes is very closely reflected in PR No 13.
375. In the circumstances I find that Mr. Symons did not attend site Progress Meeting No 13, and I consider it unlikely that he attended any other meeting on the site that day. Although it is McBains Cooper's pleaded case that Mr. Symons visited the site again on 25 November 2008, Mr. Symons says nothing about this in his witness statement. Since he does not suggest that he visited the site on any other date between 30 October and 25 November 2008, when he issued PR No 13, I conclude that Mr. Symons did not attend site prior to issuing that report.

Progress Meeting No 14

376. This took place on 27 November 2008. Mr. Symons did not attend, but he received a copy of the minutes on 3 December. He received Clark Associates' latest interim certificate, No 14, on 5 December 2008 and received Acre's amended valuation No 14 three days later.
377. He says that "on or around 15 December 2008" he visited the site to review the progress of the work. Progress Report No 14 was issued on 18 December 2008. The Outlook diary for 15 December 2008 contains no reference to the Church Road project, although it does record Mr. Symons as being at Finchley Road between 10:00 and 11:30 hours. The next appointment (with "OBS") is shown as being at 12:30 hours. The timesheet does not show any time spent on the project on Monday, 15 December, but does show 1½ hours on Thursday, 18 December (the day on which PR No 14 was issued). Mr. Symons accepted that his evidence that the date of the site visit was on 15 December was based on reconstruction.
378. Much of the description of the progress of the work in PR No 14 can be derived from the minutes of Progress Meeting No 14, but not all of it. For example, in one or two places where the minutes record that something is to happen in the future: in PR No 14 it is described as having commenced or, in the case of the roof removal, as being "largely" complete (the minutes noted that it would "re-start tomorrow" and "all will be removed by the end of next week", namely 5 December).
379. It seems to me that Mr. Symons could not have written PR No 14 in the terms that he did unless he had received some updated information from the site. I reject the Bank's suggestion that the differences are "stylistic". For the reasons that I have already discussed in the context of one of the other site visits, I think it unlikely that he obtained the relevant information from Mr. Clark. On balance, I think it is most likely that he did visit the site at some time between 15 and 18 December 2008: for example, he might have gone on to visit the site from his appointment at Finchley Road if it finished a little early (it was shown as finishing at 11:30 hours) on Monday morning and still been in time for his next appointment at 12:30 hours (but that depends on where it was). Alternatively, he might have gone after the meeting with OBS because he is shown as working on the Church Road report from 14:00 hours to 16:30 hours. I therefore reject the Bank's allegation that Mr. Symons did not visit the site before preparing PR No 14: in any event, it has certainly not proved that he made no such visit.

Progress Meeting No 15

380. This took place on 29 January 2009. It was attended by Mr. Symons. However, in the meantime, he had issued PR No 15 on 19 January 2009. He said in his witness statement that he did this without having made a further visit to site on the basis of the contractor's progress report for the period.
381. There is no doubt that Mr. Symons attended the meeting on 29 January, because he is shown in the minutes as having been present. This is the only meeting at which he was shown as being present. Mr. Symons thinks that he attended this meeting with Mr. Mannering, but the latter is not shown in the minutes as having attended.
382. Mr. Symons received Clark Associates' Interim Certificate No 16, together with Acre's amended valuation No 16. Drawdown notice No 16 was received on 13 February 2009, together with the supporting invoices. He says that on either 16 or 17 February 2009 he visited the site. PR No 16 was issued on 27 February 2009.
383. There are no entries in the Outlook diary for Monday 16 February 2009, but for Tuesday, 17 February, Mr. Symons is shown as preparing the Interim Report in the office between 09:30 and 11:00 hours. The timesheet shows him spending 1 hour on the project on the Monday and 2½ hours on the Tuesday.
384. The description of the progress of the work in PR No 16 is very similar to that in the previous report, although the percentage completion of the cutting works to the window lintels has been increased to 80% (from 75% in PR No 15). The notes of the meeting of 29 January 2009 recorded that the mansafe system and guttering would be completed that day, whereas these are shown as work still to be carried out in PR No 16, a month later.
385. In these circumstances, I find, albeit with some hesitation, that Mr. Symons probably did visit the site in about mid February 2009 as he says. At any rate, in my judgment the Bank has failed to prove that he did not.

Progress Meeting No 16

386. This took place on 26 February 2009. The minutes show Mr. Symons as not being present but on the distribution list for the minutes. He accepts that he was not present at this meeting.
387. Mr. Symons says that on 2 March 2009 he received Clark Associates' Interim Certificate No 17 and Acre's amended valuation No 17. He received the minutes of the meeting on the following day. Mr. Symons says that on 5 March 2009 he received Acre's progress report No 17 and, on the following day, he received drawdown notice No 17, together with supporting invoices. He says that he visited the site on 16 March 2009. He says in his witness statement that, to the best of his recollection, it was during this visit that he was informed by Mr. Clark that the preferred M&E subcontractor was no longer prepared to work on this project as a result of the delays.
388. The Outlook diary has an entry for 16 March 2009 which shows that Mr. Symons was to be working on the "Interim DD Report" between 15:30 and 16:30 hours. The timesheet has 3 hours recorded for Monday, 16 March. PR No 17 was issued on 17 March 2009.
389. The description of the progress of the works in PR No 17 contains information that is not set out in the minutes of the site Progress Meeting No 16. For example, the list of work to be carried out in the next four weeks includes the electrical and mechanical first fix and the encasing of steel columns to ground, first and second floors. Neither is mentioned in the minutes. The work to the flat roof, which according to the minutes of the meeting of 26 February 2009 "should finish mid-next week", are not shown in the list of forthcoming work (in contrast to the list of corresponding items in PR No 16).
390. On balance, I consider that Mr. Symons probably did visit the site on 16 March 2009, as he said he did. However, I consider that he was probably mistaken about being informed by Mr. Clark that the M&E subcontractor had been lost. It looks far more likely that this information came from Acre, the contractor, as suggested in PR No 17.

Note 1    In the Draft (Revised) Report dated 6 April 2007 McBains Cooper had advised that the original summary of the development costs included interest of £86,475, based on a tender sum of just over £2 million and professional fees of £75,000. By the time this report was written the revised tender figure was about £2.5 million and so the interest would increase by a similar proportion to a figure in excess of £100,000.    [Back]

Note 2    For those unfamiliar with building contracts, a provisional sum is a lump sum allowance for a particular item of work, usually because either the contractor has not obtained a quotation for it or the scope of the work required is uncertain. A provisional sum is therefore an allowance that is almost certain to change - although the change may be either up or down.    [Back]

Note 3    £25,000 for the increased interest on the higher construction costs plus £50,000 for the professional fees.    [Back]

Note 4    As Lord Hoffmann famously observed in Secretary of State for the Home Department v Rehman [2001] UK HL 47, at, [55]: "It would need more cogent evidence to satisfy one that the creature seen walking in Regents Park was more likely than not to have been a lioness than to be satisfied to the same standard of probability that it was an Alsatian. In this basis, cogent evidence is generally required to satisfy a civil tribunal that a person has been fraudulent or behaved in some other reprehensible manner".    [Back]

Note 5    See, for example, his e-mail dated 15 November 2005: “I am keen to do something here and would appreciate an early opportunity to discuss".    [Back]

Note 6        [Back]

Note 7    See paragraph 27 of the Joint Statement of the expert project monitors. Mr. Symons made a concession to similar effect in cross examination (Day 1/162).    [Back]

Note 8    This is based on actual interest paid to 1 June 2009 of £90,277.69 (taken from the appendix to McBain Cooper’s closing submissions).    [Back]

Note 9    Mr. Diana was cross-examined at some length about what he was told by Mr. Mannering (at Day 6/13-20) and agreed that Mr. Mannering should have reported to Commercial Credit the additional costs incurred in relation to asbestos and the fact that works were being carried out to the third floor. There is no record in the documents of him having done so.    [Back]

Note 10    In its further submissions following the issue of this section of the judgment in draft the Bank relied on the fact that Mr. Symons knew about this CAI in the context of PR No 5, but I could not see the relevance of this point.    [Back]