West Faulkner Associates (A Firm) v London Borough of Newham West Faulkner & Associates (A Firm) London Borough of Newham
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SIMON BROWN,Lord Justice Hirst,Lord Justice Balcombe,Order |
| Judgment Date | 10 November 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J1110-6 |
| Docket Number | QBENF/93/0002/B |
| Court | Court of Appeal (Civil Division) |
| Date | 10 November 1994 |
[1994] EWCA Civ J1110-6
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
On Appeal from Orders of his Honour Judge Newey
Before: Lord Justice Balcombe Lord Justice Hirst Lord Justice Simon Brown
QBENF/93/0002/B
QBENF/93/0667/B
MR R FERNYHOUGH QC and MR A WILLIAMSON (Instructed by Messrs Alastair Thomson & Partners, London) appeared on behalf of the Appellant.
MR B MAULEVERER QC (Instructed by Messrs Fenwick Elliott of London) appeared on behalf of the Respondent.
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This is an appeal by West Faulkner Associates (WFA) against the judgment of His Honour Judge Newey QC dated 1st October 1992 holding WFA liable in damages to the London Borough of Newham (the Council) for breach of a contract dated 12th September 1986, whereby WFA were engaged by the Council as the Architect in respect of works of modernisation and refurbishment to the Clements Avenue Housing Estate. Those works were the subject of a contract dated 16th September 1987 entered into between the Council and William Moss Construction Limited (Moss) as the Contractor, the conditions of that contract being those set out in JCT Contract for use by Local Authorities with Quantities 1963 edition (1977 Revision) as amended by the Council's own standard amendments.
Put at its shortest, the Judge held at the conclusion of a 22 day trial on liability that WFA were in breach of their duty in failing to give Moss notice under Clause 25 (1) (b) of the standard JCT conditions, a notice which the Architect "… may give …" "… if (the Contractor) fails to proceed regularly and diligently with the Works".
At the heart of the appeal lie questions as to the true construction of Clause 25 (1) (b) —questions upon which there is little authority. Mr Fernyhough QC for WFA contends that the Judge was wrong in his construction and (a separate and, as will appear, more directly relevant contention) wrong too to reject WFA's very different construction. Even, however, were WFA wrong in their construction, it is Mr Fernyhough's submission that given the clause's obscurity they should not be held in breach of duty; rather, he contends, an ordinarily competent Architect could similarly have misconstrued it.
With that brief introduction let me set out something of the facts of the case although, for reasons which will appear, it is unnecessary to do so at great length.
The contract refurbishment works comprised the renovation of 150 dwellings on Clements Avenue Housing Estate: 132 flats in twenty blocks and eighteen two storey houses in four blocks. It was to be completed in 61 weeks. The contract price was approximately £3 1/2 million.
The intended scheme of the works was shown in an Architect's drawing number NCA/066C. Essentially this required the Contractors first to renovate three empty blocks to allow an initial decanting of tenants from their existing accommodation, and thereafter progressive further decanting and renovation. A rolling sequence was provided for, the contractor being entitled to possession of no more than three blocks at any one time. The renovation of each block was programmed to take some 9 or 10 weeks.
Possession of the three empty blocks was given to Moss on 10th August 1987, the 61 week contract period dating from then. From the very beginning, however, it became clear that the envisaged programme would not be achieved, nor, indeed, anything like it. As early as October 1987 WFA were complaining that progress "… slows from day to day …" and "… at this stage the project is wavering out of control". The position never really improved.
There was an enormous amount of evidence before the Judge to this general effect. It is quite unnecessary to detail it here. Let this single paragraph from the admirably comprehensive judgment below serve to paint the broad picture:
"The extent of Moss' overall failure to progress the works is shown by the time which it took them to deal with individual blocks. They took possession of Block H on 21st September 1987 and, using NCA/006C as criterion, should have completed work on it by 23rd November 1987 but in fact completed it on 13th June 1988. They took possession of Block I on 12th October 1987 and should have completed it by 14th December 1987 but completed it on 11th July 1988. They took possession of Block J on 2nd November 1987 and should have completed it on 4th January 1988 but completed it on 8th August 1988. Even if allowances are made for short delays not within Moss' control … the over-run on each block was enormous".
The delays and uncertainty had, of course, very serious effects upon the tenants whose lives were dreadfully disrupted. In the end, and following WFA's continuing refusal to give Moss a Clause 25 notice (a matter to which I shall return) the Council felt that they had no alternative but to procure Moss' withdrawal from site by negotiated settlement. As the Judge observed:
"It seemed certain that the works would not be completed until a year or more after the 61 weeks' contractual period expired, the tenants were becoming more and more angry and frustrated, problems were arising because of the Council's need to incur expenditure within periods [allowed] by the Central Government and not afterwards, and Moss' continued presence on the Clements Avenue Estate made it difficult to employ different Contractors to carry out Contract A or further works on the estate" (references to additional works of modernisation which the Council were intent on putting in train).
Negotiations between the Council and Moss began in July 1988 and agreement between them was reached on 23rd August 1988 whereunder Moss were to be paid £1.26 million for measured work and £220,000 for leaving the site voluntarily; the Council also agreed to waive their right to claim liquidated damages of £9,715 per week even though Moss were greatly in delay and had not been granted any extension of time (although they were probably entitled to extensions of some 2 or 3 weeks).
Although there can be no doubt that this termination agreement was singularly favourable to Moss, the Judge concluded that the Council had acted reasonably in reaching it and against this finding there is no appeal. The Council had then to employ fresh Contractors to complete the work. Their loss is the additional cost of doing so together with payments to tenants and lost rents, a claim, we are told, now put at some £1.5 million.
For many months before Moss' negotiated withdrawal from site the Council had been urging WFA to give a Clause 25 (1) (b) notice. Let me at this stage set out the clause in full:
"25 (1) Without prejudice to any other rights or remedies which the Employer may possess, if the Contractor shall make default in any one or more of the following respects, that is to say:-
(a)if he without reasonable cause wholly suspends the carrying out of the Works before completion thereof, or
(b)if he fails to proceed regularly and diligently with the Works, or
(c)if he refuses or persistently neglects to comply with a written notice from the Architect requiring him to remove defective work or improper materials or goods and by such refusal or neglect the Works are materially affected; or
(d)if he fails to comply with the provisions of Clause 17 of these Conditions [Clause 17 prohibits unauthorised assignment or sub-letting of the works].
then the Architect may give to him a notice by registered post or recorded delivery specifying the default, and if the Contractor either shall continue such default for fourteen days after receipt of such notice or shall at any time thereafter, repeat such default (whether previously repeated or not), then the Employer may within ten days after such continuance or repetition by notice by registered post or recorded delivery forthwith determine the Employment of the Contractor under this Contract, provided that such notice shall not be given unreasonably or vexatiously".
If put into effect, the clause requires a two-stage process: first, the Architect's notice and then, entirely at the option of the Employer and provided always that the Contractor has continued or repeated his default, the determination notice. The Architect's notice is thus a necessary precondition of determination.
On 19th February 1988 the Council wrote to WFA and to the nominated Quantity Surveyors, in these terms: "… possibility of determination —we express some surprise that you had at no time considered the possibility of recommending that the contract be determined and at no time warned William Moss of the possibility". In a memorandum to the Architects commenting on that letter, Mr Baker of the Quantity Surveyors wrote: "in our experience this is an extremely difficult default to substantiate and at present Moss' performance, although very poor, does not come within the definition of (Clause 25 (1)(b))". On 4th March 1988 WFA wrote in similar terms to the Council. It is unnecessary for present purposes to chart their subsequent exchanges.
As became plain at trial, and perhaps plainer still during the appeal, the reason why WFA (and the Quantity Surveyors from whom alone WFA sought advice on the point) continually felt it impossible to give the Clause 25 notice which the Council so urgently desired them to give was because of their construction of the clause. It was their understanding that no notice could be given to the Contractor under Clause 25 (1)(b) unless the Contractor was failing to proceed...
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