Neutral Citation Number: [2005] EWHC 3102 (TCC)
Case No: 4CK01684
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14/12/2005

Before :

DEPUTY TCC JUDGE COLIN REESE QC.
- - - - - - - - - - - - - - - - - - - - -
Between :

	Clark Smith Partnership Limited	Claimant	
	- and -		
	Leyton Football Club	Defendant	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Claire Packman (instructed by Beale & Co.) for the Claimant
Graham Platford (instructed by Richard West Freeman Christofi) for the Defendant

Hearing dates: 24, 25, 26 October 2005
- - - - - - - - - - - - - - - - - - - - -
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

DEPUTY TCC JUDGE COLIN REESE QC.

Mr. Recorder Colin Reese QC. Sitting as a Recorder in the TCC  : 

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

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

	2.1	TAS is a director of the Claimant, he was the Club’s initial contact within the Claimant and he became the director responsible for the project.  TAS assigned Mr R Cooper (“RS”) to the project.  Until he left the Claimant in early 2002, RS was involved (in conjunction with TAS) in day to day liaison and correspondence with the Club.  RS’ rôle was then taken by Mr Chris Turtle (“CT”).

	2.2	CS is one of the directors of the Club and at all material times he was the Chairman of the Club.  The other Club director who was involved over the first 12 months (approximately)  of the project, was Mr Philip Foster (“PF”).

	2.3	TAS was the Claimant’s only factual witness.  I accept the written and oral evidence which he gave.  In this judgment I have not found it necessary to deal with the details of each of the areas of additional work described in the lettered sub-paragraphs of paragraph 16 of the Amended Particulars of Claim.  However, for the avoidance of doubt, I record that, in respect of each, I accept the evidence given by TAS concerning the request for such work to be undertaken and content of the work which the Claimant carried out.  Where his evidence conflicted with the evidence given by CS, I consider TAS had the more accurate recollection and , as will be apparent from my findings, I prefer his evidence.  

	2.4	CS was the Club’s principal factual witness.  Whilst I accept much of his written and oral evidence, as will be apparent from my findings, in certain respects I do not think CS had a particularly accurate recollection of events which had occurred.  To give an example – surprisingly, in view of the contrary indications in the apparently clear contemporary record, at paragraphs 14 and 15 of this first witness statement (C/337) CS stated that TAS orally quoted a fixed fee of £32,000 plus VAT and that he handed over a down payment of £5,000 to TAS at their very first meeting at the Club’s ground.  The error was repeated/reinforced at paragraph 8 of this second witness statement (C/373c).  When cross examined CS accepted that what he had said was in error.  He said he had made an error on dates for which he apologised, adding “It’s four years ago”.  Three other features of CS’ evidence are worthy of comment at this point.  First, I accept his evidence that although he had been actually engaged as a dwellinghouse developer for many years, in May 2001 he was not familiar with the detail of with the JCT Forms of Contract or the ACE Conditions of Agreement.  Secondly, in my judgment, insofar as CS gave evidence that he considered the Claimant was engaged to be the Club’s “contract manager” or “my project manager” or that “they were in charge of completing the job” and/or when he said (or implied by what be said) that the Claimant has agreed a fixed fee of £32,000 plus VAT irrespective of the method of procurement which was to be used, those were not views which a reasonable/experienced businessman could hold if he had read the contemporary correspondence.  Thirdly, I simply do not accept CS’ suggestion that the Claimant’s payment applications No 3 dated 19th February 2002 (I/1099), No 4 dated 29th October 2002 (I/1101) and/or No 5 dated 5th March 2003 (I/1107) were not seen by him and/or that they were processed and paid in error by members of his staff.  In my judgment, CS saw each and every one of the Claimant’s applications for payment and none was paid unless and until he authorised it.  As he himself said at paragraph 64 of his first witness statement, save when he was in hospital, “…in reality, the Club tended to rely on me authorising payments”.  Unfortunately, CS had to spend some in hospital in the first half of 2004 but, so far as this case is concerned the relevant period is February 2002 to May 2003.

	2.5	The Club’s other factual witnesses were PF and Mr Steven Benton (“SB”), a self-employed bricklayer who had been employed by the Club on the redevelopment project in 2002/2003.  So far as SB’s evidence is concerned, I readily accept all that he said which directly concerned the works for which he was responsible (i.e. up to and including paragraph 16 of his witness statement – C/357-360) was accurate.  I am less convinced that his description of conversations with CS and/or with the Claimant’s CT is sufficiently full or adequately contextualised to be taken at face value but, assuming that part of the evidence could be accepted, I do not consider it could assist the Club in any way.  The limitations or constraints on the matters that the Club might advance in its defence as a result of the Order made on 5th April 2005 preclude any weight being given to this evidence in the present context (see further at paragraph 35 below).  If, at some future date, the stay on the Counterclaim is lifted, it may be that some or all of this evidence would then become relevant.

	2.6	RF’s evidence concerning the discussions with the Claimant in 2001 added little to the matters which CS covered rather more fully.  He had resigned well before a dispute concerning the Claimant’s fees entitlement began to develop and, as he himself had said at paragraph 26 of his witness statement, “[CS] tended to be the person running things anyway ….” (C/355).  His detailed recollection when preparing his witness statement contained the same obvious errors concerning the first quotation and the initial payment as CS’ first witness statement (C/351).  As I have already said, the errors were obvious when the contemporary documents were examined and, when asked about this, RF readily admitted that his stated recollection was wrong.

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

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

	Thank you for your time and courtesy at our meeting on site on Wednesday 16th May 2001 during which we discussed proposals for the above redevelopment.

	As a result of these discussion we understand that you have full Planning Consent, a copy of which was provided to us for the demolition of the existing premises know as the Morris Minor Centre and the new build construction of a two storey development providing Restaurant, Banqueting Club and Bar facilities….

	In consideration of the above you are now desirous of commencing the works, undertaking demolition of the existing buildings using your direct labour and procurement of the new building to a shell finish by traditional contractual means through a main contractor.  To assist in realising the above you wish to appoint a professional consultancy to deliver various services, the least of which being design calculations and drawings for submission and approval by the Local authorities Building Control Department.

	In connection with this we express our keen interest and list below matters for your consideration in delivering the project together with a range of services and associated fees.

	I understand from our discussions yesterday that all internal fitting out works, finishes, internal walling and services will be undertaken by your good selves and with this in mind we offer the following:-

	1.	To obtain Building Regulation Approval

	Take a brief, provide structural design calculations for foundations, ground floor, first floor, primary structural frame and roof, provision of below ground drainage design drawings and details, assisting with the discharge of planning conditions, arranging for trial pits, inspecting same and providing advice and assistance with soil sampling and analysis by others, obtaining information from statutory authorities in respect of gas, water, electricity and telephone, providing information on same, liaising with Local Authority as necessary, providing attendance at meetings as required, liaising with Planning Supervisor and Party Wall Surveyor as necessary, providing information as water, electricity and telephone, providing information on same, liaising with Local Authority as necessary, providing attendance at meetings as required, liaising with Planning Supervisor and Party Wall Surveyor as necessary, providing information as required to Acoustic Consultant, assisting with appointment of same and providing advice on the services of others required.

	In addition we have allowed for developing the internal arrangement of accommodation in conjunction with your good selves.

	Our fees for providing the above service will be £13,5000 exclusive of VAT but inclusive of all normal foreseeable expenses and disbursement.

	2.	Tender Action

	In addition to the above we are willing to provide the following optional service in assisting you with the tendering process of structural steel work and the main contract.  This service will include:-

	To provide tender documentation in respect of structural steelwork, external cladding, the provision of specification for steelwork, cladding and general building works, providing form of contract, provision of tender analysis report and recommendations.

	Our further fee for the provision of this service would be £6,000.00 exclusive of VAT but again inclusive of normal foreseeable expenses and disbursements.

	3.	Site Works

	In addition to the above we can provide a construction phase service, administer the contract on your behalf and generally assist you during the construction process.  For this aspect of the works we propose the following service:-

	To provide intermittent site visits, provide attendance at and chair site meetings, provide minutes of same, liaise with client, contractor, local authority and checking consultant as necessary, provide stage reports and snagging lists at completion of structural steel work and completion of shell, provide monthly valuations and issue certificates as necessary, assist in obtaining, contractor warranties, and provide general advice as required.

	For such a service we would expect our fees to be in the sum of approximately £12,5000.00 exclusive of VAT.  It is however difficult to assess such costs since our workload will be determined by the performance of the contractor.  Nevertheless we would offer the above price or alternatively could charge for this aspect of the works on a time expended basis should you so wish.

	In addition to the above the services of others will be required which we list as follows:-
	1.	Party Wall Surveyor

	The works involve demolition and construction within 3mtrs of the party wall and as such there is a statuary requirement for a Party Wall Award.  To progress, it will be necessary for you to appoint a Party Wall Surveyor and we would suggest …[Mr C Hookham]…..

	2.	Planning Supervisor

	In accordance with the Construction Design and Management Regulations 1994 you are required to appoint a Planning Supervisor to manage safety issues.  As with the Party Wall Surveyor this is a legal liability.  Again we would suggest Mr C Hookham…..

	In consideration of the above two services we have taken the liberty to speak directly to Mr Hookham on your behalf and he has offer the following:

	1.	Party Wall Surveyor

	On the information that we have been able to provide Mr Hookham has estimated his fees to be approximately £1,500.00 exclusive of VAT.  This figure will however require confirmation subject to a site visit.

	In respect of Planning Supervisory Services Mr Hookham has advised the following:

	a.	For pre-tender Health & Safety plan and filing of F10 – £1,000.00 exclusive of VAT.

	b.	For construction stage Health & Safety file, checking of Designer and Contractor Competence and the full discharge of Planning Supervisory Services a further £1,500.00 again exclusive of VAT.

	Whilst your Architect has produced planning drawings we understand that theses have not been based upon a comprehensive site survey.  We would therefore strongly suggest that prior to the commencement of construction phase drawings a detailed site survey is undertaken and the information provided in digital format, ACAD compatible.  For such a service may suggest [Laser Surveys]…..

	In order to minimise the cost of the new below ground drainage installation it would, if possible, prove advantageous to use the existing sewer connection.

	Whilst on site yesterday we noted a number of manholes to be present and would suggest that a drainage survey would be a worthwhile investment.  Any reputable drain repair company can provide such a service.

	We note that condition 5 of the Planning Approval requires that an Acoustic Study is prepared by a reputable firm of Acoustic Consultants.  In respect of this may we suggest you contact and appoint the following [the Equus Partnership]…..

	Should you wish to appoint us in accordance with the above we would suggest that our appointment is in accordance with the ACE Conditions of Contract agreement (A1).  We trust that we have understood your requirements correctly and have responded accordingly.  If, however, further clarification is required please do not hesitate to contact us by phone.

	In the meantime thank you once again for the courtesy extended yesterday and we look forward to hearing from you further.
5.	A further meeting took place on 8th June 2001 at which the Club appointed the Claimant to carry out professional engineering services, the nature and extent of which are now in issue.  TAS wrote a confirmatory letter dated 8th June 2001 (H/597) in which he said:

	We refer to our meeting this morning in connection with the above redevelopment and write in confirmation that you wish to appoint us in accordance with the services itemised as 1 to 3 in our letter dated 18th May 2001.

	In order to regularise the situation, we enclose a further copy of our letter dated 18th May 2001 which we have amended to show your name correctly, which we would be pleased if you could countersign and return to us as confirmation of our agreement.

	We have this afternoon contacted Mr Hookham in respect of the Planning Supervisor and Party Wall Supervisor commission and have asked that he contact you direct.  In addition, we have also made further contact with Paul Gray of The Equus Partnership who should similarly contact you directly.

	We will contact Messrs Laser Surveys and instructed them on your behalf to undertake a full survey of the site and again we will suggest that they contact you directly to make appropriate arrangements…..

	Whilst writing we also confirm and thank you for the cheque this morning in the sum of £5,000 paid to us on account in respect of the proposed works and enclose for your retention our invoice in respect of this.

	Thank you for this commission and we look forward to working with you on this project.

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

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

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

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

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

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

	Further to our previous meeting and the recent discussions with regards to finding an acceptable solution to progress with the project, we have listed below the various elements of the works to be considered.

	1.	Piling
	2.	Ground Works
	3.	Drainage
	4.	Precast Ground Floor Slab
	5.	Structural Steelwork, Floor Slabs, Staircases and Fire Protection
	6.	Roof
	7.	External Cladding and Glazing
	8.	External Brick/Block Walls
	
	We understand, with the exception of Items 5, 6 and 7, the above elements could be carried out individually by Subcontractors of your choice.  With regards to items 5, 6 and 7, we will enquire with the original Tenderers as to their willingness to carry out these items only and obtain prices for such works.

	Further to the above, you will require the services of the following:

	1.	A Site/Project Manager to supervise and co-ordinate the Subcontractors.  The Project Manager will possibly be responsible for setting out otherwise.

	2.	Setting Out Contractor such as Laser Surveys.  The Setting out will be required for each separate element of works.

	3.	Clark Smith Partnership to provide a service to aid the Subcontractors.  The extent of this service will depend on the competence of the Subcontractors.

	We look forward to meeting with you to discuss the above and suggest you obtain quotations for the elements of works you are able to provide in order to ensure this method of proceeding with the project is financially viable.

This letter was discussed at a meeting on 8th November 2001.  The minutes, which RC prepared, included:

	1.1	[TAS] discussed contents of letter with regards to a solution to progress with project.  In particular the requirements for the services of a Project manager and Setting Our Contractor, should the project be broken down into “individual trades”.

	1.2	With the agreement of [the Club, the Claimant] will enquire with Clive Hartley to assess his willingness to carry out the role of Project manager and to ascertain the level of service to be provided together with anticipated fees.

	1.3	The Club, understood the requirements for a Setting Out Contractor and request [the Claimant] discuss this item with Laser Surveys.

	……..

	2.4	Structural Steelwork [The Claimant advises] the preferred solution is to package together the steelwork with the upper floor slabs and the external envelope.  [The Claimant has] discussed with Faircloth Ltd (preferred tenderer) and [is] awaiting a fee proposal for these items.

		[The Claimant expresses] concern with the increased risks associated with procuring these elements individually.

		[The Claimant is] to obtain quotations for Steelwork Contractor to provide Steel frame only.

Those minutes were forwarded to the Club on 12th November 2001 (H/621 – 623).

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

	11.	A meeting was held on the 8th November 2001 between [the Club] and [The Claimant] and the package procurement further discussed.  [The Club] confirmed that they would commission the ground works including the ground floor slab themselves.  It was also confirmed that external brick and block walling would also be procured directly by [the Club].

		………….

		The question of [the Claimant’s] services was discussed between the parties; it was agreed that it was impossible for the [the Claimant] to provide fixed fees for services of an unknown scope and duration and that [the Claimant] would continue to provide services to [the Club] which would be charged a the company’s usual hourly charging rates.

The pleaded confirmations concerning the ground works, the ground floor slab and the external wallings are evidenced by items 2.2, 2.3 and 2.5 of the minutes (H622 – 623).  However, the minutes do not record the agreement which was pleaded in the final sentence of that paragraph.

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

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

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

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

	12.	By reason of the matters aforesaid and the [Club’s] decision to break the works down into various packages, the contract between the Claimant and the [Club] was varied by express agreement.  The Claimant was to continue to provide services to the [Club] for which it was to be paid at its usual hourly charging rates.  In the alternative the contact between the parties was determined by the Claimant under Clause 5.2 [of the ACE conditions] or terminated by the Claimant’s (sic) breach of contract or frustrated because the contract became impossible to perform as originally intended by reason of the [Club’s] decision.  The Claimant is entitled to be paid a reasonable sum for the work carried out under Clause 6.5 [of the ACE conditions] or by virtue of the term pleaded at paragraph 6 above or on a quantum merit for work carried out at the [Club’s] request and for the [Club’s] benefit.

[The term pleaded at paragraph 6 of the Amended Particulars for Claim (to which reference was made in the second of the three alternative ways in which the entitlement was claimed) was that any variation of the services required from the Claimant and/or any additional services would be paid for by the Club “on the basis of time based fees at a reasonable hourly rate.”  This was pleaded as an express or alternatively an implied term by virtue of Clause 6.4 and Appendix II of the ACE Conditions and/or an implied term arising from Section 15 of the supply of Goods and Services Act 1982.]

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

17.1	In my judgment, because there was no agreed fixed fee and no agreed rates on the basis of which “time based fees” could be calculated for such additional services as might be requested and provided, it must follow that the Claimant’s legal entitlement was to claim a reasonable remuneration for such additional services as it did in fact provide at the Club’s request.  I do not accept the Claimant’s submission that the change made to the method of procurement was so significant that it altered the entire scope of the work which the Claimant carried out thereafter.  To my mind, manifestly that was not so.  But, how should the reasonable remuneration for those additional services which were required and provided be calculated ?  Very probably, the Claimant would put forward a claim on a conventional time-charging basis viz. hours properly and reasonably spent charged out at rates appropriate for the salary and overhead cost of the employees involved plus disbursements but, in the absence of agreement on the rates it was to be entitled to charge, there was no established right to claim on this basis.  The Club would be able to challenge the reasonableness of the  Claimant’s proposed charges, suggesting, if it thought fit, alternative rates or even an alterative basis of charging for some or all of the additional works.  
17.2	I wish to make it clear that I have not overlooked CS’ evidence that he is not a person who is in the habit of writing blank cheques for people and/or that if there had been any suggestion that the amount to be paid to the Claimant was changing from the lump sum stated in the letter of 18th May 2001 he would have “wanted to know exactly what amounts were being talked about”.  I accept unreservedly CS’ statement that he is not in the habit of writing blank cheques but that is not something which he agreed to do.  I do not accept that he did insist upon knowing exactly what were the charges which the Claimant would be making for what was, at that time, an uncertain workscope.  In my judgment, CS is an experienced and successful property developer, well used to negotiating accounts which are presented to him so as to ensure that value for money is obtained.  In November 2001, I believe CS accepted what TAS said and that he was confident he would be able to resolve matters satisfactorily with TAS in due course;  and, if the major counterclaim issues had not arisen, I think it very likely that would indeed have happened.

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

	Further to our previous meeting with have received a revised quotation of £220,000.00 to carry out the following items of work

		1.	Structural Steelwork and metal decking to Floor Slabs.
		2.	Roof, Gutters and RWP’s.
		3.	External Cladding and Glazing.

	The outstanding items to be considered will be:

		1.	Piling
		2.	Ground Works
		3.	Drainage
		4.	Precast Ground Floor Slab
		5.	Staircases
		6.	Lift
		7.	Fire Protection to structure
		8.	Concrete to First Floor and Plantroom Slabs

	As previously discussed, there will also be a requirement for the services of the following:

		1.	A Site/Project Manager to supervise and co-ordinate the Subcontractors.  The Project Manager will possibly be responsible for setting out otherwise.
		2.	Setting Out Contractor such as laser Surveys.  The Setting out will be required for each separate element of works.
		3.	Clark Smith Partnership to provide a service to aid the Subcontractors.  The extent of this service will depend on the competence of the Subcontractors.

	We look forward to meeting with you to discuss the above.

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

	Assuming the attached is acceptable, we require instruction from [the Club] to arrange to meet with the [prospective tenderers] and yourselves to set up the required contracts and commence the works.

The Club’s written response to that letter came from CS on 18th December 2001 (H/666) when he said:
	Re: your letter sent on 13.12.01

	I would like to confirm that the estimate sent is fine and if you could go ahead to arrange a meeting to discuss the next stage.

	If you could also check out the things that we spoke about on the phone and I look forward to hearing from you.

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

	3.0	The Contract

	3.1	The contract will be “Standard form without quantities, plus contractor’s designed portion.”
		Threecie will act as principle (sic) contractor during the ground works and hand-over principle (sic) contractor responsibilities to Faircloth on commencement of the above ground works.

		…………….

	3.4	Site Facilities : All facilities including toilets, temporary power and office will be provided by [the Club].

	4.0	Site possession/start date

		[The Club] will demolish existing structure and have site cleared for the commencement of works by Threecie on 21st January 2002.

	……………..

	6.0	Below Ground Works

		In addition to above, Threecie to provide proposed programme of works.

	……………..

	8.0	Project Management

	8.1	It was agreed that Project Management/Site Supervision for integration of packages would not be necessary.

	9.0	Monies

	9.1	It was agreed with all parties [the Claimant] will inspect works and issue valuation certificates fortnightly.  Upon issue of these certificates [the Club] should pay contractors within 14 days.

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

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

	As discussed yesterday, [the Club] are required to place an order direct with Tarmac Topfloor for the supply, deliver and installation of the precast concrete ground floor planks.  In writing to them, please refer to the previous correspondence, copies of which are attached.

	I am sure Tarmac Topfloor will require information from [ the Claimant].  Therefore, I suggest you advise them that we are managing the project on your behalf and they are to contact us direct.

	I trust the above is in order.  However, should you require further assistance with the above, please do not hesitate to contact us.

By 4th March 2002 no order had been placed (see Progress Report 4th March 2002 – H/699).  On 5th March 2002 TAS sent a fax to CS informing him that this presented a programming problem because of the long delivery period involved.  The fax continued:

		An option would be construct an insitu slab.  I have spoken to Clive Hartley [of Threecie] about this and he has provided a budget price of £20k.  This is £4000 more than the pre-cast but will keep the job going and on programme.

		Clive will require an instruction ASAP if we require insitu.  Please call me ASAP to discuss.

At paragraph 32 of this first Witness Statement (C/99) TAS stated that CS called him, said he wanted the insitu slab and asked that the Claimant design it.  At paragraphs 33 to 35 of the Witness Statement , he described the work involved (C/99 – 100).

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

	(i) instead of the works being carried out by one main contractor the works were carried out in various individual sub-contract packages or by the Club itself employing direct labour;

	(ii) the Club did not appoint a project manager or site supervisor until about April 2003 despite the Claimant’s advice that it should do so;

	(iii) there were delays to the project due to the Club ordering materials and instructing consultants late;  and 

	(iv) the Club required advice and assistance from the Claimant in respect of some aspects of the internal fit-out works and the building services installation which were not part of the original contract.

Particulars of these alleged additional services were given in lettered sub-paragraphs (a) to (w) inclusive.  Given the extent of agreement which the expert witnesses were able to reach, I do not need to set these out in full and make individual findings in respect of each of them but, in case it were to become relevant in relation to any appeal, I have already recorded my acceptance of the factual evidence given by TAS in relation to each of the additional services.  I will have to deal with “the acoustics issue” in more detail later but, at this point, it is sufficient to note the following.  As well as mentioning the further work allegedly involved as a result of the change in the method of procurement (the sub-paragraphs (a), (b) and (w)) and in designing an insitu concrete floor slab (see sub-paragraph (e)), to which I have already referred, the Claimant identified a number of design changes which the Club was said to have made (see sub-paragraphs (e), (i), (j), (k) and (s) to (v) and see also paragraph 18 of the Amended Particulars of Claim) and a number of instructions to become involved with the building services and internal fit out works (see sub-paragraphs (f), (h), (m), (n) and (o) to (r)).  The Claimant also alleged that additional work was required in relation to the obtaining of local authority grant monies (something of which it had had no knowledge in May 2001 - see sub-paragraph (b)), in relation to the existing flood light towers (see sub-paragraph (d)) and in dealing with acoustic issues as was required by the terms of the planning consent (see sub-paragraph (g) and also see paragraph 17 of the Amended Particulars of Claim).

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

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

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

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

	Accordingly therefore we have finally completed the specification and detailing of the external envelope.  You should by now have received revised coloured elevational drawings which reflect our agreements of last week and these drawings have been copied to both Planning Officer and Building Control.  Having reached this stage it is timely for us to submit a 4th Application for Payment and in compiling this I have had occasion to research our costs.  Not unsurprisingly due to the additional work that we have undertaken in liaising with the Local Authority, Equus Partnership and Lightfoot Windows and in producing stair drawings, alternative layouts and coloured elevations we have significantly overspent our quoted fees.  With your agreement I would propose to postpone discussions concerning additional fees until the project is more substantially complete.  I have enclosed our Request for Payment for the agreed construction stage activities.

	I trust this meets with your approval although should you wish to discuss this matter further please do not hesitate to contact me by telephone.

There was no written response to that letter.  As had been the case in February 2002, the Club expressed no written dissent or surprise at its contents.  The sum claimed was paid promptly and in full.  The receipt was dated 14th November 2002 (I/1100).

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

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

	I refer to your brief discussion with [CT] yesterday and our discussion this morning.

	As you are aware we have undertaken considerably more work than was originally envisaged, not only in the design and drawing of additional on site works but in liaison, site visits and meetings.  As such our fee expenditure has risen alarmingly and I will collate additional costs and services and will write to you again shortly with such details.  I would then hope that we can meet to discuss our current situation of a sizeable overspend and agree a mutually acceptable remuneration.

	In the meantime however, and in accordance with our discussions this morning, we enclose our Request for Payment for an “on account” sum which will help to redress the situation pending a full costing exercise.

	Your prompt attention to the enclosed would be much appreciated.

So far as the discussions referred to in the letter were concerned, in his evidence CS stated that he recalled discussions with CT who had told him “there were too many hours on the job” but, he said, he was not clear whether CT had been referring to additional hours.  CS accepted he had seen this letter and agreed that he had not written in response to dispute what had been said.  In my judgment, the letter fairly reflected the discussions.  What was discussed was the considerable amount of extra work which the Claimant was contending it had undertaken; CS had acknowledged the Claimant’s concerns and agreed that a further payment application could be submitted in the sum of £12,500;  and, CS had accepted that the Claimant would be collating its “additional costs” which would be submitted as the basis for a discussion at which, so it was hoped, a mutually acceptable remuneration would be agreed.  Insofar as the case pleaded by the Claimant at paragraph 21 of the Amended Particulars of Claim (A/11) goes further than those findings, it has not been made out.

30.	Although CS had agreed in advance that this fifth payment application could be made, the sum claimed was not paid particularly promptly. According to the Claimant,  shortly after the application was submitted, CS made his first criticism of its performance.  The criticism was made in a letter dated 31st March 2003, to which TAS responded on 2nd April 2003 (H/1017).  In his reply TAS stated: 
	Whilst I can fully understand your frustrations concerning poorly executed remedial works to the cladding and your frustrations with the Cladding Contractor generally I cannot accept your allegation that we are not committed to this project. Equally I cannot accept, and am offended at your suggestion that we have not acted honourably.

	It is a point of fact that there has been many difficulties with the project, not least of which with the cladding and window sub contracts.  As your representative we have, at all times, acted diligently and have expended enormous amounts of time and effort on your behalf, way beyond that which we can reasonably ask for reimbursement.  Our Mr Turtle has been working on this project since last February, and for considerable periods of time virtually full time on your project.  Please be assured that any frustrations that you feel are equally felt here and that us without considering our sizable financial loss.

	Throughout our involvement, we have constantly phoned and faxed the cladding and window sub contractors on your behalf, in an effort to achieve completion of their works to a satisfactory standard.  Indeed when we last spoke you acknowledged the efforts that we were making on your behalf.

	Notwithstanding the problems to date, the priority must still remain to complete the envelope of the building.  This is not best served by removing the Contractors from site, although I can certainly understand your motives.  ………………….

	Despite the fact that our commission with your goodselves is in respect of steelwork, cladding and windows we have undertaken considerably more than this on your behalf.  Indeed with the internal works we have to date been instrumental in pushing this forward and liaising and negotiating with the other consultants on your behalf.  Bearing in mind however that the other consultants now involved should be more than capable of delivering the fit out and your obvious dissatisfaction with us it may prove beneficial to all if we cease to be involved.  Rest assured however, that we have not and will not shirk our current responsibilities and commitment to you to deliver a completed shell to your satisfaction.

After this exchange of correspondence the works continued and the sum which the Claimant had requested in the fifth application for payment was paid towards the end of May 2003.  When paid, it was paid in full.  The receipt was dated 28th May 2003 (I/1106).

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

	We last wrote to your regarding fees on the 5th March 2003.

	As outlined in this letter, and [as] has been explained many times during our discussions, we have expended considerable sums on your behalf due to the extent of additional works undertaken and liaison we have undertaken with various contractors and consultants.  Now that we are virtually complete on the project, I have been able to take stock of our financial situation and write to report this to you.

	Our job costing amounts to £101,000.00 which for the sake of simplicity I have assumed to be £100,000.00.  As I have previously explained to you, we did incur significant additional costs during the change over period when Roy Cooper unexpectedly left us and the project was handed over the Chris Turtle.  Obviously we will not expect you to bear these costs since these were generated purely in house.  I have made a rough assessment of the likely magnitude of costs involved and conclude that this amounts to something in the region of £8,000.00.  Bearing in mind, however, the likely inaccuracy in this and giving you the benefit of the doubt, I am willing to accept that our costs involved in this handing over period amount to £10,000.00.  Effectively, therefore, I am accepting that our productive costs are £90,000.00.  So far to date we have invoiced £55,186.21 which again I have rounded down to £55,000.00 for the sake of simplicity.  We are therefore currently facing a short fall of £35,000.

	We also accept that some of this overspend was due to circumstances beyond both our and your control being generally associated with poor performance by others for example the Cladding Contractor, but it is a point of fact that we expended enormous amounts of time and energy in resolving these problems on your behalf.  You may recall, however, that during our discussions we advised that it would not be our intention to seek full recovery of the extra fees incurred in this fashion and we fully intend to honour this commitment.

	On the basis of the foregoing therefore, we propose to base our fees on the total amount of productive costs less our profit i.e. 80% of £90,000.00 which equates to a total fee due of £72,000.00.  On the basis that we consider this is more than fair and reasonable, we enclose our Request for Payment in the sum of £17,000.00 plus VAT being the final amount due.

	We trust you agree that we are being extremely fair over this matter , however, should you wish to discuss this issue in further detail, please do not hesitate to contract me by telephone.

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

	I write to acknowledge receipt of your letter dated 4th August 2003 regarding your calculation of fees.

	I would confirm it is my intention that you receive all legitimate fees due.  However, in light of the protracted period experienced in reaching  this point and the apparent complicated contractual procedures, in the first instance it is proposed that that a full analysis of this project be undertaken.

In my judgment, the text of this letter is significant.  CS did not contend that it had mistakenly made an overpayment in relation to a £32,000 net fixed price contract.  The references to the Claimant receiving “all legitimate fees due” and to the need for a “full analysis” of the project are consistent with the Club accepting that the Claimant had undertaken more work than the originally agreed price had covered and with the need to establish what would be a fair and proper amount for the Club to pay for that work.

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

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

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

	1.	The [Club] do have permission to withdraw paragraphs 20 to 24 of the Amended Defence on the basis that it undertakes not to pursue those matters at a later stage.

	2.	The [Club] be granted relief from the sanction of the Order of 4 March 2005 as varied by the Order of 18 March 2005 on the condition that:

	a.	paragraphs 20 to 24 of the Amended Defence and Counterclaim are withdrawn as set out in paragraph 1 above. ……..

	c.	the Counterclaim be stayed in the form it is in and it is to be pursued only with the leave of this Court and if properly perfected and re-pleaded.

	3.	The Amended Defence and Counterclaim did stand struck out for failure to comply with the Order of 4 March 2005 as varied by the Order of 18 March 2005 until the relief set out in paragraph 2 above was granted.

There was no appeal against that Order and it must follow that the matters which the Club may advance in its defence to the Claimant’s claims are now strictly limited or constrained by the terms of paragraphs 1 and 2c of that Order.  At paragraph 20 of the Amended Defence (A/25) the Club had pleaded that the Claimant owed contractual/ tortious duties to exercise reasonable skill and care;  at paragraph 21 (A/24-26) the Club had pleaded that the Claimant ought to have done certain things;  at paragraph 22 (A/26-29) various alleged breaches of duty were identified;  and then at paragraphs 23 and 24 (A/29) it was said “In consequence of those breaches of duty, the Claimant carried out more work and incurred more expenditure than would have been reasonably necessary but for those breaches” and “furthermore, the [Club] is entitled to set off against the claim such sums as may be found due to it under the Counterclaim hereafter set out.”

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

	The reasonable fees for the project would be:

		1.	The fee originally agreed for the works as proposed.

	2.	Additional works as a result of the variation in the form of tender & contract and as set out in paragraph 16 [of the Amended Particulars of Claim]

	Item 1 is priced at £32,000.

	Item 2 could be assessed in two ways.  Either by the analysis of time records and apportionment into normal and additional services which has been carried out by [Mr Carter] in his report, or, by assessment of each item which might be needed to undertake the additional services.  This second alternative has not been carried out by either expert.

Mr Carter and Mr Kendall did not discuss two matters which Mr Carter had considered in his report because they did not fall within the ambit of Mr Kendall’s instructions.  These matters were whether the time expended by the Claimant on the redevelopment project was reasonable and what would be a reasonable fee for the whole of the Claimant’s work on the redevelopment project if the claim was to be assessed on a pure time basis.  Mr Carter and Mr Kendall noted that what might conveniently be called “notification issues” viz. to what extent did the Claimant notify the Club that it was undertaking work outside the terms agreed in May/June 2001 and what effect should any shortcomings on the Claimant’s part in this regard have on its claim for additional fees, were matters falling outside their expertise.

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

	16(c):  The change from suspended concrete planks to an in-situ reinforced slab

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

	(16(f):	The internal stairs – was the work carried out by the Claimant after November 2001 additional work ?

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

	16(n):	The appointment of the Building Services Consultant (or M&E Contractor)

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

	16(u):	The link with the existing Clubhouse

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

	16(g) and 17:	The acoustic issue - did the Claimant fail to instruct Equus to provide acoustic advice as required, with the result that additional works were required ?  If so, can the Club rely on this failure in the light of the Order dated 7th April 2005 ?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	Interest

52.	At paragraph 28 of the Amended Particulars of Claim the Claimant contended it was –
	….. entitled to interest upon the sum claimed pursuant to the Late Payment of Commercial Debts (Interest) Act 1998 at the rate of 12.5% per annum on the sum of £19,975 from 19 August 2003 to 5 December 2003, and on the sum of £43,288.75 from 6 December 2003 to date, alternatively pursuant to section 35A of the Supreme Court Act 1981 on such sum and such period and at such rate as the Court sees fit.    

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

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

	Costs

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

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

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

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

	Permission to Appeal

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

COLIN REESE QC
14th December 2005
1.