Anchor 2020 Ltd v Midas Construction Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Waksman |
| Judgment Date | 01 March 2019 |
| Neutral Citation | [2019] EWHC 435 (TCC) |
| Docket Number | Claim No: HT-2017-000372 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 01 March 2019 |
[2019] EWHC 435 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Mr Justice Waksman
Claim No: HT-2017-000372
Duncan McCall QC and Jessica Stephens (instructed by Clyde & Co. Solicitors) for the Claimant
Rupert Choat and Christopher Reid (instructed by Osborne Clarke LLP Solicitors) for the Defendant
Hearing dates: 22, 23, 24 and 29 January 2019
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.
INTRODUCTION
This trial has been concerned with the determination of certain preliminary issues arising in the context of a final account dispute between the Claimant Employer, Anchor 2020 Limited (“Anchor”) and the Defendant Contractor, Midas Construction Ltd (“Midas”). The works to be performed were the design and construction of a new Continuing Retirement Community at Yateley, Hampshire (“the Works”). These were commenced on or around 7 October 2013 and practical completion was obtained on 18 December 2015.
Both parties had intended to contract pursuant to a JCT Design and Build Contract (2011 Edition). Midas signed a copy of that contract on 21 July 2014 but Anchor never did.
In the present dispute, Anchor contend that a binding contract was made on 21 July. Midas denies that any binding contract was made and accordingly it should be remunerated for outstanding sums on a Quantum Meruit basis. The price which the parties had agreed for the Works was £18.2m.
A key document in this case has been Midas' Risk Register (“the RR”). It quantified certain costs risks to Midas which were then fed into the calculation of the Contract Sum and amounted to some £155,000. However, it also referred to some other risk areas where the relevant work was described as “excluded” which, according to Midas, meant not within its scope of work at all.
Out of the 8 preliminary issues originally set for trial, 5 remain, as refined, as follows. I shall refer to them by their original numbering:
(1) Issue 1: Did the parties enter into a contract in respect of the Works on or about 21 July 2014?
(2) Issue 2: If the parties did enter into a contract in respect of the Works, did that contract include the documents set out in the Claimant's Further Information dated 26 January 2018, or the documents set out in paragraph 1 of the Defence and Counterclaim, or some other and if so what documents?
(3) Issue 6: Is Midas' entitlement to payment in respect of the Works to be valued (a) in accordance with the contract entered into (if so found) or alternatively in accordance with the Letters of Intent for the period up to 30 June 2014 and thereafter on a Quantum Meruit basis?
(4) Issue 7: If a contract was entered into as set out in Issues 1 and 2 above, was the 8 July 2014 RR and/or some other RR part of it? If so, what principles apply to the valuation of the Works?
(5) Issue 8: If the basis of valuation of the Works carried out after 30 June 2014 is a Quantum Meruit, what valuation principles apply to the Works, in respect of any defective works and in respect of any delays for which Midas is responsible?
I should add that Anchor has paid Midas just under £21m to date, accepting as it has, some claims to further sums beyond the contract price (but subject to claims for deductions due to defects and liquidated damages). Midas however had contended that it was entitled to about £28.5m on a quantum meruit basis, or, if there was a contract including the RR, for just under £33m, so on any view this is a substantial final account dispute.
The sums at stake in the final accounts dispute amounted to at least some £10 m.
THE EVIDENCE
For Anchor, I heard from John Webb, a quantity surveyor employed by Mace Construction Consultants Ltd (“Mace”) through whom he acted as Anchor's Employer's Agent. I also heard from Tony Barnes, a surveyor who worked for ECV Partnerships Ltd (“ECV”) which, among other things, provided project management and support services to Anchor both before and during the works. ECV hired Mace to perform the quantity surveying, Employer's Agent, and contractual administration services for the project.
For Midas, I heard from Richard Ross who was its Commercial Director at the time and Scott Poulter who was the Commercial Director of the Midas Group.
The evidence of these witnesses was of some assistance but the very substantial number of contemporaneous documents in this case essentially tell the story. The utility of the oral evidence is further diminished by the fact that (a) the critical question of contract formation (or not) is an objective one, not to be determined by reference to the parties subjective perceptions and (b) as will be seen, both sides engaged in a degree of “position-taking” as they fell into dispute in late 2014.
THE KEY FACTS
It is neither necessary nor desirable to trace the entire history of this dispute. Instead I shall concentrate on the key salient facts which are either common ground, or as I shall find them to be.
The Letters of Intent
Following Anchor's ITT, Midas submitted its tenders on 30 May and 30 August 2013, after which it was selected. The parties were not able to agree the intended contract before the start date and so a first Letter of Intent (“LOI”) dated 10 September 2013 was entered into (“LOI 1”). This stated, among other things:
“2. Subject to precise terms being agreed between us, it is our intention to appoint you to carry out the design, construction and completion of the Works and to enter into a contract with you (“the Contract”) for the carrying out of the design and construction of the Works. For the avoidance of doubt, this letter is not a legal acceptance of your tender.
3. Notwithstanding that all terms of the Contract are not yet agreed, we authorise and instruct you to proceed with the necessary preparation for the Works, to enable us to meet the intended start date on site for the Works of 7 October 2013 and to meet the intended date for completion being 19 December 2014, which shall be limited to the works detailed on the turnover forecast attached to this letter (“the Mobilisation Works”).
4. Any works done or services provided under this letter shall be governed by the terms of this letter, the Contract conditions (as defined in paragraph 5.) and the Documents (as defined in paragraph 5.2). In the event of inconsistencies, the terms of this letter shall prevail.
5.1 The “Contract Conditions” are JCT DESIGN AND BUILD 2011 as amended by a schedule of amendments provided to you by the Employer's Agent on 23 rd April 2013…
7. Subject to this letter, we agree to pay you for the Mobilisation Works provided by you which are in accordance with the Contract Conditions and the Documents in accordance with the following provisions:
7.1 Notwithstanding any other paragraph of this letter, our total liability under this letter … shall not exceed £1,325,000…
7.2 The amount payable for such Mobilisation Works shall be calculated, so far as possible, in accordance with the Contract Conditions, or where not possible, we shall pay you a reasonable amount for them…
13. The authorisation contained in this letter will terminate by written notice served on you at any time.…”
Following successive increases in the financial limit, a second LOI was issued dated 3 March 2014 (“LOI 2”). This was expressed to expire on 30 March. It capped Anchor's total liability under LOI 1 and LOI 2 at just under £3.5m. The expiry date was later amended to 30 April 2014. It is clear that both parties saw it as vital that while negotiating for the substantive contract they had the benefit of an LOI. Thus, for example, on 31 March 2014 Midas emailed Anchor pointing out that a further LOI had not been issued and “Obviously as we discussed… The existing LOI formally instructs us to stop all works on the 30 th [March] unless instructed otherwise so could we please have the formal LOI today to avoid any risk of having to explain why we are still working to our Board.” The parties then entered into a further LOI dated 28 March 2014, with an expiry date of 30 April 2014 (“LOI 3”).
LOI 4, dated 30 April 2014 extended the date further to 31 May 2014 with an increased cap of £6m and noting that the parties had now agreed the Contract Sum at £18,213,082. This was replaced by LOI 5, dated 3 June 2014 which extended the expiry date to 30 June 2014. There were no further LOIs after that.
The Structure of the Intended Contract
There is no dispute as to the overall structure of the intended contract; it would consist of the following:
(1) The standard form of the JCT Design and Build, with its Articles, Contract Particulars and Conditions;
(2) Amendments made to the above either directly into its text or contained in a Schedule of Amendments; and
(3) A set of Contractual Documents which would include the ITT and the Employer's Requirements which themselves consisted of sections 1–4 of the document headed Sandhurst Road Yateley Phase 1 Main Contract Works Contract documents and 41 appendices which themselves included at Appendix 32, a Schedule of (agreed) Amendments.
In this particular case, Anchor, together with ECV had engaged Farrow Walsh Consulting Ltd (“Farrow Walsh”) being structural engineers, and the architects, Urban Edge Consulting Ltd (“Urban Edge”), pursuant to separate written consulting agreements. However, on the making of the intended contract these agreements would be novated away from Anchor and ECV as the employers of those consultants, to Midas. As we shall see, there were considerable negotiations over the terms of those novations.
The RR
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