Hadley Design Associates Ltd v The Lord Mayor and Citizens of the City of Westminster
| Jurisdiction | England & Wales |
| Judge | H.H. JUDGE RICHARD SEYMOUR Q. C. |
| Judgment Date | 09 July 2003 |
| Neutral Citation | [2003] EWHC 1617 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-0250 |
| Date | 09 July 2003 |
[2003] EWHC 1617 (TCC)
His Honour Judge Richard Seymour Q.C.
Case No: HT-0250
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT
St. Dunstan's House,
133137, Fetter Lane,
London, EC4A 1HD
Andrew Burr (instructed by Irwin Mitchell for the Claimant)
Clive H Jones and Adrian Pay (instructed by C. T. Wilson, Director of Legal and Administrative Services, for the Defendants)
APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
INTRODUCTION
The Lord Mayor and Citizens of the City of Westminster is the corporate body which is, among other things, the local housing authority for the area of the City of Westminster. In this judgment I shall refer to that body for convenience as "the Council".
The City of Westminster includes the district of Pimlico. That area, lying between Victoria Station and Battersea Power Station, sustained extensive damage from bombing during the Second World War. In the post-war period, in order to provide much needed housing, the Council caused to be constructed what became known as the Churchill Gardens Estate ("the Estate"). The Estate comprises 37 blocks of flats built in phases between 1950 and 1965. The flats were designed by the well-known architectural practice of Powell and Moya, which was successful in a design competition in 1946. The blocks of flats are now regarded as an important example of post-war architecture. The Estate was declared a conservation area in 1990, and six of the blocks were listed Grade II for the purposes of Planning (Listed Buildings and Conservation Areas) Act 1990 in 1999. The Estate is also the largest housing estate within the City of Westminster, providing some 1600 dwellings.
With the passing of the years the fabric of the blocks of flats on the Estate deteriorated. By about the beginning of 1984 the state of the original windows had been identified as a matter of concern. The Council resolved to engage the services of surveyors or architects to undertake a survey of the condition of the windows.
Messrs. Hadley Design Associates ("HAD") was, in 1984, an unlimited company in which one of the principals, Mr. Howard Wright, was a surveyor, while the other two principals, Mr. Peter Bailey and Mr. Stuart McClinton, were architects. Mr. Bailey subsequently left the company before its practice was transferred, in 1993, to a limited company, Hadley Design Associates Ltd. ("HDA Ltd."). Mr. Wright and Mr. McClinton remain directors and shareholders in HDA Ltd. HDA Ltd. is the Claimant in this action.
In February 1984 Mr. Peter Warhurst was employed by the Council as Assistant Director (Technical Services) in the Housing Department. As such it fell to him to organise the obtaining of tenders from surveyors and architects for the work of surveying the blocks of flats on the Estate to ascertain the condition of the windows. He had had previous dealings with HDA whilst employed by the Council of the London Borough of Islington and he decided to invite the firm to tender for the survey work at the Estate. He wrote a letter dated 10 February 1984 in the name of Mr. C.C.H. Guy, Director of Housing, to HDA which began as follows: –
"FEES FOR CONSULTANCY SERVICES
The City Council wishes to engage the service of consultant surveyors or architects for the following service: –
CHURCHILL GARDENS ESTATE PIMLICO (40 Blocks of Flats)
The inspecting and reporting on the above mentioned Estate with recommendations and estimates of cost to repair or replace as necessary the existing windows, the preparation of tender documents for the said remedial work and the supervision of work on site, including valuations, certifying and final accounts.
It should be noted that the scale of this project is such that a programme spanning up to five years is envisaged.
You are invited to submit your tender for fees for this work, stated as a percentage of the final account sum (including loss and expense but excluding any arbitration or court award). In so doing you should note that if any instructions to you are withdrawn at any stage before commencement of a contract for the work on site, fee will be paid as follows: –
a) If no tender has been received. The appropriate work stage percentage of your submitted estimate of the cost of the scheme.
b) Where tender has been received. The appropriate work stage percentage of your submitted estimate or of the lowest tender, whichever is the lower.
Any engagement would be in accordance with the RICS Conditions of Engagement for Building Surveying Services (1981 Edition) work stages C-H, except for the following amendments: –…"
In response to that invitation HDA submitted a tender dated 5 March 1984. The percentage indicated in that tender as that which was offered by HDA was 6 3/4. The form of tender also invited the specification of time charges, and appropriate rates were set out by HDA. That tender was successful. Mr. Warhurst indicated the outcome in a letter dated 2 April 1984 which he wrote in the name of Mr. Guy. The material part of the letter was in these terms: –
"Further to the recent discussions with Mr. Warhurst I confirm your appointment to carry out surveys of all of the blocks (39) on the above Estate to ascertain and report to me the condition of the windows, external doors and staircase screens. Your considered report is to make recommendations for repair or replacement of all found defective, with estimate of cost and give a view on the order of priority. You are also to check on incidence of spalling or cracking concrete on the external faces of the buildings and similarly report with recommendations and estimate of cost.
The terms of the engagement are as set out in my letter dated 10 February 1984 and it is initially on a time basis, with the hourly rates applicable being those set out in your tender offer dated 5 March 1984
Please confirm acceptance of this appointment …
It is likely that you will later be appointed for full service in running the contracts for the work which you recommend, in which case, of course, the overall fee arrangement reverts to the quoted percentage."
HDA then undertook a survey as requested and prepared a full report which was dated November 1984. The detail of that report is not presently material. It is enough to say that a substantial quantity of work was identified as being necessary. The undertaking of that work was divided into phases. The first actual phase seems to have been the undertaking of some urgent work to remove loose concrete and to examine brickwork. HDA was instructed to prepare a specification for that work, to invite tenders and to supervise the execution of the work. Those instructions were confirmed by Mr. Warhurst in a letter written in the name of Mr. Guy to HDA dated 1 March 1985. The terms of the confirmation were: –
"I think it appropriate to retrospectively formally confirm the instruction to you to specify, invite tenders and supervise the urgent work now in progress by VAT Watkins Ltd. for the removal of all loose or suspect concrete and examination of the brickwork in all of the blocks. The fee for this service, in accordance with the terms of your tender for work on the Estate, is 6.75% of the cost of construction, inclusive of normal expenses, and with the Conditions of Engagement as stated in the letter on invitation."
The phase of work actually referred to as Phase 1 involved work to part of the block of flats on the Estate called Chaucer House, HDA undertook the preparation of specifications for that work, the invitation of tenders and the supervision of the work.
Originally the Council separately employed a firm of structural engineers, Messrs. Bowden, Sillett and Partners ("BSP"), to advise in connection with the work needed to be carried out on the Estate. However, in a letter dated 18 October 1985 to the Director of Housing Mr. Wright proposed that: –
"our appointment for the major works to the remaining blocks be at a fee percentage of 8% of the total contract sums. This figure is to be inclusive of Quantity Surveyor services, Structural Engineers' services and normal out of pocket expenses, excluding testing and advertising."
Mr. Eiles of the Council replied, in the name of the Director of Housing, to the revised fee proposal advanced by HDA in a letter dated 13 November 1985. What he said was: –
"Regarding your fee proposals for the remainder of the Estate to include structural engineering services. Your proposals are at the moment a matter of discussion, but to avoid delay could you please proceed with the preparation of tender documents for the next phase (i.e. Keats and Shelley Houses). Please note that until I gain approval for your revised fees, your commission is not to include structural engineering services.
Hopefully I will have an answer to your proposals with [sic] the next two weeks."
There were some discussions between Mr. Wright on behalf of HDA and Mr. David Wickersham, Assistant Divisional Director in the Housing Department of the Council, and Mr. Eiles concerning the proposal for a revised fee. Those discussions resulted in Mr. Wright indicating in a letter dated 23 January 1986 that he would be prepared to accept a revised fee of 7.85% as proposed on behalf of the Council for all on-going projects, on the basis that structural engineering services fell within the remit of HDA.
In the summer of 1986 the Council seems to have decided that some greater degree of formality was required in the contractual arrangements between it and HDA. Mr. Wickersham wrote a letter dated 9 July 1986 to HDA, marked for the attention of Mr. Bailey, in which he said this: –
"CHURCHILL GARDENS ESTATE
PROPOSED AGREEMENT
I attach...
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