England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		4th October 2007

HIS HONOUR JUDGE PETER COULSON QC:

A. INTRODUCTION

1. This is a claim by FT Everard & Sons Limited ("the claimant") for the repayment of £150,000, together with interest, from Kent County Council ("the defendant"). The sum had originally been paid by the claimant to the defendant, pursuant to clause 16(1) of an agreement dated 11th October 1988, as the claimant's contribution to the costs of improvements to be carried out by the defendant to the junction between Station Road and London Road in Greenhithe ("the junction site"). The repayment of the £150,000 and interest is sought pursuant to clause 16(5) of the same agreement, on the ground that the defendant did not, in fact, commence to carry out the improvements by 31st December 1994, the agreed cut-off date.
2. I propose to set out the relevant background too in terms of the contract (section B below), before outlining the relevant events (section C), and the issues that now arise (section D). I then go on in detail to address in detail the two issues raised by the claim (sections E and F). There is a short summary of my conclusions at section G.

B. THE CONTRACT

B.1. Background

3. Although much was made by Mr. Challenger for the claimant of the relevance of the background to the agreement of 11th October 1988, I consider that, in truth, the background is neither contentious nor unusual. It can, I think, be summarised as follows:

(a) the claimant wanted planning permission to develop certain sites that they owned at Greenhithe;

(b) the defendant was prepared to grant such planning permission, but only on certain conditions, which were best addressed by way of a written agreement under section 52 of the Town and Country Planning Act 1971;

(c) the parties were aware that the proposed development would increase the traffic at the junction site, and that improvements to that junction, probably involving the construction of a roundabout but not necessarily so, would be necessary.

(d) such improvements would be carried out by the defendant with a financial contribution from the claimant, and would provide an additional benefit to the claimant because their head office, which was still in the locality, would also benefit from the improved junction.

4. In addition, at the time of the agreement, it seems likely that both parties were aware that these improvements might be carried out as part of a wider road scheme known as the South Thames Development Route (STDR). This had apparently been in the planning stages since the late 1970s. By 1988 there was a proposal that the STDR, which involved the construction of a major dual carriageway throughout this part of south London, would commence at the junction site.

B.2 The Relevant Terms

5. Clause 16 of the agreement provided as follows:

"(1) Everards will within five working days of receipt of the permissions pay to KCC the sum of £150,000 as a contribution towards the costs of improvements to be carried out by KCC to the junction between Station Road and London Road, Greenhithe as hereinafter provided.

(2) Should Everards make default in making payment of the said sum, interest shall be payable thereon at the rate of 1% above the base lending rate of National Westminster Bank plc at the relevant time and fluctuating accordingly for the whole of the period that the said sum remains unpaid.

(3) Upon completion of the improvements mentioned above, the County Treasurer for the time being of KCC shall issue to Everards a certificate specifying the actual cost of such improvements and a statement of interest earnt upon the said sum of £150,000 as provided for below together with such other details of the costs of such improvements as Everards may reasonably require.

(4) If the actual cost of construction of the said improvements so certified is less than the sum of £150,000 plus interest as hereinafter provided, then KCC shall pay to Everards (or to such person as Everards may nominate upon payment of the said sum of £150,000) within 28 days of the issue of such certificate an amount equal to that by which £150,000 plus interest as aforesaid exceeds the cost of construction.

(5) If KCC shall not, for any reason, have commenced to carry out the said improvements by 31st December 1994 then KCC will repay to Everards or to such person as Everards may nominate as aforesaid the sum of £150,000 plus interest as hereinafter provided".

6. The relevant parts of the fourth schedule provided as follows:

"2. (1) In consideration of the payment of the said sum of £150,000 hereinbefore referred to KCC covenants that it shall use the said sum for the purpose of carrying out highway improvements to the said junction between London Road and Station Road and for no other purpose.

(2) The said improvements shall comprise either a new roundabout, an improvement traffic signal layout, or such other improvements as KCC may in its reasonable discretion determine.

(3) KCC shall use all reasonable endeavours to commence such improvements by the 31st December 1994 but shall not be liable to Everards for any failure so to do.

(4) Upon commencing such works KCC will use its best endeavours to complete the same with all due diligence".

C. THE RELEVANT EVENTS

C.1 Progress Of The STDR 1988-1994

7. It seems that a good deal of detailed work was done on the planning of and preparation for the STDR during this period, including the obtaining of all relevant planning consents and the obtaining of all necessary compulsory purchase orders^[1]. According to Mr. Farmer, a senior highways manager employed by the defendant, detailed drawings, specifications and a bill of quantities had been drawn up by 1994. These drawings included number 7702/512 dated July 1994 which showed, amongst other things, the new roundabout at the junction of Station Road and London Road, the new roundabout at Greenhithe Station and the new dual carriageway to bypass the existing Station Road running between those two roundabouts.
8. It was however clear by the autumn of 1994 that the STDR could not yet go ahead. A detailed letter from Mr. Mowatt, the defendant's director of highways and transportation, dated 5th September 1994 sets out why not. The difficulties were essentially two-fold: one was the need for the funding (provided by way of the transport supplementary grant or "TSG") to come on-stream at the same time as the works themselves, although, as the other documents in the bundles make clear, and Mr. Farmer confirmed in evidence, that there was no shortfall in the funding itself. Secondly and perhaps more importantly, there were the complications that might potentially arise from the proposal to develop a large adjacent area as the Blue Water shopping park. In his letter, which was addressed to Mr. McCready of Bluewater Park plc, Mr. Mowatt said:

"Thirdly, I am concerned that the Council does not start any work which might backfire on us in the future. If I do not pursue a cautious approach I could see the situation where I complete work on the Station Road link without any work starting on Blue Water Park. I would then be left with two dual carriageway cul-de-sacs paid for with government grant which was for a complete link. The government would rightly question the use to which their grant had been put. The Council would be at the very least highly embarrassed and at the worst required either to complete the project out of their own funds or to refund the grant."

C.2 The Hiving Off Of Phase 1

9. As a result of the difficulties addressed in Mr. Mowatt's letter, it appears that, in October 1994, the defendant decided to hive off part of the STDR and go ahead with at least some works at the junction site immediately. The works that were hived off in this way were called 'STDR Phase 1' and consisted of the construction of the two roundabouts referred to above and the dual carriageway between them. Phase 1 therefore included the improvements referred to in the agreement of 11th October 1988.
10. There are two documents in particular that evidence the decision to hive off the Phase 1 works and the reasons for it.

(a) Briefing Note

11. This document, prepared by Mr. Farmer on 3rd October 1994, stated:

"Reasons for Phased Approach:

need to use TSG

Johnson/Everards contributions of £0.5 million plus to be returned if improvement of A226/Station Road not started before 31st December 1994.

CPO expires if entry not taken by March 1995 ...

Drainage outfall

Soakaways were previously 'allowed' by NRA but onerous conditions subsequently imposed do not make this a feasible option.

Piped outfall to Thames now required.

Recommendations

1. Enter amended agreements.

2. Start Phase 1 now.

3. Start CPO for drainage outfall."

(b) Report to Highways and Public Transport Sub-Committee

12. This document prepared by Mr. Mowatt and dated 4th October 1994 repeated the point that substantive progress on the STDR was not possible because of the delays in respect of the potential development of the Blue Water; warns of the need to start work at the junction site because of the terms of the agreements with the claimants and the other potential developers, Johnsons; and makes a further recommendation as follows:

"14. BWP's [Blue Water Park] contribution towards STDR 1 would be conditional on BWP proceeding, and the established proposal is that STDR 1 would be constructed as a whole. As BWP are not in a position to provide funding now and the county council does not have sufficient TSG allocation to construct the full single carriageway scheme, my revised proposal is for STDR 1 to be constructed in two phases as follows:

(a) Phase 1 - The Station Road section to its full dual carriageway standard, including the A226 roundabout and the Station Road roundabout north of the railway bridge.

(b) Phase 2 - The remaining full dual carriageway connection between the Station Road roundabout and the existing roundabout on the section of the STDR 1 within Crossways."

13. The report also refers to the difficulties created by the necessary change to the proposed surface water drainage arrangements. It said:

"Other STDR 1 Issues.


20. When the compulsory purchase order was made the surface water drainage of STDR 1 was intended to be by soakaways located within this new highway. The National Rivers Authority has subsequently objected to this proposal because of its concern about possible pollution of the aquifer. A new outfall is required in order to discharge surface water into the adjacent River Thames.

21. Most of the land required for the outfall is within highways or under county council control, but an easement is required for the last section towards the river. There is agreement in principle but the negotiations are taking some time because the owner of the land in question is in receivership. While I believe the easement will be achieved, it would be appropriate to commence compulsory purchase procedures to ensure that the outfall is secured ..."

This was a reference to a company called McInerney Land Limited, who owned land with a surface water drain outlet into the Thames. The defendant wanted an easement so as to add the surface water drainage from the STDR, and possibly Blue Water too, into the McInerney outlet.

14. The report recommended that Phase 1 of the STDR should commence straightaway. The documents indicate that this recommendation was approved by the relevant committee that day, namely 4th October 1994.

C.3 The Preparation for Phase 1

15. The defendant placed a number of orders in respect of the Phase 1 works. They related to the diversion of utilities, and certain specific drainage and earth works.

(a) Utilities

16. There were two orders to British Telecom in the total sum of £870,000 in respect of the works in Station Road and in London Road. There was an order to British Gas in the sum of £96,529 for works in Station Road and London Road. There was also an order to Seeboard plc in the sum of £44,398.08, again for work in Station Road and London Road. It is plain from all these written orders that the defendant wanted these works to be carried out as soon as possible.

(b) Earth Works and Drainage (Advance Works)

17. A memo dated 11th November 1994 written by Mr. Taylor, a senior engineer with the defendant, addressed the first element of the earth works and drainage works to be carried out at the junction site. These works are described elsewhere as "advance works". This memo records that the defendant's Mr. Binder "has a gang programmed to start before Christmas". This memo also talked about the difficulties in the delays created by the receivership of McInerney Land. The response to the memo from Mr. Farmer, dated 16th November 1994, suggested splitting up the advanced works into two separate packages, because each would then be worth less than £25,000 and could be carried out by the defendant's contract services department without the need to go out to public tender. The second memo from Mr. Taylor, dated 28th November, refers to the need to carry out earth works and drainage associated with the 600mm pipe work "in the disused mineral railway tunnel". The memo identified two proposed work packages, one valued at £24,720.29 for the removal of contaminated material, and the second valued at £24,669.35 for the construction of a new surface water drain.
18. On the same day the contract services department provided their two quotations for the advanced works at the values noted above. The two quotations, apparently prepared by Mr. Binder, expressly confirmed that the works would commence on 5th December 1994. The document shows that orders were placed in accordance with these quotations.

(c) The Bulk of the Phase 1 Works

19. As Mr. Farmer explained in his evidence, the defendant was not able to go out to tender in October/December 1994 in respect of the bulk of the Phase 1 works. This was because of the uncertainty as to the eventual route that would be required to take the surface water drainage both from Phase 1 and from the possible Bluewater development (see paragraphs 11, 13 and 17 above). He said that everything else in respect of Phase 1 was in place, including the detailed drawings, specifications and bills of quantities. The documents in the bundles before me were consistent with that oral evidence.

C.4 The Commencement of the Phase 1 Works

20. As to the utilities, paragraphs 16 above, it is plain that British Telecom was not able to start the works until some time in 1995, a position that they indicated in their letter of 27th October 1994. Mr. Farmer also said that his best recollection was that the works carried out by British Gas and Seeboard were also carried out in the first half of 1995.
21. I am satisfied on the basis of the contemporary documents, and the oral evidence of Mr. Farmer, that the advance works referred to in paragraphs 17 and 18 above started on the junction site in December 1994. The principal element of the works was the construction of a new drainage run from manhole E4 to manhole E8, which was apparently about 172 metres in length and which was to run down the central reservation of the proposed new dual carriageway. The drainage was 600mm in diameter. The new run was to carry surface water from various localities in the new and existing roads as well as the new roundabout at the junction site.
22. The contemporaneous evidence that showed that these advance works commenced in December 1994 included the following:

(a) the memo of 11th November, which stated that a gang was prepared to start work before Christmas.

(b) the memo of 28th November, which said that "the works will commence on Monday, 5th December".

(c) Mr. Taylor's diary, which noted "start advanced works 7702" against the date of Tuesday, 6th December. 7702 was apparently the defendant's internal job number for the works.

(d) Mr. Farmer's letter to a local resident, Mr. Pollitt, dated 13th December 1994. This said:

"You will be aware that some work has started at Station Road. This is a small advance contract doing some drainage works and removing unsuitable material. Shortly after Christmas the diversion to statutory undertakers apparatus will commence, followed in the early spring by the main roadworks contract for the roundabout on the A226, the dualling of Station Road and the roundabout north of the railway line."

(e) Mr. Farmer's letter to Mr. McCreary of Bluewater Park which referred to "works starting on Phase 1 of STDR". This letter was dated 13th December 1994.

(f) some internal computer records which, according to Mr. Farmer, demonstrated that vehicles and operatives were involved on the advanced works in December 1994.

23. It is not quite clear when the advance works were completed. They clearly extended into 1995. However, it seems that the works, which included earth works (which are referred to as having created a "changed [the] terrain"^[2]), and the installation of the surface water drainage referred to above, were completed in the first few months of 1995. As previously noted, the utilities diversion works went ahead thereafter.

C.5 The Subsequent Delays

24. The bulk of the Phase 1 works did not go ahead in 1995, contrary to Mr. Farmer's prediction in his letter to Mr. Pollitt which I have just noted. Mr. Farmer's evidence was that there were delays as a result of the need to resolve the design and route of the outfall for the surface water drainage. The delays were initially created by the receivership of McInerney Land Limited. This seems to have brought the negotiations between the defendant and McInerney Land to a halt and eventually, some time in 1995, having got nowhere with the receiver, the defendant decided on a different strategy. The different strategy led to an eventual solution whereby a new outfall was built on land which had been retained by the claimant itself. This new outfall was the subject of a separate agreement between the claimant and the defendant, which has not been produced for the purposes of these proceedings. Planning permission for the new outfall design and route were sought in September 1995 and granted, it is thought, some time in early 1996.
25. The bulk of the Phase 1 works went out for tender some time in 1996 once the outfall route and design had been settled. The works were carried out in 1996 and 1997. It appears that they were completed in 1997. The total value of the Phase 1 works was in the order of £3.3 million. According to a certificate that was issued much later by the defendant, and was apparently prompted by these proceedings, the value of the improvements at the junction site, as completed by the defendant, was put at about £449,000.

D. THE ISSUES

26. There are essentially two issues between the parties. The first is the nature, scope and extent of the defendant's obligations as to the improvement works pursuant to the agreement of 11th October 1988; the second is whether the defendant complied with their obligations under that agreement. I deal with each of those issues in turn below.

E. THE DEFENDANT'S OBLIGATIONS UNDER THE AGREEMENT

27. As a matter of construction of the agreement, I consider that the defendant's basic contractual obligations in respect of the improvements were as follows:

(a) the defendant had to determine what those improvement works would be prior to 31st December 1994 (clause 2(2) of the fourth schedule to the agreement);

(b) the defendant had to commence to carry out those improvement works prior to 31st December 1994 (clause 16(5) of the agreement);

(c) the defendant had thereafter to use its best endeavours to complete the improvement works with all due diligence (clause 2(4) of the fourth schedule to the agreement).

28. The parties are agreed that, in order to satisfy the obligation set out at paragraph 27(b) above, the defendant had to start physical improvement works on-site and that the works commenced to be carried out had to be more than de minimis. However, on behalf of the claimant, Mr. Challenger contended that not only did the works have to be physically started at the junction site but also that, at the point when they were started, the defendant:

(a) had to be in a position to complete the works without interruption (save possibly for reasons beyond its control);

(b) had actually to complete those works without interruption (again save possibly for reasons beyond its control).

29. On behalf of the defendant, Mr. Bryant disagreed with that and submitted that, in accordance with the terms of the agreement, once physical works had started on-site that were more than de minimis, the defendant's only obligation was to use its best endeavours to continue and complete the works with due diligence, as set out in paragraph 27(c) above. He also emphasised that this was not an obligation of which it was alleged that the defendant was in breach.
30. I accept Mr. Bryant's submissions. They are based on the clear words of the agreement which, so it seems to me, contained two separate obligations: one in respect of the commencement of the improvements and another in respect of the continuation and completion of the improvements. It seems to me that Mr. Challenger's construction overloads the first of these, namely the obligation to commence the carrying out of the improvements, in particular by reference to events that might or might not occur after commencement. On his case, the issue as to whether or not the defendant commenced the carrying out of the works by 31st December 1994 might depend on how and when the works were completed thereafter. In circumstances where there is a separate obligation dealing with the continuation and completion of the works, it seems to me that there is neither the reason nor the room to impose potentially onerous conditions on the defendant at the point of commencement of the improvement works which were not expressly spelt out in the agreement itself.
31. As to the argument noted at argument 28(a) above, I consider that it is contrary to practicality and commonsense to construe the obligation to commence to carry out the works by reference to the extent to which the defendant was in a position, at the outset, to complete every element of those works without interruption. What if the defendant reasonably thought that it was in such a position in December 1994 but events thereafter demonstrated that in fact it was not? What if 60% of the works could have been carried out, but one outstanding matter within the defendant's control caused a wholly unexpected delay which meant that the works had to stop for two years? In neither circumstance would the defendant have been in breach of its reasonable endeavours obligation (clause 2(4) of the fourth schedule). It would be unreasonable if a later event, which may not have been reasonably foreseeable, could lead to a finding that the commencement of the carrying out of the works, which had looked originally to be in accordance with the 1988 agreement was, in the events which unfolded, in some way not a valid commencement.
32. One further example of the potential difficulties created by Mr. Challenger's construction, this time in respect of the argument noted at paragraph 28(b) above, will suffice, I think, to demonstrate its unworkability. The defendant might have carried out, say, 60% of the Phase 1 works in 1995, when it became apparent that in a year's time the works could be incorporated into a new and different traffic scheme that would save money, save land use and be markedly better for the environment. In such circumstances, the defendant may well choose to stop work on Phase 1 until the new scheme is ready to go ahead, so that Phase 1 could be probably aligned with and incorporated into it. The defendant would not in those circumstances be in breach of its obligations under clause 2(4) of the fourth schedule. But on Mr. Challenger's construction, since the defendant would have chosen to stop the Phase 1 works when it could theoretically have continued with them, it would mean that the interruption was not beyond the defendant's reasonable control and thus, on his case, would constitute a breach of his construction of clause 16(5). In my judgment that example further demonstrates that Mr. Challenger's construction of the relevant words is not one that I should adopt.
33. In essence, I consider that the claimant's case on clause 16(5) fails sufficiently or at all to recognise the broad nature of the defendant's obligation to use its best endeavours to continue and complete the works once they had started. Indeed, for the reasons I have given, I consider that the claimant's case is actually at odds with that express term.
34. Nor did I derive any assistance from Mr. Challenger's fallback argument to the effect that, by reference to Lord Hoffmann's well-known statement of the law in Investors Compensation Scheme v The West Bromwich Building Society [1998] 1 WLR 912, there were factual matters in the background to the agreement of October 1998 which supported his construction of the relevant words. I do not consider that there were any such matters. For example, I do not accept that, merely because the defendant was a local authority and could be expected to sort out planning permission and other relevant consents rather more easily than an ordinary company, this could have any effect on the proper interpretation of the words in clause 16(5).
35. For completeness on this issue, I should say that, although Mr. Bryant referred to a number of planning cases as to what works were required on-site in order to activate a planning consent (including Malvern Hill District Council v The Secretary of State for the Environment [1982] 46 Planning & Compensation Reports 58, Pioneer Aggregates UK v The Secretary of State for the Environment [1984] All ER 358, and Ashfield v The National Assembly for Wales [2004] All ER (D) 240), I derive no real assistance from them. They are all cases concerned with the proper interpretation of the Town and Country Planning Acts and, in particular, the question of what works are sufficient to amount to the beginning of a development for planning purposes. They do not assist with the words in this agreement. I also accept Mr. Challenger's point that these authorities are concerned with the situation where the planning consent attaches to the land which is emphatically not relevant to the dispute here.
36. Accordingly, I conclude that the defendant's relevant obligations were those set out in paragraph 27 above and that in order to comply with the obligation that I have noted at paragraph 27(b) the works that were commenced had to be physical improvement works at the junction site, which had to be more than just de minimis.

F. Did the Defendant Comply with its Obligations?

F.1 Are the Works in July 1994 Relevant?

37. It appears that some unidentified works were carried out in July 1994 by a JCB in the region of the abandoned railway tunnel. This was in the general locality of the junction site. Although relied on by the defendant in its pleaded defence, it is clear that this did not amount to a commencement of the carrying out of the improvements because, amongst many other reasons:

(a) whatever works were carried out, they were not obviously connected either to the junction site or its improvement;

(b) it seems to me that these works would have been de minimis in any event;

(c) in July 1994, the improvement works to be carried out had not been determined by the defendant. There was no commitment by the defendant at that point to carry out any improvement works at all. These works could not therefore be part of the improvements identified in the agreement.

For all these reasons, therefore, I have ignored the July 1994 works for the purposes of this issue.

F.2 Did the Defendant Determine the Improvements Works Prior to 31st December 1994?

38. It is clear that on 4th October 1994 the defendant determined the nature and scope of the improvement works. That was when the defendant decided to go ahead with Phase 1 of the STDR which involved, amongst other things, the construction of a roundabout at the junction site (see paragraphs 9-14 above). The defendant therefore complied with the obligation set out at paragraph 27(a) above.

F.3 Did the Defendant Commence the Improvements Prior to 31st December 1994?

39. As noted in paragraphs 20-23 above, the defendant commenced work at the junction site before 31st December 1994. This work included earth works and the laying of a new drainage run. Mr. Greaves, the claimant's principal witness, expressly accepted in cross-examination that this drainage work was associated with the roundabout, which was the key element of the improvements determined by the defendant. He also accepted that, in consequence, it could be said that the improvement work had been commenced by 31st December 1994.
40. In the light of that evidence it is quite impossible for me to make any finding other than that the improvement works determined by the defendant commenced at the junction site before 31st December 1994.
41. Mr. Challenger submitted that the works that were commenced, worth about £50,000, were de minimis, in particular when compared with the total value of Phase 1, which was about 3.3 million. That is, in my judgment, the wrong comparator. The correct comparison must be with the cost of the roundabout, because it was the roundabout that constituted the improvements for the purposes of the agreement. The roundabout cost was about £449,000. The advance works, which were commenced in December 1994, therefore comprised more than 10% of the total costs of the improvements. That was not, therefore, on any view de minimis. In any event, I consider that a new drainage run and earth works which changed the terrain cannot be regarded as de minimis in any event.

F.4 Do Subsequent Events Lead to a Different Conclusion?

42. It has always been implicit in the claimant's case that their real criticism was not that some works started at the junction site on 31st December 1994, but that almost immediately thereafter such works stopped and did not properly recommence for almost another two years. Thus, the claimant argues, the defendant did not in truth commence the carrying out of the improvement works in December 1994. This point was made explicit by Mr. Greaves who, having accepted that improvement works had started by 31st December 2004, went on to complain that there was then a 22-month delay on the part of the defendant in progressing the bulk of the Phase 1 works. He agreed with Mr. Bryant that he was essentially criticising the defendant's management of the whole of Phase 1 of the STDR.
43. This line of attack, of course, depended, at least up to a point, on the claimant's particular construction of the obligation at clause 16(5) of the agreement, which, for the reasons set out in paragraphs 27-36 above, I have rejected. I therefore address this issue first on the basis that the defendant's obligations were as I have found them to be in those paragraphs.
44. I should say at the outset that, notwithstanding my conclusion as to the construction of the agreement of October 1988, I was initially of the view that there may well be something in the claimant's criticisms of the defendant on this score. Indeed, I thought that it might be argued that the defendant had deliberately done a small amount of improvement work at the junction site and then stopped, solely in order to prevent repayment of the £150,000 under clause 16(5). This initial view was possibly strengthened by Mr. Farmer's internal memo of 16th November 1994 which said: "As you know, I am very nervous that Saxon/Everards might challenge whether we had genuinely commenced the junction improvement and seek return of the contribution".
45. However, Mr. Farmer was not cross-examined on that memo; neither was it suggested to him that works had been carried out in bad faith merely to trigger the relevant parts of the agreement. Moreover, on a careful consideration of the relevant evidence I have concluded that the events in December were indeed a genuine commencement of the carrying out of the improvement works. This conclusion is supported in my judgment by the fact that the defendant placed large value orders with the various utility companies in respect of the Phase 1 works (paragraph 16 above). I do not consider that such significant orders would have been placed if the defendant had had any intention other than to proceed with Phase 1 as promptly as possible.
46. That leaves the question as to why the Phase 1 works came to a halt in 1995. As I have indicated, the answer, provided by Mr. Farmer in his cross-examination, was that the change to the outfall design and route and the separate agreement eventually required, together with subsequent planning consents, caused significant delay to the remainder of the Phase 1 works and meant that the major earth works contract could not be let until 1996.^[3]
47. The claimant was ultimately not in a position to challenge Mr. Farmer's oral evidence as to the reasons for the delay. Nor, as Mr. Bryant pointed out, had the claimant ever pleaded that the defendant was in breach of clause 2(4) of the fourth schedule and had somehow failed to use its best endeavours to continue and complete the works. In those circumstances I consider that, although the defendant had intended to continue and complete the Phase 1 works into 1995, delaying events beyond their reasonable control intervened and created the 22-month hiatus. I find that the defendant was entitled to delay until the outfall route and design had been resolved and that such delays did not put the defendant in breach of the agreement. I also find that the subsequent delays did not affect the validity of the defendant's commencement of the carrying out of the Phase 1 works, including the improvements at the junction site in December 1994.
48. Finally, for completeness, let us assume that I am wrong in my interpretation of the defendant's obligations under the agreement and that, contrary to my view, the defendant could only have complied with clause 16(5) if it commenced improvement works which, at that point, it was in a position to complete. I have concluded that, even if that was the relevant obligation, the defendant complied with it. In particular:

(a) The documents make plain that all the relevant planning consents, CPOs and funding for the improvements were all in place by October 1994. Thus, when the works started in December 1994, the defendant was in a position to complete the improvements.

(b) The uncertainty about the eventual surface water drainage route and design did not mean that, in December 1994, the defendant was not in a position to complete the improvements. They reasonably concluded that the matter could be resolved promptly and would not cause a delay. The fact that, in the event, it took much longer than expected to finalise the eventual solution (which solution was different to that envisaged in December 1994 in any event) could not have been reasonably predicted. It does not put the defendant in breach of the agreement, even if that agreement is construed in accordance with Mr. Challenger's submissions.

(c) The decision to carry out the improvements as part of Phase 1, and the decision to delay the bulk of Phase 1 until the outfall solution had been rectified, together with the possible effect of the Bluewater development, were both entirely reasonable. They were in accordance with the defendant's obligations under clause 2(4) of the fourth schedule. Such an 'interruption', to use Mr. Challenger's word, to the works of improvement at the junction site, cannot in my judgment constitute a breach of any term of the agreement.

G. SUMMARY

49. For the reasons set out above, I find that:

(a) the defendant's relevant obligations were those set out in paragraph 27 above;

(b) the defendant complied with those obligations;

(c) in particular, the defendant commenced the carrying out of the improvement works at the junction site prior to 31st December 1994 in accordance with the agreement;

(d) further, for the reasons noted in paragraph 48 above, even if, contrary to my primary view, the claimant is correct as to the nature of the defendant's obligation as to commencement, I still consider that the defendant was not in breach of the agreement.

50. I, therefore, find that there is no basis in law for the claimant's claim, which must be dismissed.
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Note 1   This was Mr. Farmer's evidence and is supported by paragraph 7 of the report referred to below at paragraphs 12-14.    [Back]

Note 2   See Mr. Taylor's memo of 2nd February 1995    [Back]

Note 3   This aspect of the history came out principally during Mr. Farmer's cross-examination. It was not material which could be found in either of his written witness statements.    [Back]