Munkenbeck & Marshall (A Firm) v The Kensington Hotel Ltd
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Bowsher Q.C,JUDGE BOWSHER |
| Judgment Date | 18 April 2000 |
| Judgment citation (vLex) | [2000] EWHC J0418-11 |
| Date | 18 April 2000 |
| Docket Number | Case number:1997 ORB 456 |
| Court | Queen's Bench Division (Administrative Court) |
[2000] EWHC J0418-11
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Bowsher Q.c
Case number:1997 ORB 456
Michael Soole for the Claimant (Solicitors: Reynolds Porter Chamberlain)
Paul Darling Q.C. and Gaynor Chambers for the Defendant (Solicitors: Mishcon de Reya)
I direct that no further note or transcript be made of this judgment.
The text of the Judgment of His Honour Judge Bowsher Q.C. is as follows:
Introduction
The Claimants (M&M) are architects. The Defendants (KHL) are the developers and owners of a hotel, the Kensington Hotel.
This action began as a claim by M&M for unpaid fees. KHL counterclaimed for damages for delay.
The claim for fees was tried first as a preliminary issue by His Honour Judge David Wilcox. He gave judgment in favour of M&M for £67,236.17 and interest.
The action now comes before me for trial of the Counterclaim.
For the purpose of this trial, the pleadings have been reconstituted beginning with an amended Statement of Case from KHL.
The principal issues in this action are:
(a) What were the terms of the agreement between the parties in particular as to what M&M were employed to do and the time in which they were to do it; and
(b) Whether M&M were in breach of any obligation as to time.
(c) Whether damage was caused by any proved breach.
KHL alleges that as a result of breaches by M&M the opening of the Kensington Hotel was delayed. The parties have agreed that if M&M were in breach of any obligation as to time and if any delay to the business of KHL was caused by that breach, damages are to be assessed at a monthly rate of £187,500.
HISTORY
KHL is a company incorporated by Mr. Brian Duffy to develop and operate a luxury hotel at Richmond Way, West Kensington, London W1 near the Shepherds Bush roundabout.
Mr. Duffy qualified as a chartered accountant with Arthur Andersen and then went into business on his own. That business led to him becoming Managing Director and then Chairman of a public company, a construction company. After retiring from that position, in 1993 he set up a family business through a company called MBI MBO Limited. He bought a small hotel, the Abbey Court Hotel, and built it up into a much larger hotel. He then bought a police section house and developed it into a hotel named the Generator. That hotel was aimed at providing fairly basic cheap accommodation for young tourists in London. Mr. Duffy is a forceful character and a successful businessman.
On 26 April, 1996, KHL bought an empty office block, previously used by the BBC, known as Kensington House. The vendors had applied to the local authority for planning permission to develop the building as an apartment hotel. Mr. Duffy learnt from the planning officer that such planning permission was unlikely to be granted because the authority regarded such a development as simply residential development in disguise and they did not think residential development was desirable in that situation.
Mr. Duffy wanted planning permission for a full service luxury hotel, which he was led to believe was obtainable. He planned to put substantial capital (much of it borrowed) into the project, and he naturally wanted to see a return on his money as soon as possible.
The previous owners had employed M&M to prepare plans and apply for planning permission. Mr. Duffy considered that it would be sensible to employ M&M both because they were already involved and there would be a saving of time and because they had a high reputation.
M&M is a partnership of Mr. Munkenbeck and Mr. Marshall, founded in 1984 and employing about 15 people. The partnership is highly regarded and successful. Before this project, they had not taken a hotel through to construction, but they had designed a Health Club.
THE AGREEMENT
The engagement of M&M took place at two meetings of 1 and 16 May, 1996 and in a letter of 13 May, 1996. There was another letter of 17 May, 1996, receipt of which is denied. The letters are not clear, and the evidence of what took place at the meetings is conflicting.
Mr. Duffy first met Mr. Munkenbeck and Mr. Marshall at their offices on 1 May, 1996. Mr. Munkenbeck and Mr. Duffy did not find each other congenial. Mr. Munkenbeck, who named himself in his witness statement as Alfred Hedges Munkenbeck III described Mr. Duffy as exhibiting "the hubris of a self-made man". Either at that meeting or at a later meeting (the date is disputed), Mr. Duffy asked that only one partner should attend meetings and said that he preferred that one partner to be Mr. Marshall. Mr. Duffy's expressed reason was that it was a waste of money for two partners to attend meetings but he also preferred not to deal directly with Mr. Munkenbeck. The antipathy between the two men led to some extremely acrimonious correspondence both between them and with the RIBA when Mr. Duffy terminated the retainer of M&M in June, 1997. However, there was no question of any lack of confidence in the firm on the part of Mr. Duffy in the earlier part of the project.
It is common ground that at that meeting, Mr. Duffy explained that he wanted a luxury 4 star hotel with the front of the house to include a bar, a restaurant and a health club, but without the swimming pool that had been planned for the apartment hotel. The front of the building had a comparatively narrow frontage behind which was to be the front of house (FOH) including the reception desk and the public rooms. Stretching behind the FOH was a long narrow building, the Back of House (BOH) which was to contain a series of suites based on standard designs of 3 or 4 suites of varying size. In time, the whole became known as a train, with the FOH being the engine and the BOH being the carriages.
It is also common ground that the parties discussed the basis on which M&M should be paid. It was agreed that M&M would not be engaged on the RIBA scale fees but would instead be paid hourly rates for individuals of differing seniority. Mr. Duffy said that he had two reasons for that choice. He did not want M&M involved in the certifying process during construction, because he regarded that as the work of a quantity surveyor, and he wanted speed and he felt that if M&M were paid on a scale fee they might be reluctant to put in all the hours that he wanted from them. Mr. Munkenbeck's impression was that he wanted to turn them on and off like a tap. One result of that arrangement was that there was no agreement that M&M should do any of the RIBA work stages A to L and the parties did not have the advantage of working to the clear definition of the scope of the work provided by the RIBA terms. There is a dispute as to what M&M were asked to do at that meeting. Mr. Munkenbeck and Mr. Marshall say that apart from being asked to do anything else, though they hoped to do all the architectural work through to construction. Mr. Duffy says that he said that he wanted them to do all the architectural work, including supervising construction apart from certifying, and in particular, he wanted drawings for planning permission and tender drawings speedily. Mr. Munkenbeck said, and I accept:
"Mr. Duffy said that he was not sure how far he would go with us at that point, although it would be at least until the end of planning and the alteration of our drawings to the new hotel concept he had in mind. He did not seem to want us so much for visual design as for the planning application and possibly future drawings for tender. He explained that he expected to hire other designers to develop the look of his hotel whilst we concerned ourselves with drawing production and technical matters."
Mr. Duffy accepted that he was concerned at the way professional fees could run away with the costs and he was anxious to keep control of such costs on this project. I find that Mr. Duffy did ask for drawings for planning permission and while he in principle wanted M&M to be the architects for the whole project, and in his own mind he was well aware that it would be best if possible to keep the same architects throughout, he was careful not to say anything that might bind him contractually to engage them for the whole project or even for the tender drawings in case he later became dissatisfied with M&M.
There is also a dispute about what was said about time for performance at the meeting of 1 May. It is agreed that Mr. Duffy did express the need for urgency. Mr Duffy also said that it was to be a fast track programme. But I accept the evidence of Mr. Munkenbeck and Mr. Marshall that no time table for their work or for the project generally was discussed save that Mr. Duffy did say that he wanted to be open for business by Easter 1997. Mr. Munkenbeck said that that was totally unrealistic. Mr. Duffy said that it had taken only a few months to renovate the Generator, and Mr. Munkenbeck said that that was a wholly different project.
At the end of the meeting, Mr. Duffy asked Mr. Munkenbeck to write to him. I accept the evidence of Mr. Munkenbeck that he was asked to write to confirm the way of working and to confirm his rates of charging. I do not accept Mr. Duffy's evidence that he asked Mr. Munkenbeck to specify a timetable for completion of the design and tender drawings. There was not even any commitment that M&M would be asked to do the tender drawings.
In response to that request, Mr. Munkenbeck on 13 May 1996 wrote a letter misdated 13 May, 1995. In that letter he wrote:
"We are very pleased to be asked to submit a proposal for your new hotel. I am putting down some ideas about how to organise and pay a design team which should reflect our discussion.
As chartered architects we are only paid from our fees and we shop around...
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