Professional services – Breach of contract – Damages – Claimant company claiming balance of professional fees for quantity surveying and project management services provided to defendant for construction of primary healthcare centre – Defendant bringing cross-claim for professional negligence or breach of contract – Whether parties establishing respective claims – Whether parties being entitled to damages for breach of contract – Determination made
The claimant company was a professional services practice which provided quantity surveying and project management services for the defendant company in connection with the construction of a new primary healthcare centre (PCT).
A dispute arose between the parties in relation to payment for professional services. The claimant contended that it was entitled to the balance of its professional fees in the sum of £174,500 which fell due under the deed of appointment by which it had been retained.
The defendant argued that the claimant had failed to provide the specified services with the result that there had been a considerable overspend on the project of £733,394.96. Therefore, nothing more was due to the claimant and the defendant sought repayment of £195,000, which had already been paid to the claimant. Further or in the alternative, it claimed a deduction, by application of the principle of abatement or otherwise, from any sum payable to the claimant under the deed of appointment to reflect the services not provided. The defendant also claimed damages for breach of contract and/or professional negligence, reimbursement of certain liabilities incurred in relation to an adjudication brought against it, which had been settled and damages in respect of the overspend in the sum of £214,557, representing the value of unnecessary variations to the project works for which the claimant was responsible.
Held: The issues were determined.
(1) The defendant had failed to make good its claim for damages in relation to the pre-construction phase. As a matter of law, the defendant was estopped by convention from contending that the claimant was obliged to undertake a competitive tendering process. It had not made out a case that it had suffered any relevant loss or damage as a result of any breach by the claimant in relation to its pre-construction phase services.
(2) Subject to the defences of deduction by abatement or otherwise and/or set off, the court was satisfied that the claimant had established its entitlement to its remaining fees of £162,500, inclusive of VAT, under the deed of appointment. There was no basis for the defendant claiming repayment of the monies already paid.
(3) It was open to the defendant, as a matter of law, to defend itself in relation to a claim for payment for services rendered by a professional by contending that all, or some specific part, of those services had either not been performed at all or had been performed so poorly that they were worthless. However, the claimant had complied with some, if not all, of its obligations under the deed of appointment. With the possible exception of the final cost plan, there had been no express or implied requirement that those obligations could only be satisfied by the provision of some form of written report with some minimum degree of supporting detail. Accordingly, the defendant was not entitled to make any deduction in relation to pre-construction phase services: Multiplex Construction (UK) Ltd v Cleveland Bridge UK Ltd [2006] EWHC 1341 (TCC); [2006] PLSCS 193 applied. Hutchinson v Harris [1978] 10 BLR 19, Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9; [2011] 1 EGLR 111 and Pickard Finlason Partnership Ltd v Lock [2014] EWHC 25 (TCC) considered.
(4) Although there was nothing in principle wrong with a total or global cost claim, there were added evidential difficulties which a claimant contractor had to overcome It would generally have to establish, on a balance of probabilities, that the loss which it had incurred would not have been incurred in any event. Thus it would need to demonstrate that its accepted tender was sufficiently well priced that it would have made some net return. The fact that one or a series of events or factors caused or contributed to the total or global loss did not necessarily mean that the claimant contractor could recover nothing. It depended on the impact of those events or factors: Walter Lilly v Mackay [2012] EWHC 1773 (TCC); [2012] PLSCS 189 applied.
The defendant’s fundamental difficulty was that it had failed to prove on the balance of probabilities that no or no substantial part of the costs overrun would have been incurred in any event. It had failed to surmount the evidential difficulties. This was not a case where the court could simply deduct the non-proved items from the overall claim. It was not self-evident that a substantial cost overrun on a project such as this could only have been caused by failings attributable to the quantity surveying and project management operations. There was no burden of proof on the claimant to prove that there were other causes of loss for which it was not responsible.
(5) In all the circumstances, the defendant had failed to make good its claim in relation to the construction phase and the claim for damages for such services as a global claim failed. However, the defendant had made out its claim for damages in relation to unnecessary variations in the sum of £52,023.46. The claimant had been in breach of its obligation to provide cost reports on a monthly basis. Accordingly, the defendant was entitled to deduct £25,000, plus VAT, in relation to the construction phase services. The defendant had made out its claim for damages in relation to the post-construction phase in the sum of £37,500 but it was not entitled to make any deduction in relation to post-construction phase services.
(6) Accordingly, the claimant was entitled to £132,500 net and the defendant was entitled to damages of £89,523.46. Since it appeared that the defendant was entitled to rely on a set-off, the end result, subject to any issues as to precise quantification, VAT and interest, was that the claimant was entitled to recover the principal sum of £42,976.54.
Lucy Colter (instructed by Kennedys Law LLP, of Manchester) appeared for the claimant; Justin Mort QC (instructed by Harrison Drury Solicitors, of Preston) appeared for the defendant.
Eileen O’Grady, barrister
To read a transcript of William Clark Partnership Ltd v Dock St PCT Ltd click here
