William Lippe Architects Limited V. James Innes
| Jurisdiction | Scotland |
| Judge | Lord Mackay of Drumadoon,Lord Osborne,Lord Wheatley |
| Neutral Citation | [2007] CSIH 84 |
| Court | Court of Session |
| Published date | 20 November 2007 |
| Year | 2007 |
| Date | 20 November 2007 |
| Docket Number | CA97/05 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Osborne Lord Wheatley Lord Mackay of Drumadoon | [2007] CSIH 84 CA97/05 OPINION OF THE COURT delivered by LORD OSBORNE in RECLAIMING MOTION in the cause WILLIAM LIPPE ARCHITECTS LIMITED Pursuers and Reclaimers; against JAMES INNES Defender and Respondent: _______ |
Act: C. Mackenzie; Beveridge & Kellas, SSC (for Taggart Meil Mathers, Aberdeen) (Pursuers and Reclaimers)
Alt: Alastair Clark, QC; Brodies (for David S. MacDonald, Aberdeen) (Defender and Respondent)
20 November 2007
The background circumstances
[1] The pursuers and reclaimers are the successors to the rights and obligations formerly vested in the firm of architects known as William Lippe Architects, which had a place of business at 4 St. James Place, Inverurie, Aberdeenshire, and of which the partners were William Lippe and Mrs. Anne Georgina Lippe. By an agreement entered into between that firm and the reclaimers, executed on 25 May 2004, the firm assigned the rights and obligations vested in it to the reclaimers with effect from 1 June 2004. During the period of March 2000 to June 2004, the firm carried out architectural and associated services for the respondent in relation to the intended development of part of the respondent's property known as Upperboat Farm, Inverurie.
[2] On 6 July 2005, the reclaimers raised two invoices against the respondent. The first of these invoices, No. 05/089, was in these terms:
"Upperboat Development
Fees to architectural and planning services, related to Local Plan, zoning and planning for above development, attending various community council, local authority, public meetings, promoting site and obtaining zoning in FALP. To preparing and submitting various applications to promote and gain consent on site.
Fees as per correspondence of 18 January 2000
3.8% x £900,000, sale value to Bancon £34,200.00
VAT @ 17.5% £ 5,985.00
£40,185.00"
The second invoice, No. 05/090, was in these terms:
"Upperboat Development
Fees to architectural and planning services, related to Local Plan, zoning and planning for above development, attending various community council, local authority, public meetings, promoting site and obtaining zoning in FALP. To preparing and submitting various applications to promote and gain consent on site.
Plot 18 - retained by client
Value of 17 sold £900,000.00
Value of Plot 18 £900,000.00/
17 =
£ 52,941.00
(Note: - Open un-serviced market value estimated at £100,000)
Fee 3.8% x £52,941.00 £ 2,011.76
VAT @ 17.5% £ 352.06
£ 2,363.82"
The total of these two invoices is £42,548.82, the sum sued for in the present action, which was raised because the respondent had declined to pay the foregoing invoices.
[3] In their pleadings the reclaimers aver that the architectural services which form the subject-matter of the action were rendered principally by Mr. Lippe, who was, at all material times, a partner in the firm. In or about January 2000, Mr. Lippe mentioned to the respondent that part of the land comprised in Upperboat Farm, Inverurie, had the potential to be developed for residential housing. The respondent was interested in such development potential. Mr. Lippe informed the respondent that it was necessary to have the land zoned in the next Local Plan as land for residential development and thereafter to apply for planning permission. Mr. Lippe wrote to the respondent by a letter dated 18 January 2000, noting the discussions which had taken place, and making suggestions as to what would have to be done to realise the development potential of the relevant land. The reclaimers aver in Condescendence 3 that, on or about 22 February 2000, the respondent verbally instructed Mr. Lippe to provide his services for the purpose of having the relevant land zoned as land for housing development in the Aberdeenshire Local Plan, to carry out the work preparatory to an application for planning permission or the conclusion of an agreement between the respondent or any successor in title and the planning authority in terms of section 75 of the Town and Country Planning (Scotland) Act 1997, allowing the development of the relevant land for residential housing, and to make any necessary planning applications. The reclaimers aver that it was clear to Mr. Lippe and the respondent that the professional services of the firm required would be substantial and that those services would command a substantial fee. In Condescendence 4 of the summons the following crucial averments are made in this connection:
"Mr. Lippe had already suggested possible financial arrangements with regard to payment for the firm's services in the said letter dated 18 January 2000. Accordingly the parties verbally agreed on or about 22 February 2000 that the pursuer would be remunerated, in the event of planning permission allowing development of the land for residential housing being obtained, or by the firm having done all that was necessary for the respondent or any successor in title to obtain such planning permission, or for the defender or any successor in title to be in a position to enter into an agreement with the local planning authority in terms of section 75 of the Town and Country Planning (Scotland) Act 1997 allowing such development, by 3.8% of the monies received for the new residential properties sold following development of the land, or of the monies paid to the defender by a third party developer for the sale of the relevant land, plus Value Added Tax, or alternatively by the firm receiving title to the plot mentioned in the said letter of 18 January 2000.
In the events hereinafter condescended upon, namely the sale of the relevant land by the defender to Bancon Homes Limited and the retention by the defender of a plot of the land, the latter alternative became frustrated, or alternatively by such sale and the retention of a plot of the land leaving no other parcel of land available, the defender implicitly chose the payment based on 3.8% of the sale price. It was an implied term of the contract between the parties that the defender would pay said 3.8% relative to any of the land retained by him which was covered by such planning permission. The defender was to pay any fees required by the planning or any other authority."
These averments of the reclaimers are denied, although the respondent admits that Mr. Lippe suggested possible financial arrangements for payment for the reclaimers' services in the letter dated 18 January 2000.
[4] In Condescendence 5 of the summons the reclaimers aver that:
"The firm duly carried out architectural and other services for the defender, including inspecting the land, attending meetings, consulting and corresponding with the local authority planning and the officials thereof, drafting plans, and applying for outline planning permission. Towards the end of 2003 the granting of planning permission or the conclusion of a section 75 agreement was imminent. ... About this time the defender considered developing the land himself, but in or about January 2004 certain property developers showed an interest in purchasing the relevant land. In or about June 2004 Bancon Homes Limited ... agreed to purchase the land from the defender. By this time the defender was in a position to enter into a section 75 agreement with the planning authority to allow the development with 16 houses to proceed. In or about May 2005 the defender sold the relevant land to Bancon Homes Limited for the sum of £900,000."
The averments in Condescendence 5 also refer to the fact that the respondent retained one of the plots for his own use.
[5] Since the letter, dated 18 January 2000, from Mr. Lippe to the respondent featured so prominently in the course of the proof and the hearing of the reclaiming motion, it is appropriate for us to reproduce its terms in full, which we now do:
"Thank you for affording me some time recently to discuss that Upperboat Development. As discussed we believe that the site has potential for residential development and that there are various courses of action but would suggest the following.
1 We would attend Community Council Meetings, Local Authority and Public Meetings, Public and Planning Forums, Business Association Meetings, Inverurie Strategy Meeting, Local Authority Planners Local Plan Team with a view to promoting the Upperboat site for inclusion in the New Aberdeenshire Local Plan 2001 - 2006. The whole scenario of the revised local plan commences in April and will take approximately one year.
2 This alternative would be to prepare and submit a Planning Application over and above the Local Plan promotion in respect of the site, showing a general layout, roads, sub-division feus and landscaping offering planning gain incentives to the Local Authority. These are:
(i) Removal of the Piggery and therefore allowing the Council to sell off
their own land at St. James's Place for housing.
(ii) To provide them with a car park for their fishers serving the River
Don.
(iii) To provide additional amenity area and extended walkways along the
River Don connecting the Port Elphinstone and Davidson Park areas to the Golf Course walkways.
There will also be further requests for planning gain, typically in terms of financial contribution towards affordable housing, community projects, education etc. but these can only be determined upon submission and negotiation with the Planning Officers.
3 In respect of fees there are two options:-
(i) That we would carry out professional architectural services on an
hourly basis. We estimate approximately 300 hours over a one to two year period, which would equate to a fee of approximately £12,000 plus expenses and VAT and which would be invoiced quarterly.
(ii) Incentive based where the fee would only be paid upon satisfactory
zoning of the land and would be paid upon sale of the site. This is much longer term for ourselves where we also take considerable risk and based upon an unknown...
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