Liability of site owners to pay for soil survey of marshy site — Cost of sinking boreholes — Architects’ authority to give instructions for boreholes — There was no dispute as to drilling company’s entitlement to be paid for the work, but there was a dispute as to liability between site owners and architects, which turned on the latter’s authority — The soil survey was wanted by potential purchasers of the site, but they had never had any intention of paying for it and were under no liability — Site owners instructed architects to hasten arrangements to get the boreholes sunk but stated several times that they would not pay the cost — At this stage, when a sale of the site seemed likely, the cost of the boreholes was treated as unimportant and liability for the cost was left unresolved — Subsequently the cost of the boreholes increased as additional boreholes were sunk — Eventually the potential purchasers decided not to proceed with the purchase — The site owners claimed, in an action by the drilling company’s liquidator, that they had repeatedly disclaimed liability for the cost — The county court judge held the site owners liable and they appealed — It was submitted by the site owners that in view of their repeated disclaimers of liability the architects had no authority to bind them — Held by Court of Appeal, rejecting this submission, that the attempt of the site owners to get the best of both worlds could not succeed — While pressing the architects to get on with the boreholes they kept repeating that they were not going to pay for them — The attempted disavowal of liability did not prevent the architects from having authority to act, which was clear from all the circumstances — Appeal by site owners dismissed
No cases are
referred to in this report.
The appellants
in this appeal were Brain Haulage Ltd, the first defendants in the action below
before Judge Rice at Grays Thurrock County Court, in which the plaintiffs were
Advance Drilling & Grouting Ltd. The second defendants were Redlich Powell
& Partners, consulting engineers, who were in effect dismissed from the
action. The third defendants (respondents to the appeal) were ATP Group
Partnership Ltd, the architects, between whom and the appellants the issue as
to liability arose.
Nicholas Davidson
(instructed by Budd Martin Burrett) appeared on behalf of the appellants; Paul
Darling (instructed by Kingsford Dorman) represented the respondents. The
plaintiffs, Advance Drilling & Grouting Ltd, and the second defendants,
Redlich Powell & Partners, were not represented and took no part in the
proceedings.
Giving
judgment, KERR LJ said: This is an appeal from a judgment given by His Honour
Judge Rice in the Grays Thurrock County Court on December 16 1985. The issue
arises between the first defendant in the action, Brain Haulage Ltd, to whom I
shall refer as ‘Brains’, and the third defendant, ATP Group Partnership, to
whom I shall refer as ‘ATP’, the partner concerned with this matter being a Mr
Billingham.
The events to
which the action relates had occurred as long ago as 1980. The position of the
parties to the action can be summarised as follows. The plaintiffs are Advance
Drilling & Grouting Ltd, who had carried out the work in question, which
was to sink a number of boreholes on Brains’ land in 1980. They had not
received payment for the work which they did, although there was never any
dispute as to their entitlement to payment. The dispute was as to which of the
defendants was liable to pay them. That appears to have taken a very long time
to discuss. In the interim, unfortunately, Advance Drilling went into
liquidation and in the end the liquidator brought the present action for the
amount which was indisputably due to Advance Drilling. That amount is also not
in issue; it came to £4,261.09, for which the learned judge gave judgment in
favour of Advance Drilling against Brains.
The second
defendants are Redlich Powell & Partners, a firm of consulting engineers;
they play no part in the ultimate history and were in effect dismissed from the
action.
The third
defendants, ATP and Mr Billingham, were architects who had been acting on
behalf of Brains on previous occasions and were undoubtedly in the position of
being their architects in connection with the present transaction.
The other
parties that should be mentioned are Christian Salvesen (Transport) Ltd of
Edinburgh, who were potential purchasers of the site belonging to Brains. That
was a site in Moss Lane, Walkden, Manchester, within the city of Salford, which
Brains owned and wished to sell. Christian Salvesen were interested in buying
the site, but since the soil was marshy they required that a soil survey,
involving a number of boreholes, should be carried out. The issue is: who
should pay the cost of those boreholes, the work having been done by Advance
Drilling? In that regard the only
possible candidates were either Brains or ATP, in effect in the form of Mr
Billingham.
What happened
broadly was as follows, but I shall have to look at the facts in greater detail
in a moment. It was left open at the beginning of the negotiations for the
possible purchase of the site by Christian Salvesen who was going to pay for
the soil survey, and indeed for an engineering feasibility study which was
going to be carried out thereafter. It was clear, however, that it was Mr
Billingham, the architect of Brains, who was going to make arrangements for
these boreholes. It was then in the mind of everybody, I think, that provided
the transaction went through, as everybody hoped and expected it would, the
cost of the boreholes would, so to speak, come out in the wash or would be
reflected in the price or would prove to be insufficiently important to require
specific arrangments to be made as to who was going to bear the cost of that
work.
But two things
happened. First, the cost of the boreholes was higher than had been expected
because they rose from an initial figure of 6 to 9 and to an ultimate figure of
15, with the result that their cost was going to be in excess of £4,000.
Second, unfortunately for everyone concerned, at the end of the history
Christian Salvesen decided not to go ahead with the purchase, with the result
that the sinking of these boreholes did not fulfil any purpose in connection
with those negotiations.
Mr Billingham,
having given instructions to the second defendant, Redlich Powell, to accept a
quotation from Advance Drilling to sink these boreholes, considered himself to
be acting with the authority of Brains and in particular of Mr John Brain, who
was the moving spirit in that company. The issue is whether in these
circumstances, putting it quite broadly, the cost of these boreholes is to be
borne by Brains or
no authority to instruct Advance Drilling through Redlich Powell. The sole
reason why it is said that he did not have this authority against the
background of what I have already mentioned is that on a number of occasions Mr
Brain said to him that he, Mr Brain, was not going to pay for this work. At the
same time, however, it will be seen that Mr Brain’s conduct was only consistent
with his instructing Mr Billingham to go ahead and arrange for the boreholes to
be sunk. And as I have said, Mr Billingham was throughout acting on behalf of
Brains if he was acting on behalf of anybody. That is the outline of the
matter.
The only
witness who gave evidence at the trial was Mr Billingham. At the end of his
evidence it was submitted on behalf of Brains that they had no case to answer
in relation to the sole issue which was before the judge, that is to say,
whether this account for £4,261 was payable by Brains or by their architects,
ATP. The submission of no case to answer was not accepted by the judge. He gave
judgment against Brains and Brains now appeal to this court.
The history
begins with a meeting on July 4 1980, which was initially held between Mr
Brain, a Mr Cole representing Christian Salvesen and Mr Gwynne Smith, a
representative of Debenham Tewson & Chinnocks, who were the surveyors to
Christian Salvesen. Mr Billingham joined that meeting when it was approaching
its end. He realised at once that most of the decisions had already been taken.
The judge’s
account of that meeting, as he found it on the basis of Mr Billingham’s
evidence, is in relation to Mr Billingham:
He was faced
with what seemed a fait accompli in that Christian Salvesen explained
that they were interested in a possible purchase but needed to be satisfied as
to the ground conditions present on site. They seemingly had reservations, no
doubt based on the reasons why (Brains) wished to dispose of the land, namely:
its marshy nature. Mr Cole and Mr Gwynne Smith on behalf of Christian Salvesen
had stated that they wanted some boreholes taken and a soil survey. This
consisted of six boreholes.
Mr Billingham
in that part of the meeting did ask, when it was suggested that there should be
an increase in the number of boreholes from six to nine, who was paying. He
said that the conversation carried on, and that he never did get a specific
reply. No one volunteered who would pay. He said ‘I went out believing Brain
Haulage would pay’, but certainly there was no evidence on which he could base
that.
He said that
‘When I was there there was no express agreement who would pay’.
And the judge
concluded that passage by saying: ‘He left the meeting puzzled.’
One can well
understand that although Mr Billingham put that question, nobody was anxious to
give a specific answer. No doubt Mr Brain hoped that Christian Salvesen would
pay, but as it turned out they never had any intention of paying. Uppermost in
everybody’s mind, of course, was the thought that the site was likely to be
sold by Brains to Christian Salvesen at a figure in the region of £250,000, so
that nobody was anxious to get involved in a discussion about the cost of these
boreholes at that stage. That was how the matter was left.
Mr Billingham
then instructed Redlich Powell to obtain quotations for these boreholes.
Pausing at
that point, there is no doubt in my mind, not only in the light of what
happened thereafter but simply on the basis of what had happened at the
meeting, that Mr Billingham was entitled to proceed to seek quotations. He
alone was the person whom everyone expected to do so. It was Mr Brain’s land,
and everybody understood that it was Mr Billingham who was going to make the
necessary arrangements. He was acting for Brains in relation to the planning
aspects of the site, but not in any way on the financial aspects of the
transaction. That was left to Brains’ estate agents and surveyors, Dunlop
Heywood & Co of Manchester, who were not present at the meeting on July 4
but were subsequently kept informed.
During the
week beginning Monday July 7 and concluding for present purposes on Friday July
11, when Advance Drilling began work, a number of letters passed between the
parties. There were also telephone conversations between, in particular, Mr
Billingham and Mr Brain; those are the ones with which we are concerned. It is
not clear how many there were or precisely when they took place, but Mr
Billingham’s evidence shows that there were three or four such conversations
during that week. On the evidence the gist of those conversations can be
summarised as follows: on the one hand Mr Brain was urging Mr Billingham to get
on with the boreholes and soil survey; but on the other hand he was saying that
he, Mr Brain, was not going to pay their cost. That, as I understand it, is the
effect of the evidence of Mr Billingham as noted by the learned judge.
In that regard
the following answers given by Mr Billingham ought perhaps to be referred to.
This was in his evidence in chief:
I had
telephone conversations with Brain on most days. I received no instruction to
stop the work. He did say I am not paying for the soil survey. He asked me what
was happening with the soil survey; I obtained quotations. I was under pressure
from him to get things moving. Soil survey was important to Salvesens.
In
cross-examination he said:
On July 10
Brain said he was not paying for the soil report . . . He told me about three
or four times that he would not pay.
That is the
background of the conversations. One then has to go to the correspondence
during the same week. On July 8 Debenham Tewson & Chinnocks, surveyors on
behalf of Salvesens, wrote to Mr Billingham setting out the arrangements as
they then stood, headed ‘Subject to Contract’. That letter made it clear that
Salvesens were prepared to proceed in principle with the purchase of the site
on certain terms, but that the purchase would in any event be subject to a
number of conditions, the relevant one being no 2:
That the
results of soil survey are satisfactory. Brains have agreed to carry out a soil
survey at their own expense and it is understood that this is currently being
put in hand.
When Mr
Billingham received that letter he felt considerable relief. Although, as found
by the judge, it had been his belief on leaving the meeting of July 4 that
Brains were going to pay, this had not been formally settled, but here was
confirmation that they would do so.
On the
following day, July 9, Mr Billingham replied to this letter as follows:
Thank you for
your letter of July 8 referring to matters discussed with our Clients Brain
Haulage Ltd on Friday afternoon last
that was the
meeting of July 4.
He then dealt
with a number of matters, and he went on as follows:
Concerning
those matters relating to the Planning Submission, I recorded the situation as
follows:–
1. That I will arrange for a Soil Survey to be
carried out, and additionally arrange for an Engineering Feasibility Study to
be made on the basis of the Soil Survey findings; this feasibility being based
on the foundation requirements of the Salvesen Cold Store. The cost or value of
the Soil Survey and Engineering Feasibility to be recognised as an item in the
negotiations for the disposal of the land.
After
mentioning a number of other points, he said:
Unless I hear
to the contrary I will proceed as Architect and Planning Consultant to Brain
Haulage Ltd along the above lines.
He sent a copy
of that letter to Mr Brain, as well as to his estate agents.
He wrote to Mr
Brain as follows on the same day:
Further to
the meeting held at your offices on Friday afternoon last
that was July
4
I enclose an
exchange of correspondence that I have had with Debenham Tewson &
Chinnocks, which I trust is self-explanatory.
That is the
correspondence to which I have just referred. He goes on:
I am in touch
with Mr Shaw, the partner in Dunlop Heywood & Co, and have asked him to
finalise the negotiations with Debenham Tewson & Chinnocks and Christian
Salvesen. In the meantime I have put in hand the soil survey and also the
engineer feasibility on the basic Christian Salvesen proposals for the Moss
Lane development.
After that, on
July 10, there was a telephone conversation between Mr Billingham and Mr Brain
to the effect already mentioned and recorded in Mr Billingham’s evidence, which
I have read.
The next
letter was on July 10 from Mr Billingham to Mr Brain, as follows:
Dear John
and then there
is a heading referring to this transaction
We have spoken
and I have now written to you on the action that I have taken since the meeting
at your offices on Friday afternoon last, July 4.
The immediate
action which I have initiated is the Soil Survey and Report.
I have been
telephoned this morning by Walter Redlich the Senior Partner of Redlich Powell
& Partners
the second
defendants
who advised me
that the result of quotations for the boreholes to be driven, analysed and an
Engineering Report prepared indicate that the likely cost will be in the region
of £4,000.
I am satisfied
that Redlich Powell have sought competitive quotations for the drilling
operation and that in view of the amount of Engineering investigation required
by Christian Salvesen that the overall cost is reasonable.
Consequently I
have asked that the drilling quotation be accepted so that work can commence
either on Friday, July 11 or week-commencing July 14.
Salvesen that this Survey and Report is a gratuitous element in the sale
negotiations. The value of the investigations and Report of £4,000 must be
taken into consideration when Dunlop Heywood enter the detailed negotiations of
the disposal price with Christian Salvesen.
I am
therefore sending a copy of this letter to Mr Shaw at Dunlop Heywood so that he
is appraised of the value of the Survey now being carried out to the detailed
requirements of Christian Salvesen.
As one can see
from that, Mr Billingham was indeed trying to do his best for Mr Brain. Mr
Brain had made it quite clear to him that he did not intend to pay, but at the
same time, as I have already mentioned, he was pressing him to get on with the
boreholes. All that Mr Billingham could do in that situation, as it seems to
me, is what he in fact did, that is to say to do his best to try to make it
clear that at the end of the day the cost of these boreholes, which was higher
than had been expected originally, would be taken into account in the
negotiations and the ultimate price. He sent a copy of that letter to Mr Shaw,
and added:
In my opinion
it is important that the provision of this Survey and Report should not be
considered as a gratuitous item in the sale negotiations.
Then I need
only refer to two more letters. On the same day, July 10, Christian Salvesen
wrote direct to Mr Billingham acknowledging his letter of July 9. In relation
to what they call a point of detail concerning the last sentence of para I of
Mr Billingham’s letter of July 9, they said:
This is
factually incorrect; this was not a point made either by yourself or Mr Brain
at our meeting.
That refers to
the sentence he had added to his letter of July 9 in para 1, which I have
already read, as follows:
The cost or
value of the Soil Survey and Engineering Feasibility to be recognised as an
item in the negotiations for the disposal of the land.
Mr Billingham
thought that that was rather unfair and, although it is not a relevant letter,
it should be mentioned that on July 14, the following Monday, he wrote a long
letter to Christian Salvesen reviewing the history and making it clear that in
his view Christian Salvesen could not simply wash their hands of the cost of
this work. It had been carried out for their purposes, though of course Mr
Brain was anxious that this should be done because he wished to comply with
their requests in the hope that they would buy the land.
Meanwhile, on
July 11, the Friday, Advance Drilling had begun the work and they completed it
on July 26. Unfortunately, however, as already mentioned, the transaction fell
through and Christian Salvesen have never accepted any responsibility for the
cost of this work.
It was agreed
that Redlich Powell, who had only been a conduit pipe for the instructions
between Mr Billingham and Advance Drilling, could not possibly bear any
financial responsibility. So the issue inevitably lay between Brains and ATP —
between Mr John Brain and Mr Billingham.
What Mr
Davidson has submitted — and he has done so with considerable lucidity and
firmness — is that the crucial point is that Mr Brain made it clear on three or
four occasions that he was not going to pay or that he had no intention of
paying. In that regard Mr Davidson places reliance on an answer which Mr
Billingham, in cross-examination, gave to him (although it is not recorded in
the judge’s note) to the effect that what Mr Billingham understood by Mr Brain
saying that Brains did not intend to pay was that Brains ‘would not under any
circumstances pay (whether by cash, cheque or otherwise) for the soil survey’.
Speaking for
myself, I do not see how that takes Mr Davidson, or Brains, any further. It may
often be the case that a party says that it has no intention of paying for
something, but is then nevertheless held liable to pay as a matter of law,
depending on the facts of the case. In the present case one has to ask oneself
whether or not, taking all the facts together, Mr Billingham had the authority
of Mr Brain to instruct Advance Drilling to sink these boreholes. In my view it
is quite impossible to arrive at any other conclusion. I think that from the
start — that is to say, from the meeting of July 4, as indeed the judge found
in answer to a specific question which he was asked to answer — it was clear
that Mr Billingham was the person, in his position as architect for Brains, who
was going to arrange for the boreholes to be sunk. Although they subsequently
went up in number, in my view that position never changed. The fact that Mr
Brain repeatedly said, while pressing Mr Billingham to get on with the
boreholes, that he (Mr Brain) was not going to pay for them, cannot, in all the
circumstances, be interpreted as amounting to a denial of Mr Billingham’s
authority to go ahead; or to a revocation of his authority, or instructions, to
go ahead. Mr Brain was really trying to have the best of both worlds, which
would not avail him in the law of agency. If his instructions were reasonably
to be understood, as they were by Mr Billingham, that Mr Billingham was to go
ahead, then Mr Billingham was entitled to act on them — indeed, he was perhaps
obliged to do so. On the other hand, it may be that Mr Brain was simply
expressing a pious hope, or a truculent view, that Salvesen would or should pay
that cost. In my view that cannot avail him. Taking all the circumstances
together, Mr Billingham, as his architect, was authorised by him to instruct
Advance Drilling to sink these boreholes. The important point was that Mr Brain
was kept informed explicitly, by the correspondence to which I have referred,
of what Mr Billingham was doing and, knowing perfectly well what was going on,
he was not only content that it should go on but was anxious that progress
should be made.
In these
circumstances it seems to me quite clear that the fact that he was saying at
the same time that he had no intention of paying for the work cannot exempt him
from liability for it as between him and Mr Billingham. Mr Billingham was doing
his best for him throughout and it cannot possibly be said that he was acting
without any authority.
In these
circumstances, I entirely agree with the conclusion of the judge and would
dismiss this appeal.
Agreeing,
NOURSE LJ said: I add a few words of my own out of a regard for the
well-sustained argument of Mr Davidson.
As my lord has
said, Mr Davidson has placed great reliance on the fact that Mr Billingham
accepted in cross-examination that when, on July 10 and in previous telephone
conversations, Mr Brain said that he was not paying for the soil survey, he (Mr
Billingham) understood that Brains would not in any circumstances pay, whether
by cash, cheque or otherwise, for the soil survey. That shows, says Mr
Davidson, that Mr Billingham knew that Brains would not pay for the survey in
the circumstances which actually happened, namely the breakdown of negotiations
between Christian Salvesen and Brains, with the result that the value of the
work done by the plaintiffs could not be taken into consideration in those
negotiations.
Although the
learned judge did not make a note of that answer of Mr Billingham, it was one
which he heard, and I would assume that, as is often the case with answers
which are elicited in response to leading questions put in cross-examination,
he did not attach the significance to it for which Mr Davidson contends.
I say that
because in his judgment the learned judge, after reading the penultimate
paragraph of Mr Billingham’s letter to Mr Brain of July 10 1980, which my lord
has already quoted, said this:
It is quite
clear that Mr Billingham on behalf of the Third Defendants was saying to the
First Defendants that,
‘Despite what
you have said, that you don’t intend to pay, I as your architect have arranged
for the services of a soil surveyor and you should bear in mind, in view of the
fact that Christian Salvesen will not be liable, that this is [a] matter of
£4,000, which will be taken into account by Dunlop Heywood, when Dunlop Heywood
enter negotiations.’
Mr Davidson
has failed to persuade me that that was not a view which the judge could
properly have taken of the factual position. It is, I think, strongly confirmed
by the fact that, as my lord has said, a copy of the letter of July 10 was sent
to Mr Brain after his telephone conversation on that day and he does not appear
to have reacted to it in any way.
In the
circumstances it seems to me that the learned judge was entitled to conclude
that Mr Brain had accepted the position in the terms which he stated. I think
that Mr Brain’s receipt of a copy of the letter of July 10 and his failure to
come back to Mr Billingham on it is perhaps the crucial event in the whole
story. I think it is impossible to say, on all the facts, that Mr Billingham
acted without the authority of Brains in instructing the plaintiffs to go ahead
with their survey.
For these
reasons, as well as for those given by my lord, with which I am in complete
agreement, I, too, would dismiss this appeal.
The appeal was
dismissed with costs. Application for leave to appeal to the House of Lords was
refused.
