Fitzroy Robinson Ltd v Good Start Ltd (No. 3)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 21 December 2009 |
| Neutral Citation | [2009] EWHC 3365 (TCC) |
| Docket Number | Case No: HT-08–97 |
| Date | 21 December 2009 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2009] EWHC 3365 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Coulson
Case No: HT-08–97
-No 3-
Mr Peter Fraser QC and Mr Zulfikar Khayum (instructed by Laytons) for the Claimant
Mr Paul Darling QC (instructed by Mishcon de Reya) for the Defendants
Hearing dates: 10 th, 14 th and 15 th December 2009
INTRODUCTION
The Claimant (FRL) is a well-known architectural practice. The Defendants own a number of adjacent properties in Piccadilly, including the In & Out Club, and Mentmore Towers, in Buckinghamshire. Between the summer of 2005 and December 2007, FRL acted as architects in connection with the Defendants' ambitious scheme to develop both sets of properties as part of an exclusive private member's club. Amongst other things, FRL had obtained planning permission on both elements of the project by the time of the suspension of their work in December 2007.
The Defendants failed to pay FRL's fees in accordance with the terms of the three Contracts agreed between FRL and each of the three Defendants. These proceedings began life, therefore, in April 2008 as a relatively simple fee claim by FRL, based on the unpaid instalments set out in those Contracts. The total sums claimed were about £1.5 million, inclusive of some interest. The Defendants raised a variety of issues in their defence and counter-claim, including a number of related allegations concerning Mr Jeremy Blake, the individual director then with FRL, who was crucial to the Defendants' decision to appoint FRL as the architects on the project, but who, unknown to the Defendants, had already tended his resignation by the time that the Contracts were finally agreed in March-May 2006.
Pursuant to my order of 3.10.08, there was a trial of all liability and causation issues in May and June of this year. My subsequent Judgment, dated 7 th July 2009, [2009] EWHC 1552 (TCC), can perhaps be summarised as follows:
(a) I construed the payment terms of the Contracts largely in the way advanced by the Defendants although I also found that they were in breach of contract in failing to pay the instalments as they fell due;
(b) I concluded that FRL had been guilty of fraudulent misrepresentation in failing to disclose to the Defendants, before the Contracts were finalised, their knowledge that Mr Blake was not going to be with FRL for much of the projected period of the project. However, I found that, on the evidence then available, the only demonstrable loss flowing from the misrepresentation was the duplication between Mr Blake and Mr Hobart, his successor, a head of claim now assessed as being worth about £40,000;
(c) I concluded that the allegations against FRL of professional negligence and/or delay were unfounded and I dismissed them in their entirety.
Following the handing-down of that Judgment, as envisaged by my original order of October 2008, all that was left were issues of quantum. These essentially divided into three parts: the ascertainment of the precise fees due to FRL pursuant to the Contracts; the amount of the adjustment, if any, arising out of or in connection with the fraudulent misrepresentation or any other finding against FRL identified in the Judgment; and the claims for interest. Slightly to my surprise, the parties have been unable to agree these quantum disputes, although, by the time of the quantum hearing, many of the matters which were previously in dispute had been agreed, either by the experts or as part of the commercial negotiations between the parties.
Accordingly, this final Judgment is concerned with the remaining issues of quantification. It is structured in this way: at Section 2, I set out the contractual basis of the fee claim; at Section 3, I set out my conclusions as to the correct approach to the assessment of the fees due, and at Section 4, I set out my assessment of those fees. Thereafter, at Sections 5 and 6, I deal with the effect, if any, of the fraudulent misrepresentation and the other matters raised by the Defendants. At Section 7, I deal with the detailed arguments as to interest. There is a short summary of my conclusions at Section 8. I am again grateful to leading counsel for their assistance.
THE CONTRACTUAL BASIS OF THE FEE CLAIM
Section D1 of my Judgment of 7.7.09 set out the relevant contractual provisions concerned with payment and my conclusions as to their proper construction. In essence, I concluded that the parties had agreed a lump sum Fee in respect of each of the three Contracts, and those fees were broken down into monthly instalments, which were (in the absence of the necessary notices from the Defendants) payable in full as they fell due. However, I also accepted the Defendants' case that, at any quantum hearing, those instalments were capable of adjustment, depending on whether or not it could be shown that the scope of the Services was altered and/or whether those Services were performed in accordance with the Programme. It appears that, for the reasons outlined in the next three paragraphs, much of that analysis has now been superseded by events.
As noted above, on 24 th December 2007, the Services were suspended by the Defendants and they have never been reactivated. In those circumstances, so it seems to me, FRL's entitlement to fees was governed by clauses 15 and 16.3 of the Contracts. Clause 15 was entitled 'Suspension' and was in these terms:
"The Employer shall be entitled to suspend the Services by written notice. Upon any suspension of the Services the Consultant's fee entitlement shall be as provided for in Clause 16.3. If a suspension lasts more than 6 months the Consultant may make a written request for the Services to be resumed and if no such instruction to resume is given within 28 days after such request the engagement of the Consultant under this Agreement shall then terminate"
Clause 16.3 was entitled 'Obligations following Termination/Suspension of the Services' and was in the following form:
"In the event of any termination of the Consultant's engagement for any reason (other than those set out in Clause 14.1) or upon any suspension of the Services the Consultant will be entitled to a fair proportion of the Fee for any of the Services properly performed up to and including the date of termination or suspension having regard to the instalment schedule set out in Schedule [2] and the payments already made to the Consultant under this Agreement."
Accordingly, whatever may have been the precise contractual mechanism for the adjustment of the instalments in Schedule 2 prior to any suspension of FRL's Services, it seems to me that, following that suspension, there can be no doubt that FRL's entitlement was governed by clause 16.3. By the conclusion of the quantum hearing, I did not understand this point to be in dispute between the parties. Accordingly, the first question for the court is the proper calculation of "a fair proportion of the Fee for any of the Services properly performed" by FRL, in accordance with clause 16.3.
THE CORRECT APPROACH TO ASSESSMENT
There were three different methods put forward by the parties as being an appropriate way of calculating a fair proportion of the Fee pursuant to Clause 16.3. For the reasons set out below, I have concluded that only one of these alternatives represents the proper method in all the circumstances.
a) The Time-Based Claim
FRL's principal way of putting their fee claim was by reference to the time expended by the FRL team on these two elements of the project. There can be no doubt that this claim was based on valid contemporaneous time sheets, which Ms Vela checked at the time, and which were incorporated by FRL into monthly financial reports. The hours recorded on these time sheet were then valued at the rates used by FRL in their original bid. This calculation resulted in a net claim, taking into account the sums already paid, of £508,336 in respect of Mentmore and £540,540 on the two sets of Piccadilly properties.
Whilst I consider that this is a useful exercise, because it identifies the maximum sum that might now be recoverable by FRL, I do not consider that this is the most appropriate method of arriving at a fair proportion of the Fee under clause 16.3. There are a number of reasons for that conclusion.
First, it seems to me that the court is concerned with calculating a fair proportion of the Fee (emphasis supplied). The Fee is defined in the Contracts as the fee payable in accordance with Schedule 2. That is the total lump sum agreed in relation to each of the three Contracts, namely £2,291,736 on Mentmore Towers; £3,800,037 on 90–95 Piccadilly; and £955,668 on 100 Piccadilly. Accordingly, as a matter of construction, what is required by clause 16.3 is a calculation – an apportionment—based on those three lump sums. A calculation which is based on hours worked, and then multiplied by the bid rates, seems to me to be some way away from the methodology envisaged in these Contracts.
This leads onto the second point. FRL's entitlement under these Contracts was not at any stage an expressly time-based entitlement. Prior to the suspension, FRL were not entitled to be reimbursed a particular sum merely because they had worked a particular number of hours. Thus, so it seems to me, it would be wrong to alter the entire basis of FRL's remuneration, and convert it into a time-based entitlement, merely because of the suspension of the Services.
FRL were not entitled to...
To continue reading
Request your trial
-
Bluewater Energy Services BV v Mercon Steel Structures BV and Others
...replacing Key Personnel without its prior approval. Mercon refers to the decision in Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 3365 (TCC) where Coulson J found that there was liability where a firm of architects had failed to inform their client that the key person had left the......
-
Fitzroy Robinson Ltd v Mentmore Towers Ltd & Others
...on all liability issues dated 7th July 2009 [2009] EWHC 1552 (TCC), and my judgment on all quantum issues dated 21 st December 2009 [2009] EWHC 3365 (TCC). It sets out my detailed reasons for the oral answers to the costs issues that I gave to the parties at the end of the hearing on 14 th ......
-
Van Oord Uk Ltd (First Claimant) v Sicim Roadbridge Ltd (Second Claimant) Allseas Uk Ltd
... ... Mr Justice Coulson ... Case No: HT-2014-000032 ... Between: Van Oord Uk ... inevitable rate awarded in cases like this: see Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 3365) ; ... 15 I should start with a threshold issue. There was a suggestion in Mr ... figure on the basis that Knowles Ltd had undertaken a good deal of work which might otherwise have been done by the ... ...
-
Khambay and Another v Nijhar
... ... Mr Justice Lewis ... Case No: TLQ/13/0782 ... Between: Khambay & Another ... in mind the decision of Coulton J in the case of Fitzroy Robinson Limited v. Mentmore Towers Limited [2009] EWHC ... ...
-
Case Law Update - Issue 3 (2010)
...Corporate insolvency in adjudication Enterprise Managed Services v Tony McFadden Utilities Ltd [2010] BLR 89 and [2010] Con LJ Vol. 26 No. 3 TCC Following the insolvency of Tony McFadden Ltd, by a deed of assignment drainage sub-contracts were assigned to Tony McFadden Utilities (Utilities)......
-
Case Law Review.
...Corporate insolvency in adjudication Enterprise Managed Services v Tony McFadden Utilities Ltd [2010] BLR 89 and [2010] Con LJ Vol. 26 No. 3 TCC Following the insolvency of Tony McFadden Ltd, by a deed of assignment drainage sub-contracts were assigned to Tony McFadden Utilities (Utilities)......