England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NORTHAMPTON COUNTY COURT
(HIS HONOUR JUDGE CHARLES HARRIS QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		24th November 2008

Lord Justice Ward:

1. This is an appeal from His Honour Judge  Harris's order made in the Northampton County Court on 14 May dismissing the claim brought by Mr and Mrs Sargeant against Macepark (Whittlebury) Limited.
2. The claim is a perpetuation of a running dispute between these highly litigious parties bound to each other for 122 long years under a lease dated 29 October 1998, whereby the appellants, Mr and Mrs Sargeant, demised to the respondent company an area of landlocked land on which the respondents erected and now run a management training centre, hotel and spa known as Whittlebury Hall, Whittlebury in Northamptonshire.
3. The appellants own the surrounding land, which is the West Park Golf Club in Whittlebury. The lease granted the respondent certain rights of way over the appellant's land. This was to give access to and allow egress from the hotel to the A413 highway. There was also a right of way and a right to enter the appellant's land referable to a sewage treatment plant on the appellants' land. The lease provided that the respondents were to pay 50% of the cost of resurfacing that access way, though by a later license that proportion was increased to 60%.
4. The parties became locked in a dispute because it seems that the sewage treatment plant did not function at all efficiently and in the result heavy traffic, much greater than was anticipated, had to use the access way to empty the treatment plant, and in the course of that use, considerable damage was done to the roadway. The earlier litigation involved, among other matters (and I think there were a number of other matters), a dispute as to whether that heavy traffic was occasioned by the intransigence of the appellants in refusing to give permission for a sewer to be laid across the appellant's land from the sewage treatment plant to the mains sewage on the highway. Be that as it may, and it does not matter greatly, the parties had the good sense on that occasion to enter into mediation, and Mr Philip Naughton QC is to be congratulated on bringing the parties to an agreement which was set out in a long document, the fruits of two days' hard work, dated 6 March 2006. The relevant provision is Clause 10 of that mediation agreement. It provides as follows:

"The parties shall repair any damage to the accessway from the A413 to the STP [sewage treatment plant] as follows:

10.1 in relation to that part of the accessway from the A413 to the entrance of the car park to the demised premises the parties shall bear the cost of repair in the proportions specified in the lease as varied by the licence dated 24 October 2003, that is 60 per cent on the part of Macepark and 40 per cent on the part of the Sargeants;

10.2 in relation to that part of the accessway from the car park to the STP the parties shall bear the cost of repair as to 75 per cent on the part of Macepark and 25 per cent on the part of the Sargeants.

10.3 the repairs shall take place on the completion of the works referred to in paragraphs 8.1 and 9 above. The parties shall consult with one another to ensure that the repairs cause minimum disruption to the parties' respective businesses. The repairs shall be carried out by a contractor appointed by the Sargeants who shall obtain three quotations, one of which quotations shall be from a contractor nominated by Macepark. The Sargeants shall provide Macepark with copies of the quotations obtained and although the Sargeants shall be at liberty to choose which contractor is appointed provided that no contractor can be appointed whose quotation is higher than the average of the three quotations the Sargeants shall first discuss the matter with Macepark. Macepark will pay its proportion of the costs within 14 days of delivery of the contractor's invoice(s) by the Sargeants to Macepark. In consideration of this agreement the Sargeants confirm that the section 146 notice dated 26 August 2005 is hereby withdrawn and further acknowledge that this agreement constitutes a full and final settlement of any liability of Macepark arising out of that notice."

5. The work required to be carried out as specified in Clauses 8.1 and Clause 9 was work to the sewage treatment plant and to the laying of a new drain to the mains sewer and the laying of a gas pipe for the hotel. That work was duly done and so the next stage was to repair the access way. The issue in this case and in this appeal is the extent to which if at all the respondent should contribute to the cost of repairs.
6. What happened is shrouded in considerable mystery. At least some of the early facts are clear. The appellants set about obtaining the three quotations they needed under 10.3 of the agreement. In June of 2006 they had received quotations from their nominated contractors. One was from Edwards Surfacing Company, the other was from Raybell and Son Surfacing Limited. There was apparently delay before the respondents nominated their contractor, and the quote from Bardon Contractors was not available until 22 August of 2006. A feature of the case is that the paperwork coming from Raybells was lamentably inefficient and this has caused great confusion. It appears that on 8 June Raybell gave a quote, which appears at page 192 of our bundle. The accessway was divided into four sections coloured yellow, orange, green and pink. In that quotation (which I will call "the lower quotation") the cost of the work for the yellow section was just under £38,000; the cost for the orange section was just under £4,000; for the green; £21,000 odd; and for the pink; £13,500. For reasons which seem a little unclear a second quotation of that bearing the same date was presented to the appellants. It seems that this was because Raybell felt they had not quoted sufficiently. They had written a letter on 12 September in which they indicated that they would wish to increase their quotation by some £3,250. That letter must have been superseded by the meeting which was held between Raybell and the applicants later in September, as a result of which the second quote of 8 June (which I will call "the higher quote") was put forward. That quotation is to this effect:

"We thank you for your enquiry and are pleased to quote as follows.

Yellow section:

To excavate to 519 square metres to severely damaged areas and cart arisings to tip,

To lay and supply 500 square metres of Type 1 hardcore and compact,

To supply and lay 519 square metres of 60 mm of Binder Course macadam

Our price would be…..£19,593+VAT.

To supply and lay 4,435 square metres of 35 mm of Surface Course macadam,

Our price would be….£30,392.50+VAT."

I pause there. The combined cost therefore of the yellow section would be £49,985 compared with the £37,985 in the lower quote. The orange section likewise contained a specification "To plane off 365 square metres of Surface Course and cart arising to the tip, to supply and lay 365 square metres" etc, and the price quoted was £7,950 plus VAT, an increase from the quotation.

7. The green section also contained a specification, insofar as it indicated how many square metres had to be planed off, how much had to be relaid for the fixing of 90 pre-cast concrete edging, supplying concrete kerbs, repairing the damaged Binder Course and temporary patchwork to allow access for other works. And the price quoted for that was £21,676.50 plus VAT.
8. The pink section was on a second sheet. That likewise specified how much had to be planed off, how much had to be relaid, and again the need for kerbs etc. And a price of £13,581 was specified.
9. The important letter is the letter of 22 September in which the appellants informed the respondents that they had received, in accordance with the agreement, the three quotations; they explained that there had been delay; and they enclosed copies of those three quotes. They stated that they had compared those quotations and believed that they offer comparable specifications with regard to the standard of the proposed work and the materials, and they conducted a price comparison which is not entirely without interest in that Bardons, whom I repeat were the respondents' nominated contractor, were going to charge £141,810 for this work. Edwards put in a quote in a total of £116,745 and the lowest quote by a mile was Raybell at a total of £93, 192. The letter of the 22^nd continued, saying that they considered Raybell the appropriate contractor as they offered the best value and had done work for both parties previously:

"We therefore asked them to confirm their price, as it is four months since they quoted and they have informed us of a price increase of £3,250 due a rise in material costs."

And a copy of that letter, being the letter of 12 September, was also enclosed. They indicated that Raybell were available to start on 2 October and to finish within a fortnight or so, and they would send an invoice in due time.

10. There was a meeting on site on 29 September when the representative for the respondent queried the Raybell figures, suggesting that they had over-measured the amount of work, particularly I think in respect of the yellow section. That appears, however, not to have deflected the appellants, and although this part of the case is partly shrouded in mystery there is some indication, for example from page 211, that the appellants told Raybell to go ahead. They wrote:

"You updated this quote a couple of weeks ago and we agreed you would proceed on the following basis:"

And they set out the figures that were quoted to the respondent including the so-called "price supplement", but they added a note that the price of the yellow section may be liable to an increment of £10,000 with the increased figures that Raybell were seeking to charge, and Mr Sargeant said he would discuss that question with Raybell. He asked him to confirm by fax how the price of that section had increased from £49,985 to about £59,985. The communications from Raybell served to confuse not to enlighten. Three completely different documents were apparently sent in answer to that little difficulty. One of these three quotations, and they are all dated 2 October, is based upon the higher of the June quotations, but with different figures for the amount of excavation necessary -- that had increased -- but for a lesser figure for surfacing because the area there had decreased.

11. The second of the 2 October quotations is again based on the higher June quotation, but based upon a third, and the highest, estimate for the amount of excavation necessary. Then there is a third document dated 2 October, but curiously this is based on the lower of the June quotations notwithstanding the fact that the measurements are those for which the second of the 2 October quotations was prepared. So there is complete mystery as to what on earth Raybell were doing.
12. The culmination of this story is that eventually Raybell submitted their invoices for the work they had done. It is not without significance that it was, if not common ground, certainly the finding of the judge that the work was well and properly done and did what was necessary to be done to repair the access way. The invoices submitted give figures for the pink, green and orange work in accordance with the quote, though with a supplement in each case. The figure for the yellow work was, however, increased from the £49,985 referred to in the higher quotation of June and had increased by £10,000 to £59,985. There too there was a supplement added.
13. The appellants therefore claimed, in their letter of 16 November, a payment of the relevant proportions of those figures. They also claimed a contribution to the building of a mini-roundabout area somewhere on the access way, for Paddock Road and for more concrete road edging, and they sought also a percentage of the cost of supervising that work.
14. So the claim, as I understand it, was brought for the payment of the monies in the invoices. There had been payments made on account. Two sums were paid by the respondents, one of the sums nearly £49,000 and the other of £8,500; and those figures were calculated by the respondents' representative, but the detail of that allocation is not clear to me and does not much matter.
15. The judge dealt with the case in this way. He found that all was reasonably clear up to 12 September: see paragraph 4 of his judgment. In paragraph 5 he refers to the site visit made by Mr Bell on 19 September when he found the road to have deteriorated since he put in his initial June estimate, said that there was more work necessary and, says the judge:

"He prepared a revised quotation at a higher price. However the document containing this was identical in its narrative and date to the quotation of 8 June, but simply contained an increased figure. There was no revised description of the increased work, which it was said was needed."

That is undoubtedly correct because the so-called "specification" of the works in the lower quotation of 8 June and in the higher quotation are in identical terms, but the price had gone up, as indicated, by something like £11,000.

16. The judge then endeavoured to clarify what on earth had been happening between the appellants and Mr Bell of Raybell, and found that he simply could not understand the chronology and he could not understand the differences between the quotations of 2 October. In his judgment he turned to the construction of Clause 10.3, pointing out -- and Mr Naughton will be disappointed by this -- that it was not drawn with perfect clarity and without ambiguity in that:

a) it did not explicitly state that the contractor who carries out the work must have been one of the three from whom the quotations were obtained;

b) it did not state explicitly that the work is to be done at one of the prices quoted and;

c) it did not state explicitly that compliance with all the conditions is a pre-requisite for recovery of the specified proportion of the cost. But he pointed out, and I quote from paragraph 18 on page 23 of the judgment.

"However (a) was not contended for at the trial and I think that on a fair reading of the document it was clearly envisaged that the party carrying out the work, must have submitted one of the three quotations. Likewise I think it reasonably clear that the authors of the agreement, and more particularly the parties to it, must have intended that one of the three disclosed quotations would in fact be accepted and its price be the price of the contract. Furthermore, the quotation selected must contain a reasonably full specification of the work actually carried out. Finally, the whole idea of the agreement was that the Claimants would comply with the provisions of it, in order to be able to be entitled to recover the agree percentage of the contractor's price. The original disclosed quotations could not be overtaken or substituted by undisclosed subsequent tender and negotiation, in my judgment."

17. He explained, in paragraph 19, that any other interpretation would remove the element of protection which the provisions for disclosure and discussion are clearly intended to provide for the defendant, which is liable to pay the majority of the costs of the contractor selected by the claimant. It would want to know and, in my judgment, was, under the agreement, entitled accurately to know the extent, quality, price of the work quoted for. In particular it was entitled to know upon what quotation and for what work the claimants' contract was based. Fundamental questions in this case are therefore:

a) upon what basis was Raybell quoting when the claimants contracted; and

b) was that made clear to the defendant?

18. He was singularly unimpressed with the evidence given by the appellants and his conclusion was that:

"24. As I have originally indicated, the agreement clearly envisaged that the work to be paid for would be, in accordance with the disclosed quotation and not some other figure. It was envisaged that the Defendant's percentage would be calculated on the basis of an accepted disclosed quotation.

25. In these circumstances it seems to me that the Claimant was entitled to the stipulated percentages of the figures he had disclosed and not to others. He had disclosed a Raybell figure of £93,192 including the yellow section of £49,895 but claimed upon the basis of invoices totalling some £125,000. I concluded in the circumstances that the Claimant is not entitled to the sums claimed in this case in respect of that work."

19. He then dealt with the claims for the additional work and rejected them as not having been agreed by the respondents, and there is no appeal against that part of his judgment. He concluded:

"27. Accordingly the Claimants claim does not succeed. This will no doubt displease Mr Sargeant who has, I dare say, had good quality work carried out at a reasonable price. But if he behaved in a clear and straight forward way, disclosing the discussion with the Defendant, the final quotation or quotations he was minded to accept before he accepted it, he would have been entitled to recover the appropriate percentages. Why he did not do that is unclear. What was actually happening on 2^nd October simply remains a mystery to the court."

20. Mr Mitchell, who appears for the appellants here as he did below, advances as his main submission that the respondents are obliged to pay the respective percentages of the invoices actually rendered. He submits that the effect of the mediated agreement is not substantially to change the obligations on the respondents to pay the actual cost of the work done in the varied percentages agreed on that mediation. He submits that Clause 10.3 provides a cap calculated by taking the average of the three quotations and that, provided that work was carried out for a price equal to or less than that cap, then that was an amount which was recoverable. His alternative case is that the respondents are obliged to pay the respective percentages of the figures quoted together with the supplement of £3,250. I will interpose to say I utterly reject that submission. The additional £3,250 was mentioned on 12 September and it is common ground, or it is the finding of the judge, that the higher quotation was one that was prepared after 12 September. The supplement must be presumed to be included in the higher quotation, and no further proportion is due by the respondent. In any event I would not begin to know whether to divide the £3,250 in the proportion of 60% or 75%, and that is all too vague to amount to a viable claim, so Proposition No 2 advanced by the appellants is roundly rejected.
21. So the appellants' final case is that the relevant proportions of the higher quotation of June should be paid and on the figures there is an amount still outstanding in respect of it.
22. We discussed those figures in the course of argument. I will not take time repeating them, but on my calculation of the respective figures the amount due taking the proportions and the higher quotation of June would be £64,605.45 plus VAT, and I confess I have not done the VAT calculation. £57,547.55 has been paid and therefore the amount due would be the appropriate difference, which my Lord helpfully calculates to be £18,363.85.
23. The respondents' challenge to this is that the mediated agreement sets out, firstly, a number of preconditions, conditions precedent I suppose, upon which liability was dependent. The first was that the quotations should each contain a reasonably full specification of the work carried out. The judge accepted that submission, as recited in paragraph 18 of the judgment. Secondly, the appellants had to provide copies of those quotations -- that I think is obvious -- but that has been done. Thirdly, the work had to be carried out by one of the three contractors who had provided a quotation; that is not in dispute and that too has been done. And fourthly, the invoice had to be for the price specified in the quotation. There again the judge held in his favour, in paragraph 18.
24. So it seems to me that the first issue in this appeal is as to the proper construction of Clause 10.3 with specific reference to whether or not it necessitated a reasonably clear specification, and what price could be recovered: was it to be the quoted price or the invoiced price? As for the question of a reasonably clear specification, on the pleadings that was accepted to be an implication of 10.3 and, as I say, the judge found that to be correct. So on that score the question for us is whether there is a breach of that requirement. Mr Mitchell's point is the simple point that, if one takes the quotation from Raybell, on each section of the work there was an adequate description of how much was needed to be done. Mr Rolfe counters that by pointing out that it cannot be a fair and proper specification because it was known to Mr Bell that the figures in the lower and higher quotation were different because, it has to be assumed, different measurements were being taken by him. In my judgment, on this point Mr Mitchell is correct. If the implication is as the judge held it to be, then all that was necessary for the respondents to understand the figures presented to them and to make a comparison between the three quotations they were being invited to consider, would be an adequate description of how much work was to be done and at what price that was to be done. And on the face of the document at page 208 and 209 of our bundle, there was, in my judgment, a reasonably full specification of the work. The fact that it differed from the lower quotation is, in my judgment, neither here nor there when it comes to asking, did it meet the requirements? If anything, of course, given the turn of events this has all worked out favourably in the respondent's favour. So far I am with the appellants. But the crucial question in my judgment is whether 10.3 entitled the appellants to charge any figure they liked provided it does not exceed the cap.
25. As I read 10.3, the relevant sentence is:

"The Sargeants shall provide Macepark with copies of the quotations obtained [that they had done] and although Sargeants shall be at liberty to choose which contractor is appointed" [then Mr Rolfe helpfully suggests brackets around the next clause, as follows: "(provided that no contractor can be appointed whose quotation is higher than the average of the three quotations)"] "the Sargeants shall first discuss the matter with Macepark."

26. My reading of that is that, firstly, it is the appellant who is entitled to choose which contractor of the three shall carry out the work, but they had to discuss the matter with Macepark, and that they had done, and the constraint upon their choice of contractor is that his quotation had to be no higher than the average of the three quotations. In other words that sentence, and especially the proviso within it, limit the choice of contractor and served no other purpose, and certainly do not entitle the appellants to assume that the cap is the limit of their entitlement. It seems to me moreover implicit that these quotations were being put forward with the view that one of the three would be accepted and would form the contract price and would therefore conclude the respondents' responsibility to make their contribution. These parties cannot agree about almost anything; they do not trust each other further than they can hit a golf ball. This dispute arises out of their deep and serious antagonism and mistrust. The fact that there were references in the dealings between these parties to surplus payments being made served only to found the suspicion that the appellants were procuring an inflated invoice from Raybell in order that Raybell would charge less for work to which the respondents would not have to contribute. I emphasise there is nothing to support any finding that such was in fact the position, but it does inform the parties' relationship one to the other and it gives me the certainty that the judge was right in his findings in paragraph 18 that the original disclosed quotations could not be overtaken or substituted by undisclosed subsequent tender and negotiations and therefore, in my judgment, the judge was correct in his conclusion (in paragraph 24) that the claimant was entitled to the stipulated percentages of the figures he had disclosed and not to others. He is entitled to his percentages of £93,192 but not to the invoiced figures at the higher sum. The judge's error was not to follow paragraph 24 of his judgment to its inevitable conclusion and enter judgment for the appropriate percentage of the "disclosed quotation and not some other figure".
27. I would allow this appeal and enter judgment for the appellants for the sum of £18,363.85.

Lord Justice Lloyd:

28. I agree with my Lord that this appeal should be allowed to the extent that he has indicated. I would only wish to add a couple of points. I entirely agree with him that the judge interpreted Clause 10.3 of the mediation agreement absolutely to the point in his paragraph 18, for the reasons given. I agree, in particular, with the proposition that the sum to which the respondent had to contribute was tied to a quotation and was not capable of being altered subsequently despite the perhaps foreseeable exigencies of a building contract. I wish to add one further point about the basis on which the appeal does succeed. The judge said in paragraph 18:

"the quotation selected must contain a reasonably full specification of the work actually carried out"

It seems to me in that one sentence the judge may have slipped slightly because the reasonably full specification would be of the work intended to be carried out, looking to what was intended rather than relating to what was later in fact done. I do not think anything turns on that save that I would regard compliance with that condition, at any rate substantial compliance with that condition, as being one of the matters upon which the respondent's obligation to contribute was dependent. But on the facts of the present case, and despite Mr Rolfe's attractive submissions, it seems to me that the higher quotation did contain a reasonably full specification of the work to be carried out. The fact that, as it seems, in particular from paragraph 5 of the judge's judgment, that in some respects this may have been no longer a fully accurate or adequate specification does not seem to me to be a sufficient reason for holding that this aspect of the conditions was not complied with. Accordingly, I would agree that the conditions for the respondents' liability to contribute in the agreed percentages had been substantially satisfied, and on that basis the liability to contribute is one which was made out by the claimant and is consistent with what the judge said at paragraphs 24 and 25 of his judgment.

Order: Appeal allowed