England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand London WC2A 2LL
		Wednesday, 9th June 2004

J U D G M E N T
1. JUDGE SEYMOUR: The claimant, Mr Trevor Nash, carries on a business as a decorator and general building contractor under the style TJ Decorators. The defendant, Tonbridge Estates (Sussex) Limited is a limited liability company which seems to have been formed for the purpose of carrying out three construction projects. One of these projects was the redevelopment of a property known as The Sussex Stud at Cowfold, West Grinstead in Sussex. The object of the redevelopment was to provide a number of units of residential accommodation. Although the matter is not particularly clear, it seems that there were in the project as completed 21 units of accommodation, numbered from 1 to 19. However, the units originally numbered 15 and 16 each in fact as completed was divided into two units, so that there were units numbered 15A and 15B and 16A and 16B, and in that way one reaches the total of 21 units. Mr Nash was engaged to do work on units 9 to 19 only, although in the event he seems also to have done work on other units.
2. The negotiations between the parties before Mr Nash began work were somewhat informal. Essentially Mr Nash was asked to price a specification. For this purpose he sought the assistance of Mr Alex Linwood, a quantity surveyor. On 8^th August 2001, Mr Linwood, on behalf of Mr Nash, sent a letter, which was itself undated, to Messrs Fryatt Associates, who were architects for the project at The Sussex Stud. One of the principals in the firm of Fryatt Associates is Mr Andrew Fryatt. The letter which Mr Linwood wrote was addressed "Dear Andy", and said simply this:

"Attached budget prices for The Stud. These prices do not include for supplier's discount. There are several items which need discussion and negotiation before finalising the prices. Plumbing, central heating, electrical and drainage to follow tomorrow."

3. Pausing at this stage, it seems fairly clear that what was intended by the letter sent on 8^th August was not an offer to do any particular work for any particular price, but rather a step further in the negotiations between the parties. The prices which were set out in the attachment, to which I will come in more detail in a moment, were described as "budget prices". Those prices were said not to include for supplier's discount, but the letter was entirely neutral as to what the impact of supplier's discount might be. The letter in terms said that there were several items which needed discussion and negotiation before finalising prices and, lastly, it was indicated that further prices were going to be sent in any event.
4. The attached budget prices referred to in the letter took the form of an extract from a specification. That extract contained deletions of printed text and also set out various figures for particular items. Some of those figures were said to be provisional.
5. The next day Mr Linwood sent a further letter to Mr Fryatt. This letter was dated 9^th August and said this:

"Attached budget prices for plumbing, central heating, electrical and soil and vent pipes. Prices added to yesterday's fax to give running total."

That is all the letter said.

6. The attachment was similar in form to the attachment to the letter of the previous day, i.e. it was an extract from a specification, which contained some deletions of printed text and various figures for various items. Some of the items were described as "provisional". In respect of some items the words "by others" had been written beside them. The total amount of the budget prices in the two extracts from the specifications which had been sent with these two letters came to £437,868.
7. So far as documentation goes, the only other letter to which I need make reference in the context of explaining how Mr Nash came to begin his work at The Sussex Stud is a letter dated 22^nd September 2001 written by Mr Fryatt to Mr Nash. Apart from being the principal in Fryatt Associates, Mr Fryatt is also, as I understand it, a director and a shareholder of the defendant company, Tonbridge Estates (Sussex) Limited. The defendant company appears to be a member of a group of companies, and it may be that another company in the group is called Tonbridge Estates Limited, i.e. no reference to Sussex. At all events, it was in a letter which was entitled at the top "Tonbridge Estates Limited" that Mr Fryatt wrote on 22^nd September 2001 as follows:

"Further to our meeting of yesterday, I confirm acceptance of your quotations in respect of the above site as follows.

(a) Your general works quotation of 8^th August 2001 in the sum of £320,567 for units 9 to 19 inclusive. I note that supplier's discount is to be deducted and material prices include VAT, which I may recover.

(b) Your plumbing and electrical quotation of 9^th August 2001 for units 9 to 16 in the sum of £68,568 and £36,333 respectively. I note, however, that the plumbing and heating figure was £7,500 per unit, including sanitary ware, but this does not equate to £68,568. I presume also that the VAT is again recoverable.

(c) Soil and vent stacks, including connection to sewer, in the sum of £9,650.

We need to discuss the additional items following our conversation yesterday. I understand that you included to plaster the external walls in your original figure, and you did tell me that you included some ceilings. I appreciate that the division walls are priced as stud and you will give me an extra over for blockwork.

1. New floor slabs at £22,430. We agree that this is a little too much, and you will look at the figures. I would expect around £12,000 for this.

2. Plasterboard and skim ceilings at £29,837 seems a little high in the light of your comments.

3. Roof repairs at £45 per square metre is acceptable.

I confirm that you will be starting on Monday 24^th September 2001, and I still require your insurances and programme. I look forward to hearing from you."

8. Each of Mr Nash and the defendant has contended in the present trial that a contract was concluded between them and that that contract was to be found in the documents to which I have just referred. As an alternative to that case, there is pleaded on behalf of Mr Nash a claim for sums on a quantum meruit basis, the basis of that claim as pleaded being put simply in this way:

"The claimant claims such sums as are payable by the defendant to the claimant on a quantum meruit basis for work completed by the claimant."

9. Notwithstanding that each party's primary case (at any rate) is that a contract was concluded between them in the documents to which I have referred, Mr Fryatt, who has appeared by my permission on behalf of the defendant, has contended that in fact there were discussions between the parties which intervened between the sending of Mr Linwood's letters of August 2001 and the writing of his letter of 22^nd September 2001, and that the terms of that letter reflect the terms of the discussions.
10. That matter was not much investigated in evidence at the trial. Certainly there was no specific evidence as to exactly what had been agreed in those discussions, save the assertion of Mr Fryatt that Mr Nash had agreed that the cost of plastering the external walls was included in his original figure. That was something which Mr Nash did not accept, and so far as that is concerned I accept the evidence of Mr Nash on the point.
11. Looking at the material put before me in the round, it seems to me that, notwithstanding the case which each party has put forward as its primary case, actually no contract was concluded between the parties in the terms of the documents to which I have referred. As I have already indicated, the opening document in the sequence (Mr Linwood's undated letter sent on 8^th August) seems on its face simply to have been a step in negotiation and not an offer capable of acceptance. The letter sent the next day carried matters very little further forward in terms of transforming a step in negotiations into any offer which could sensibly be the subject of an acceptance.
12. Mr Fryatt's letter of 22^nd September 2001, whilst purporting to be an acceptance, in fact indicated that further negotiations were going to be necessary in relation to a number of items. Some of those items seem to have been potentially of considerable significance, in particular the question of the programme of works.
13. In the result, it seems to me that, as a matter of law, the letter of 22^nd September was not an acceptance of any offer which had been made on behalf of Mr Nash.
14. It therefore seems to me that the appropriate basis upon which to consider the claims made in this action by Mr Nash is on the alternative basis set out in the Particulars of Claim, i.e. a claim on a quantum meruit. It is a feature of a claim on quantum meruit in circumstances in which there is no contract that there can be no contract terms regulating either amounts to which the claimant is entitled or imposing upon him obligations of which he may be in breach such as to give rise to cross claims on behalf of the defendant.
15. What happened was that Mr Nash carried out work for the defendant in respect of which it was common ground that the defendant paid him, principally by cheque, the total sum of £330,854. I say it is common ground that that sum was paid. Mr Nash's case is that that was all that was paid. The defendant's case is that certainly that sum was paid, but it was contended that an additional amount totalling £12,000 had been paid. I shall return to the issue whether any sum in excess of the base figure of £330,854, which it was common ground had been paid, had actually been paid.
16. It was common ground that the sum which had been paid, whatever it was, was paid without the making by the defendant of any deductions in respect of income tax or national insurance contributions, notwithstanding the fact that Mr Nash did not at the material time hold appropriate documentation under the Construction Industry Scheme.
17. By a claim form issued on 4^th November 2003, the claimant, Mr Nash, sought payment of additional sums in respect of his work for the defendant. The sums the total amount of which he claimed initially were £87,060. That figure was subsequently amended to £92,786.50. The amendment came about as a result of the appreciation of an arithmetical error in the calculations of the sums which Mr Nash was claiming, but it also took into account deductions totalling £4,000 which Mr Nash was prepared to concede. There were two elements in those deductions, each of £2,000. The one which it is material to notice for the purposes of this judgment is an allowance of £2,000 in respect of plasterboard supplied by the defendant to Mr Nash.
18. For much of the period over which this action has continued, including at the trial, the defendant has appeared, as I have said, by permission, by Mr Fryatt in his capacity as a director of the defendant. Mr Fryatt prepared the original version of the Defence, which was served on 1^st December 2003. In that Defence, the main points advanced were that, following negotiation, the final account of Mr Nash in respect of all of the works which he had undertaken for the defendant was agreed in the sum of £330,894, i.e. £40 more than Mr Nash accepted had been paid, but it was contended in that Defence that Mr Nash had actually been paid in cash sums totalling, as it was initially put, £10,000, but, subsequently, £12,000, in addition to the £330,854 which it was common ground had been paid. Consequently, the main focus of the original Defence was the contention simply that nothing more was due.
19. In the event, neither the contention that the final account of Mr Nash had been agreed, nor the contention that he had been paid sums in excess of those which he accepted, were really pursued at trial. Neither was actually abandoned, but certainly the focus of the case, as developed by Mr Fryatt, did not involve any serious suggestion either to Mr Linwood, who gave evidence on behalf of Mr Nash, or to Mr Nash himself, either that the final account had been agreed in the sum contended for in the original version of the Defence or that additional sums had actually been received by Mr Nash in cash.
20. The original Defence contained a complaint that Mr Nash did not manage properly the works which he undertook for the defendant, but that complaint in the original Defence was unparticularised and it was not alleged that the deficiencies in management which were alleged had resulted in any loss to the defendant.
21. In the original Defence, in addition, there were complaints that Mr Nash had failed to complete works which he had undertaken, or to remedy allegedly defective works. Again the complaints were unparticularised, but they were said to have resulted in the defendant incurring costs in excess of £15,000 to put matters right. There was no counterclaim, but the allegedly incomplete work and defective work did seem to be relied upon in the original Defence as a set off in the event that it should be held that any sum was otherwise due to Mr Nash.
22. During the period in which the defendant was represented by legal advisors, counsel, Mr Simon Lofthouse, prepared a draft Amended Defence, for which I gave permission on 21^st May of this year. The principal amendments made in the Amended Defence were to add new paragraphs 23 to 29 inclusive as follows:

"23. The defendant, by virtue of section 559 of the Income and Corporation Taxes Act and the provisions of the Income Tax Subcontractors in the Construction Industry Regulations 1993 is under obligation to deduct from all payments made to the claimant for labour a certain percentage, being 18% at the material time, on account of the claimant's tax and national insurance contribution liability.

24. Further, by virtue of regulation 7F(1) of the 1993 Regulations, the defendant is prohibited from making any payment to the claimant until the claimant has produced to the defendant a Subcontractor's Registration Card and the defendant is satisfied that the claimant is entitled to use the card. In the premises, the Defendant claims recovery of money paid under a mistake, the mistake being as to the claimant's entitlement to be paid in the absence of satisfaction of the 1993 Regulations, such recovery to be limited to the extent of setting off against any outstanding liability the defendant may have to the claimant, which liability is in any event denied, without prejudice to the defendant's contention that it is precluded by law from making any further payment to the claimant in respect of labour.

25. The value of such monies paid by mistake to date is either £72,633.07 or £59,599.12, depending on whether the Inland Revenue deem the payments made to date as net or gross of tax respectively on the basis that Nash is to be treated as a subcontractor. Alternatively, the liability would be £77,911.48 on the basis that the Inland Revenue treated Nash as an employee of Tonbridge. Further or in the alternative, the defendant seeks a declaration that the defendant is entitled to such sum from the claimant as represents the extent of the financial liability the defendant may have to the Inland Revenue to make good any inability to recover tax from the claimant.

26. At the time of entering into the contract, the claimant was not VAT registered. However, it was the parties' agreement that the price quoted by the claimant as recorded in the claimant's quotations dated 8^th and 9^th August 2001 anticipated the inevitable registration of the claimant. As such it was agreed that the price actually charged to the defendant would be net of the VAT that the defendant was able to recover. This was evidenced by the letter of acceptance dated 22^nd September 2001. In the premises, this agreement applied to purchase of the materials only.

27. The claimant duly became VAT registered and therefore was able to claim VAT on the price of the materials and goods it supplied to the defendant under the contract. In breach of the agreement with the defendant, the claimant failed to charge the defendant for materials at a price equating to that net of VAT. As such the defendant believes on the information available that the claimant has overcharged by £17,420.

28. In the premises, the defendant seeks to set off that sum against any outstanding liability the defendant may have to the claimant, which liability is in any event denied.

29. Further, it appears that the claimant charged the defendant VAT on top of his price which he was not entitled to do in any event. This was because the work should be zero-rated as a conversion to residential use of a listed building. In the premises, the defendant claims recovery of money paid under a mistake, such recovery to be limited to the extent of setting off against any outstanding liability the defendant may have to the claimant, which liability is in any event denied."

23. There was a section of the Amended Defence mirroring a similar section in the original Defence, which simply followed the words "The defendant avers therefore". There were four propositions advanced. The third one was the subject of amendment in the Amended Defence, and, as amended, said this:

"The claimant failed to properly manage the works and caused loss and expense to the defendant. Those heads of losses appear in the joint statement of experts dated 27^th January 2004 at items 2.2.09 and 2.2.10 as further detailed in the bundle relating to disagreed works served on 26^th April 2004. The claims rely on a failure to complete the units in accordance with the agreed programme of March 2002 postdating and extending that originally prepared by the claimant at the commencement of the project. Such dates were either agreed contractual dates or represented a reasonable time for completion of the units."

24. Essentially, therefore, by the time the action came to trial, the issues were, first, what sum, if any, in excess of the £330,854, paid principally by cheque, was Mr Nash entitled to subject to any available set off in respect of work done for, or materials supplied to, the defendant? Second, as an aspect of the first, but faintly, had Mr Nash been paid any sum in excess of £330,854? Third, was the work done by Mr Nash incomplete or defective and, if so, what sum, if any, did the defendant incur in putting right that state of affairs? Fourth, did Mr Nash fail in some respect properly to organise the carrying out of the works which he did and, if so, to what expense was the defendant put in consequence. Fifth, was Mr Nash overpaid by the defendant by mistake in failing to deduct sums in respect of income tax and national insurance contributions which should have been deducted because he did not, at the material time, hold appropriate CIS documentation and, if so, by how much was Mr Nash overpaid? In fact, the contention, as I have already indicated, was that Mr Nash should not have been paid anything because at the material time he did not hold the relevant documentation. The sixth issue on the Statement of Case at the commencement of the trial was: was it agreed that Mr Nash would recover to the advantage of the defendant any VAT which he was charged in respect of services or goods he passed on to the defendant and, if so, did Mr Nash in fact charge the defendant VAT which he should not have done? If Mr Nash did charge the defendant VAT which he should not have done, what was the amount of that VAT?
25. It is convenient, first, to consider the question of the value of the work done by Mr Nash. As to that, pursuant to a direction of His Honour Judge Anthony Thornton QC, expert quantity surveyors acting on behalf of each of the parties met for the purposes of seeking to produce a statement under Part 35.12(3) of the Civil Procedure Rules. The quantity surveyors instructed were those involved during the course of the work, i.e. Mr Linwood for Mr Nash and Mr John Watson for the defendant.
26. The upshot of their meeting was a statement recording agreement as to the value of items totalling £329,029.50. There was disagreement as to items of work in respect of which Mr Nash originally had claimed £98,611. Those items Mr Watson compendiously valued at a sum of £60,864. There was further in the joint statement of the experts a section of the schedule which was entitled "Other Tonbridge Estates costs". I shall come to consider those elements, but their character, broadly stated, was that they were said to be amounts of expense to which the defendant had been put which ought to be taken into account by way of set off or deduction in assessing the total amount to which Mr Nash was entitled.
27. So far as the items in respect of which there was disagreement as to value is concerned, they, in the first instance, numbered 14. As matters progressed, following the first meeting of the experts, agreement was reached as to three of those items. It is convenient to refer to the items in the schedule by the last part of the number which each of them bears. They are actually set out in the form 2.01.(something), but I shall refer to them, as I say, for the purposes of this judgment, just by the last part of the enumeration, i.e. 1 to 14 as appropriate. The three items which in the event were agreed were those originally numbered 3, 4 and 9.
28. At the time when the defendant was legally represented, a bundle was prepared in relation to the so-called disagreed works, i.e. the items numbered 1 to 14 with which I am immediately concerned, and also the other Tonbridge Estates costs alleged, which had a different sequence of enumeration, that being 2.02.(something), and there were 10 of those items. When I come to those I shall again refer to each of those individually by the last part of its number, i.e. 1 to 10 as appropriate.
29. The bundle in relation to the so-called disagreed works which was prepared when the defendant was legally represented included a document which was broken up into various sections, which appeared to have been prepared by the defendant's legal advisors but which in form seemed to include expanded comments by Mr Watson on each of the items remaining in dispute and, where thought appropriate, cross references to documents.
30. Mr Watson himself did not give evidence at the trial. He had, however, signed two witness statements, one on 6^th February 2004 and the other on 26^th February 2004, upon which the defendant sought to rely. Neither singly nor in combination did these statements contain the detail to be found in the bundle in relation to so-called disagreed work to which I have referred. In the circumstances, it seems to me that I have no alternative but to disregard any material in the bundle which is not a reproduction of material to be found in a witness statement signed by Mr Watson. The material coming from Mr Watson which is relevant, therefore, is really to be found in the second of his two statements, signed on 26^th February 2004. That statement was in itself in the nature of a commentary upon the witness statement of Mr Linwood dated 13^th February 2004, which itself included a commentary on the schedule of disagreed items.
31. Mr Linwood did give evidence at the trial and was cross-examined by Mr Fryatt. The best way in which to render intelligible the evidence concerning the disagreed items is to set out in this judgment the description of the item in the schedule to the experts' joint statement, Mr Watson's original comment, Mr Linwood's response, Mr Watson's reply, any other relevant evidence, and to indicate a conclusion as I go through.
32. Item 1 was floor sealer to units 9 to 13. It was common ground, as matters turned out, that Mr Nash had been asked (he thought by Mr Isles who is the other director of the defendant company but perhaps it matters not) to apply an additional coat of sealer to the floors in units 9 to 13. It was not in dispute, as I understood it, that that work had been requested and that it had been done. Mr Nash sought to be paid a figure of £825 in respect of that work. The defendant's position was that nothing should be paid for it. Mr Watson's initial comment was that he considered the work included in the flooring price. Mr Linwood in his witness statement said simply that the additional floor sealer work was not in the original specification and it was additional work. He said: "I was told by Mr Nash that he was instructed to do this by John Isles, the site manager. I was not present when this instruction was given, but I can confirm that this additional work was in fact carried out."
33. Mr Watson's response in his witness statement of 26^th February 2004 was:

"The units required a final coat of floor sealer carried out by Mr Nash to be in a fit state for handing over. I consider this work to be within Mr Nash's pricing and not claimable as an extra."

34. At the trial, Mr Fryatt contended that the reason that an additional coat of floor sealer was required was because Mr Nash had failed adequately to protect the finished floors from damage, so that it was because there were scratches and so forth in the floors that it had been necessary to apply an additional coat of sealer. Mr Nash, when asked about that by Mr Fryatt, denied it. He said that he had applied appropriate protection in the form of stiff paper or cardboard which he had obtained from a supplier that he identified.
35. So far as this item is concerned, I accept the evidence of Mr Nash and Mr Linwood. I reject the suggestion of Mr Fryatt that the work was necessary because Mr Nash had failed adequately to protect the floors in their originally finished state, and I find that Mr Nash is entitled to the sum claimed of £825.
36. The next item in the list of disagreed items which was in dispute was item 2, loft hatches in units 9 to 13. It was not in dispute that Mr Nash had provided hatches giving access to the loft in each of units 9 to 13. It was not in dispute that the provision of such hatches was not part of the work described in the original specification and it was not part of the work shown on drawings which were produced subsequently.
37. Mr Watson initially made no provision for a payment to Mr Nash in respect of this work, notwithstanding that Mr Nash claimed £660. Mr Watson's original comment was that he considered that these reasonably should have been included within the original quotation. Mr Linwood in his witness statement said that they were not in the original specification and that Mr Nash had told him that he was asked to build the loft hatch so that the plumber/fitter could install and access the water tanks for the units. Mr Linwood said he was able to confirm that these were built. Mr Watson's further comment was:

"I consider that Mr Linwood's pricing should have included for hatches to loft spaces. It is clear that these are required for plumbers' access for tanks and associated installations and occupiers' maintenance. These were obviously identifiable as being required when the original pricing was carried out and I believe should reasonably have been included within that pricing."

38. Mr Fryatt in his evidence and in his cross-examination of Mr Nash sought to deal with the loft hatches in two alternative and rather inconsistent ways. The first was to say that he had never asked for them to be provided anyway, and the second was to say that they were obviously necessary and ought to have been allowed for by Mr Nash in any event.
39. The fact of the matter as I find is that Mr Nash did provide the hatches. That was not in dispute. They were not described in the original specification. They were not priced for by Mr Nash originally, as I find. The work was done. The defendant did have the benefit of it. I find that the figure of £660 is due to Mr Nash in respect of item 2 in the schedule of disagreed value items.
40. Item 3 did not remain in dispute. Mr Nash originally claimed £130 in respect of the provision of two shower stands in unit 14, but, on reflection, Mr Watson accepted that that was an appropriate price.
41. Item 4 was not in dispute as matters turned out. It related to the credit that the defendant was claiming in respect of the plasterboard which it was accepted it had supplied to Mr Nash. As I have already said, the amount of that credit was agreed in the sum of £2,000 and was allowed for in the calculation of the revised total claimed by Mr Nash, the figure of £92,000-odd.
42. Item 5 was similar in character to item 2. It was loft hatches in unit 16. The evidence and issues were essentially the same and I reach the same conclusion. In respect of item 5 Mr Nash claimed £264 and I find that he is entitled to £264.
43. Item 6 was in a sense a credit item. The matter related to plasterboard partitions in unit 16. Originally Mr Nash had been asked to erect those partitions and to supply the appropriate materials. As matters turned out, Mr Nash only constructed the studwork, and the plasterboard was supplied and fitted by others. When I say that the issue was essentially a question of credit, that seems to have been how it was approached by Mr Watson, although perhaps logically it was not necessary to do it in that way. At all events, Mr Watson in his comment originally said that he considered Mr Nash's credit for work carried out by others to be too low and he had done an alternative calculation. At that stage Mr Nash was claiming £3,540, and Mr Watson was allowing half that, £1,770. Matters developed so that, by the trial, Mr Nash, through Mr Linwood, was claiming £2,900 and Mr Watson had increased his valuation figure to £2,195.
44. In the circumstances, it is perhaps unnecessary to deal in detail with the evidence. The nature of the issue I think I have sufficiently described. Given the positions eventually adopted by the quantity surveyors on both sides, it seems to me that the appropriate way to resolve this issue is to split what the difference between them in the end turned out to be. On that basis, rounding slightly down, I find that the sum to which Mr Nash is entitled in respect of the work he did to the unit 16 partitions is £2,540. That results in a deduction from the sum originally claimed of £1,000, and that is why I refer to an element of "rounding".
45. Item 7 in the schedule concerned the joists of the mezzanine floor and ply which Mr Nash supplied for units 17 to 19. In respect of these items Mr Nash only supplied the material. There was no work done and the question was: what was the appropriate valuation of the material? Mr Watson, in his original comment, said that he thought Mr Nash's value for the materials supplied was too high, and he put forward an alternative valuation. Mr Linwood in his witness statement simply repeated information that Mr Nash had given him that the sum claimed by Mr Nash, £1,826, represented the cost to him, Mr Nash, of those materials. Mr Watson in his turn said that he had assessed what he considered to be a reasonable value for the material, and Mr Linwood had not provided a breakdown of the sum of £1,826. In his oral evidence, in cross-examination, Mr Linwood explained that in his view Mr Watson in reaching his figure of £1,187 had under measured the amount of materials which Mr Nash had supplied and had failed to allow, as he ought to have allowed, an uplift to cover overhead and profit.
46. In relation to this item, I accept the evidence of Mr Linwood, which I prefer to the evidence of Mr Watson, and I find that Mr Nash is entitled to the sum claimed of £1,826.
47. Item 8 was a small item which concerned plaster repairs to the external rendering of a building described as The Forge. This was characterised by Mr Fryatt, rightly in my view, as a quantity surveyors' dispute. The question was: what was a reasonable sum for the work done? The work, in general terms, was the making of some patch repairs round windows, a door and to a chimney. There was no dispute that the work was requested and done. Mr Watson valued the work at £350. Mr Nash claimed in respect of it £750. When asked about it in his evidence, Mr Nash commented that the undertaking of patch repairs is often more time-consuming and, therefore, expensive, than a complete replastering job. I accept that evidence of Mr Nash and I find that he is entitled to the sum of £750 in respect of the cost of repairs to the external render to The Forge.
48. The next item, item 9, was the subject of agreement at the figure for which Mr Watson originally contended, £2,250, and I need say no more about it.
49. Item 10 was described as relating to the first floors of units 2 and 4. On the evidence given at the trial, it seemed that there was no dispute that actually only one unit was concerned, and that was unit 4.
50. The issue was this. It was said that Mr Nash had fixed the floor in unit 4 at a level different (by some 150 millimetres) from that which was actually required. In the calculation of the sum which he claimed for the work which it was accepted he had done originally, a credit was claimed in respect of the costs essentially of refixing that element. The sum claimed was £2,000. So whereas Mr Nash claimed, for his original work, £4,850, and whereas it seemed that, subject to the credit, that was acceptable to Mr Watson, Mr Watson's valuation was £2,850.
51. This was a slightly curious item, in that the bundle relating to disagreed works, to which I have referred, did include some documentation in relation to item 10, and one of the documents which was included was an invoice, from whom is unclear but it was addressed to the defendant and dated 7^th October 2002. It identified the site location and gave job details relating to plot 4 as follows:

"Remove ply flooring to one area and set aside. Remove timber joists to four rooms including wall plates. Refix at amended heights. Refix ply flooring previously set aside. Remove existing window and doorframes to plots 2 and 4. Remove tongue and groove flooring to one area of plot 2 at first floor level. Dates: Wednesday 2^nd, Thursday 3^rd, Friday 4^th October 2002. Labour costs – 3 days for 2 men at agreed rate of £265 per day. Total cost - £795."

52. However that may be, when Mr Nash was asked about this item he said that his understanding was that the floor had been removed and refixed at a different level as a result of a request from a purchaser that that should happen. Mr Fryatt contended that that was not right and that the reason why the floor had been removed and refixed was that it should have been fixed at the same level as for unit 5 (as Mr Nash knew perfectly well), that that had not happened, and that it was as a result of the need to maintain the level of the floor in unit 4 at the same level as that for unit 5 that the work to which I have just referred was carried out.
53. So far as this item is concerned, I find it difficult to imagine that a purchaser, when purchasing a unit of accommodation such as was provided in a development like The Sussex Stud, would be particularly concerned with the height of the first floor such that he would wish to alter it. I accept, so far as this item is concerned, the evidence as to what prompted the work which came from Mr Fryatt. However, in the light of the document to which I have just referred, it appears that the actual cost to the defendant of appropriate remedial works was not £2,000, assessed by Mr Watson, but some part of a total of £795. I say some part of a total of £795 because the job details given in the invoice include not only the remedial work in relation to plot 4, but also removing existing window and doorframes to plots 2 and 4 and removing tongue and groove flooring to an area of plot 2 at first floor level, which works, as matters turned out, were not said to be the responsibility of Mr Nash.
54. Doing the best I can, it seems to me appropriate to value the remedial work necessary as a result of the error in fixing level at a sum of £750. So I find in relation to item 10 that the sum to which Mr Nash is entitled is £4,100.
55. Item 11 was window ironmongery. This was a fairly straightforward issue. The question was how many sets of window ironmongery Mr Nash had supplied and fitted. Mr Watson, it appeared, had gone round the site and counted the number of windows and, on the basis of his assessment of the number of windows, had reached a conclusion as to the number of sets of ironmongery.
56. Mr Linwood, when he was cross-examined about the matter, said that this was flawed as an approach because Mr Watson had simply assumed that there was one opening window and one opening light on each window, whereas that was not the case. He, Mr Linwood, had counted the number of sets of window ironmongery which had actually been supplied.
57. The amount which Mr Nash claims in respect of window ironmongery is £3,570. The amount which Mr Watson was inclined to allow in respect of window ironmongery was £1,975. On this issue I accept the evidence of Mr Linwood, and I find that Mr Nash is entitled to the sum claimed, £3,570.
58. Item 12 related to internal doors. The doors which were specified in the specification were four-panel pine doors. The doors which were supplied by Mr Nash were pine veneered, medium-density fibreboard doors. Mr Watson, in his original comments, said that he considered that Mr Nash had varied the specification from solid pine doors to veneered. Mr Linwood in his witness statement said that the rate included for doors (which was actually £231 per door) was as agreed by Mr Fryatt in the specification and, further, the relevant item in the specification referred to the doors as being four-panel pine, there being no reference as to whether the doors were to be solid or veneered. The rate as referred to in Mr Watson's appendix does not cover the cost of installation of the doors.
59. Mr Watson's response, in his witness statement of 26^th February 2004, was:

"The specification item for internal doors is worded: 'New internal doors to have clear opening of 750 and to be four-panel pine, stained finish, with black antique lever ironmongery.' I consider that Mr Nash implemented a clear variation by installing veneered MDF panel doors in lieu of the specification description. Mr Linwood did not provide a breakdown of his quotation rate of £231 per door. I accordingly value the doors as scheduled under Appendix 8 of the quantity surveyors' joint statement and confirm my build up of the unit rate, which includes installation, as follows."

There followed a breakdown of the total sum of £147.

"I rounded this to £150 per door for valuation purposes and note from Mr Nash's invoices that actual material costs were £37 per door, £7 for lever handles, £4 for cylinder latch and hinges. I cannot understand Mr Linwood's position that Mr Nash should be paid at his quotation rate and note that my valuation of this variation allows Mr Nash a substantial profit margin."

60. Mr Nash's position when he was cross-examined about this was that the doors which he had supplied were the doors which were specified and, therefore, he was entitled, he considered, to be paid the amount which he had originally quoted for the supply and installation of those doors.
61. In my judgment, in the light of my finding that there was no contract between the parties, the issue is not whether there was a fixed rate that Mr Nash was entitled to be paid for the supply and installation of internal doors, but rather what was a reasonable price for him to be paid for the supply and installation of the doors which he in fact supplied. Furthermore, even if that were wrong, in my judgment what is described in the specification as a "four-panel pine door" is a four-panel solid pine door and not a veneered door. Mr Nash in his evidence said that solid pine doors could be had for considerably lesser sums than the sum that he in fact paid for the veneered MDF doors which he actually supplied. That may be. But, in the circumstances, it seems to me that the appropriate allowance to Mr Nash for the supply of the internal doors is not the sum of £22,119 which he has claimed, but Mr Watson's revised figure of £19,056. I find that in respect of item 12 that is a sum to which Mr Nash is entitled.
62. Item 13 in the list was the valuation of various confirmation of verbal instruction sheets submitted by Mr Nash. Mr Nash claimed £50,982 in respect of those confirmation of verbal instruction sheets. Mr Watson valued them at £32,378. His original comment was that he considered the extent of the work overstated and that the work the subject of the claim was, to a degree, included within measured work. Mr Linwood, in response to that, said that the defendant had not provided any detail as to what items of work had been allowed for and what items of work had not been allowed for. He said that the valuation tab in a bundle put before me incorporated all of the confirmation of verbal instruction sheets as provided by him to the defendant, and that the total value was £50,982. He verified in cross-examination his view that the charges were proper in respect of work which was itself properly chargeable. Mr Watson, in his statement of 26^th February said:

"The confirmation of verbal instruction sheets submitted by Mr Nash contained overstatements of various work instructed and include work claimed as additional which should be included in Mr Linwood's original pricing. The summary of valuation against claimed items is included under Appendix A."

63. There was a difficulty there, because the appendix to Mr Watson's witness statement simply set out for each of the confirmation of verbal instruction sheets a figure which Mr Watson considered appropriate without there being any commentary or breakdown of the figure to indicate why Mr Watson considered that it was right.
64. The issue of whether the work should be included within measured work or not does not arise in the light of my finding that there was no contract between the parties, because the simple question is: what is a reasonable sum for Mr Nash to be paid for the work which he has done? I reject the evidence of Mr Watson, which was wholly unspecific, that the extent of the work done was overstated. Mr Linwood verified it. Mr Linwood and Mr Nash gave evidence. Neither of them was challenged in any sort of detail at all as to any alleged overstatement of work and, in those circumstances, I find that Mr Nash is entitled to the sum which he claimed, £50,982.
65. The last item in the disagreed value schedule related to materials on site. The issue appeared to be simply one of measurement as between Mr Watson, on the one hand, and Mr Linwood, on the other. Mr Nash, in reliance on Mr Linwood's account and valuation, claimed £6,455. Mr Watson valued what ought to have been the self-same materials at £5,900. Mr Linwood told me that he had taken particular care over the valuation of materials on site, these being the materials left by Mr Nash on site when he left on 22^nd November 2002. I accept the evidence of Mr Linwood in relation to this item and find that Mr Nash is entitled to the sum of £6,455 in respect of materials left on site.
66. The £2,000 allowance for plasterboard, which I have mentioned, is already included in the figure of £92,786.50, which is the revised figure which Mr Nash claims. I find that the sums proved due to Mr Nash are some £5,203 less than the sums claimed and, therefore, subject to other points to which I am about to turn, the sum which is due to Mr Nash (if my arithmetic is correct) is £87,583.50. There was no satisfactory evidence in my judgment that Mr Nash had been paid any sum greater than the sum which he accepted he had been paid, £330,854, and I reject the suggestion that any sum larger than that had actually been paid by the defendant.
67. Mr Nash in his evidence before me accepted that he had left the site before completion of the work which he had taken on because, he said, of persistent difficulties in obtaining payment from the defendant. The date when Mr Nash said he left the site, which I accept, was 22^nd November 2002. Mr Nash and Mr Linwood were firm in their evidence that at the date Mr Nash left the site all snagging work in relation to the work which he had done had been completed satisfactorily. I accept that evidence.
68. There was some rather limited evidence of the existence of snags earlier than 22^nd November 2002 in three properties, units 10, 12 and 15A. That evidence took the form of written lists of defects. Only in respect of unit 12 did the list appear, on its face, to have been produced by a purchaser. Internal evidence suggests that the document, which took the form of an undated letter, was produced on or about 11^th November. The list in respect of unit 15A, which was undated and undateable, also appeared from its terms to have been produced by a purchaser. Apart from these three documents, to which I have referred, there was evidence that snagging lists were produced, as I understood it, by or on behalf of the defendant and given to Mr Nash. His evidence was that the work in these lists, which were not investigated before me, was undertaken and completed, and, as I have said, I accept that evidence.
69. Apart from the documentary evidence, the evidence as to snagging defects unresolved and incomplete work was of a rather general character from Mr Fryatt and Mr Watson. Mr Fryatt in his witness statement of 12^th February 2004 at paragraph 14 said:

"The defendant received numerous complaints from purchasers as to the standard of workmanship and finish within the houses and carried out the remedial and snagging to complete the units. John Watson Associates have costed the time spent on these works and deducted it from Mr Nash's final account."

That was all that he said in his witness statement.

70. In his oral evidence he said that after Mr Nash had left the site and new labour had been brought onto site, the first thing which he got that labour to do was to complete the snagging. Mr Fryatt also suggested to Mr Nash in cross-examination that it was, as it were, notorious or inevitable that a purchaser of a property in a new development would find defects of which he would complain, which would therefore be snags which the contractor inevitably would have to put right. Mr Nash, as I understood it, agreed that that was the common experience of mankind, without going so far as to accept that it was inevitable in each and every case.
71. Mr Watson, in his first witness statement at paragraph 11 said only this:

"The defendant completed work fully included within Mr Nash's final application and carried out snagging work to complete units for sale. The snagging work was largely organised by the defendant without my involvement, but discussion with labour who carried out the work confirms that a considerable amount of time was required to complete the units."

72. In his second witness statement he said about the general snagging:

"Whilst I was not directly involved in the instruction and carrying out of snagging to Mr Nash's work, I am aware that a significant amount was carried out through complaints to me by purchasers and discussion with labour who carried out the work."

73. There is no attempt at differentiation in the evidence coming from the defendant's side, to which I have referred, between work which had supposedly been completed and was defective and work which was not complete. Mr Nash was not, in the circumstances of not having any contractual obligations, bound to do any particular work. He was not entitled to be paid for work which he had not done. The general descriptions of snagging in the evidence coming from the defendant is suggestive, as it seems to me, of including incomplete work rather than work which was supposedly complete but not properly done. At all events, for the reasons which I have already given, I accept the evidence of Mr Nash and Mr Linwood that all of the work which Mr Nash actually did and purported to have completed was properly done and properly completed. There was no evidence in any event that the defendant incurred any specific cost in addition to what would have been due to Mr Nash had he completed work himself in respect of any item of work which he had started but not finished.
74. Mr Nash's evidence as to how he went about the work which he actually did was set out in his witness statement as follows in paragraphs 3, 4, 6 and 13.

"This project differed greatly from other projects that I have worked on, as I am usually in charge of all the works. On this project, however, I had to wait for other people to complete their jobs before I could move the matter forward. There were a lot of things we needed to know that were not on the plans and specification and no one seemed to know much or even want to assist apart from Andy Fryatt. For example, there was no ceiling height and there was no mention about the existing walls and how they were to be finished. The en suite shower had no toilet on the drawings. We had to rely on Andy Fryatt providing these and many more necessary details throughout the life of the project. We suggested that the gyp liner system would be the best thing to do on the walls and ceiling. This was accepted by Tonbridge Estates (Sussex) Limited, so we carried on with the gyp liner system in units 9 to 13. We quoted a price of £35 per square metre. There were rounded corners to the main building of unit 11, so that meant more work and materials, so we charged extra. This was a common theme on this project due to the limited detail as provided for in the original specification. Nevertheless, we would carry out all additional work as instructed to by Mr Fryatt and then go for it on the monthly valuations and on the CVIs. As the work progressed on the units, additional work arose that had not been previously detailed and therefore had not been quoted for in the original specification. For example, I had to decide where we would run the downstairs toilet soil pipe to unit 11. I suggested that we put the pipe on the floor and run it back to the main soil pipe, which they agreed. We put this on a CVI. This was to be done in units 9 to 13.

At one stage Mr King needed more labourers to help progress the project as the defendant and his staff were falling behind schedule. So I helped the defendant to get two more men on the project, John and Ollie. The defendant paid their salaries.

I was on site every working day of the project from October 2001 until November 2002, save for up to five days in October 2002 when I took my only holiday during my time spent working on this matter. In addition, there were two maybe three further days when I was required to attend another small job. My foreman, Dean Barton, who I instructed to carry out the work, was on site at 7 o'clock every morning until half-past 3 in the afternoon."

75. In contrast, the evidence of Mr Fryatt and Mr Watson as to alleged deficiencies in the management of work by Mr Nash was vague. What Mr Fryatt said at paragraphs 11 and 12 of his witness statement was this:

"From the spring of 2002 it became apparent that the defendant needed to address site management as Mr Nash was not hitting targets he had set. There was very little on-site management from Mr Nash and generally the site workforce were left to their own devices. Mr Nash himself did not attend site on a regular enough basis to control his workforce, given the size of the project. A team of dry liners and a team of carpenters were brought in by the defendant to improve progress, but by November 2002 Mr Nash was so far behind and failing to complete units that we had to step in and take over the works. It was agreed that the defendant would complete the works and deduct any remedial costs for snagging and defects from the TJD [Mr Nash's] final account."

76. So far as that latter agreement is concerned, I do not accept the evidence of Mr Fryatt that any such agreement was made. The evidence of Mr Fryatt in cross-examination concerning the alleged agreement was extremely indefinite. Mr Linwood and Mr Nash both denied that any agreement had been made in relation to Mr Nash's final account or deductions from it, and I accept their evidence on that point.
77. Mr Watson in dealing with the organisation of work on the site at paragraphs 8 to 10 of his statement of 6^th February said this:

"Regarding work carried out, I do not consider Mr Nash had the experience necessary to carry out a construction contract the size of Sussex Stud. The first phase of 14 number houses was a major jump in scale compared to any previous work he had carried out, and I do not consider he was in a position to properly resource and programme the work required. I also consider that Mr Nash should have spent more time on site supervising work. Labour employed by Mr Nash for work on site was insufficient to carry out the work with reasonable progress and to comply with Tonbridge Estates' proposed completion dates and completion of sales. Completion dates for units agreed between the defendant and Mr Nash were not met and units otherwise ready for Mr Nash's work to commence were left idle for many weeks. The defendant eventually employed other contractors to proceed work on the latter units. Mr Nash has contended that there were areas where the defendant was tardy in completing work, thus causing delay. There were cases where I consider this contention had foundation, though in the absence of programming from Mr Nash reasonable notice for the defendant to arrange completion of their operations to the phase with Mr Nash was not available."

78. No particular consequence beyond a general allegation of delay in achieving sales of completed units was attached to the alleged mismanagement. I reject the allegations of mismanagement made against Mr Nash. No express contractual obligation to complete the work by any particular date or within any particular timescale was agreed because there was no contract. Even if there was a contract and it was contained in the documents to which I have already referred, there was left outstanding at the end of the letter which Mr Fryatt wrote on 22^nd September 2001 that very question of a programme. If there were a contract, it would have been an implied term of the contract that Mr Nash did his work within a reasonable time. However, during the trial there has been no real investigation as to what would have been a reasonable time in the circumstances in which Mr Nash was working, including delays caused by the defendant and others for whom Mr Nash was not responsible to the progress of his work. There was no evidence as to when work in any particular units was completed and in those circumstances there is, in my judgment, no substance in the complaint of mismanagement or delay.
79. I have already referred to the section of the schedule to the experts' joint statement entitled "Other Tonbridge costs" and the ten elements of work and the alleged costs which are contained in it. The schedule itself contained no commentary on any of the items. Not all of the items were clearly raised in any version of the defendant's Statement of Case. The evidence in relation to each item came principally from Mr Linwood and Mr Watson, although Mr Fryatt did himself comment on items numbered 1, 2 and 7. I intend to deal separately with the question of VAT.
80. So far as the evidence as to the other matters of complaint are concerned, it seems convenient to adopt essentially the course which I have adopted in dealing with the 14 items of disagreed value, i.e. to look at Mr Linwood's comment, the response from Mr Watson, Mr Fryatt's evidence, and any other evidence which is relevant to the issue in question.
81. The first item in the list of "Other Tonbridge Estates costs" is described as "Acoustic work units 9 to 13 party wall". The issue comes about in this way. Mr Nash was asked to construct partition walls between units 9 to 13 inclusive. These units, as I understand it, were in an existing building and the walls were required to divide the units up into separate units of accommodation. Mr Nash told me that he himself constructed the relevant walls. He constructed them out of breezeblock, he told me, in accordance with the instructions of Mr Fryatt and to the approval of Mr Fryatt at the time the work was done. Subsequently, so Mr Fryatt contended, it became apparent that there were holes in the walls – the walls were incomplete. Some of the blocks which ought to have been included were missing and the walls did not run from floor to ceiling as they should have done. Mr Fryatt also said that there were problems with transmission of noise between the various units once the partition walls had been erected by Mr Nash. In order to deal with those problems, it was necessary to incorporate sound attenuation materials.
82. Mr Linwood in his witness statement said that he could confirm that all the building work was block walls, as carried out by Mr Nash, and it was in accordance with Mr Fryatt's verbal instructions.

"Mr Fryatt was aware of the work as not only had he instructed such, but he was on site to witness the work being carried out and at no stage did he raise any concerns with either myself or Mr Nash as to said work. I do not dispute that there may have been difficulties with the acoustics, but if this was indeed the case this would be attributable to Mr Fryatt's instructions and not the quality of the work as carried out by Mr Nash."

83. Mr Watson commented in his witness statement of 26^th February that:

"The party walls in question were new blockwork construction at first floor level. The existing brickwork walls at ground floor were retained and formed party walls at that level. Defects in blockwork construction were: the new blockwork walls were indicated on drawings as being in two skins of dense concrete blockwork 7 newtons per millimetre squared, separated by a cavity. The walls were constructed in lightweight concrete blockwork which provides poor acoustic insulation. Workmanship in construction of the walls was poor, in particular from an acoustic point of view accurate cutting of blockwork at an angle where it met the underside of roof slopes was ignored, leaving significant gaps allowing sound transmission between units. In some places these gaps had been partly filled with expanding foam, providing almost no barrier to sound transmission. The detail and cost of work required to remedy the above following complaints from purchasers about noise transmission is scheduled under Appendix A to the quantity surveyors' joint statement."

84. Mr Nash, as I have said, told me in his evidence that he did what he was requested to do by Mr Fryatt, to Mr Fryatt's approval at the time. Mr Nash said that at the time he did his work he was acting only on the verbal instructions of Mr Fryatt and that no drawings at that stage had been produced to him, although drawings were subsequently produced. In those circumstances, I find that Mr Nash did exactly what he was asked to do by Mr Fryatt. It was no part of what he was asked to do to provide an acoustically acceptable result. What he was asked to do was build blockwork walls, and that is what he did. In my judgment, there is no substance in the first element of claimed "Other Tonbridge Estates costs" in respect of acoustic work.
85. The second element was work to the ground floor of unit 13. It was unclear from the evidence whether there were deficiencies in the quality of the wood in the ground floor of unit 13. Mr Nash, I think, was inclined to accept that that might well have been so, without being in a position himself to say that it was so. His evidence was that, if it was so, it was likely to be the result of unit 13 being left without adequate protection against the ingress of rain after the floor had been completed by him, and in particular there were no windows and no door. Mr Fryatt in his evidence was inclined to attribute the defects in the woodwork of the floor to lack of protection of the timber before it was employed to form the floor, and/or lack of protection after it had been laid.
86. Mr Linwood in his witness statement said simply that the work which was carried out to the ground floor of unit 13 in respect of which a credit was claimed was the laying of a laminate floor over the top of the original and that that had never been detailed in the original specification. Mr Watson commented:

"The ground floor finish in all the units comprised softwood tongued and grooved boarding, fixed, treated softwood battens on a concrete slab. The boarding to this unit suffered from severe cupping. That could only be remedied to the purchaser's satisfaction by sanding the floor flush and laying a laminate floor finish, as detailed under Appendix A to the quantity surveyors' joint statement. Some movement of boarding did occur within other floors but none of the severity that occurred to the boarding laid by Mr Nash in this unit."

87. Again some light is shed on this item, as it seems to me, by documents included in the bundle of disagreed works, to which I have already made reference. One of the documents which is said to relate to this item is, it appears, some sort of order confirmation produced by an organisation called LFD Horsham. It relates to the supply, so it appears, of laminate flooring. What is significant, submits Mr Pearman on behalf of Mr Nash, is that the laminate flooring was obtained at the beginning of September 2003, which was some nine months after Mr Nash had left site and, therefore, submitted Mr Pearman, whatever the problem and whatever its cause, it was not likely to be attributable to any deficiency in the work done by Mr Nash. I accept that submission. It seems to me that if a sale of a property was being delayed as a result of the condition of the floor of unit 13, that is a matter that would have been dealt with promptly and expeditiously by the defendant when the problem was identified. Moreover, as it appears that unit 13 was sold to the purchaser with the floor in whatever condition it was in before the laying of the laminate floor, whatever the problem was, it was one which was likely to have manifested itself only after the sale had been achieved. Otherwise, the purchaser would have said, "I am not buying that unit in that condition", and the work would have been done before the purchaser agreed to purchase.
88. So, for those reasons, I find that there is no substance in the second item claimed under "Other Tonbridge Estates costs" in respect of work to the ground floor of unit 15.
89. The third item is "General snagging". I have indicated my findings in relation to general snagging, and I do not propose to say any more about it.
90. The fourth item is a claimed credit in respect of the plastering of external walls. The credit claimed is £12,216. The way in which this matter is put, as I understand it, is this. In his letter of 22^nd September 2001, Mr Fryatt said in the second main paragraph, after referring to "a need to discuss additional items following our conversation yesterday":

"I understand that you included to plaster the external walls in your original figure."

That, it was said, was not contradicted at the time by Mr Nash, although I think Mr Fryatt accepted that there did come a time, which was not precisely identified, when it was contradicted quite vigorously by Mr Nash and Mr Linwood. Therefore, submitted Mr Fryatt, that is what Mr Nash agreed was included in his price. The work was not done and, therefore, the defendant is entitled to a credit for the fact that it was not done.

91. When Mr Nash was asked about it he said that he never included actually for external plastering, that he never agreed that external plastering was included in his price, and bearing in mind that the value of the work is said to be over £12,000, it does not seem particularly likely that he would have agreed that it was simply included in the price of items for which he had otherwise indicated budget prices. In those circumstances, there being no contract between the parties, as I have found, the issue does not arise. It is not a case of what was included in the price or not included in the price. It is a question of what is a reasonable sum for Mr Nash to be paid for the work which he eventually did. In any event, I accept the evidence of Mr Nash that he did not actually make any allowance for plastering external walls in any price which he indicated at any stage to the defendant, and he did not agree with Mr Fryatt at any stage that he had included an element in respect of the plastering of external walls. Therefore, for those reasons, the fourth claimed "Other Tonbridge Estates costs" item fails.
92. The fifth element is described as "Adjustment to internal partitions". The evidence about this particular matter was not at all satisfactory. Indeed, I am not sure that even yet I have any very clear idea to what it is supposed to relate. Mr Linwood said simply:

"I do not understand what the defendant is referring to in relation to adjustments to internal partitions. As far as I am aware, there were no adjustments to internal partitions. I do not know what the defendant is referring to in relation to this alleged discussion between himself and Mr Nash."

93. Mr Watson, in his statement of 26^th February, said:

"I understand that Mr Fryatt had early discussion with Mr Nash relating to the pricing of internal partitions and made an adjustment within valuation number 3 at 17^th January 2002. The quantity surveyors' joint statement includes adjustment to this rate."

94. It was never clearly put by Mr Fryatt to Mr Nash that Mr Nash had agreed some sort of credit in the sum of £8,970, which is the figure attributed to item 5, or any other item in respect of a price for internal partitions. Mr Nash denied that he had made any relevant agreement. I accept Mr Nash's evidence on the point and, therefore, the fifth item in the list of "Other Tonbridge Estates costs" fails.
95. The sixth item was material supplied by Tonbridge Estates. This again was something of a mystery item. The value attributed to it in the schedule attached to the joint statement of the expert quantity surveyors was £2,000. However, in the bundle relating to the disagreed works, what appeared allegedly in support of this item was a single invoice from a company called Crawley Metal Supplies for a total, including VAT, of £719.10. What that invoice related to (the copy of the invoice before me is not particularly clear and the descriptions are in any event somewhat abbreviated) seemed to be metalwork. The suggestion which was put to Mr Nash by Mr Fryatt was that the items in question were metalwork necessary to be supplied and installed in order to enable Mr Nash to construct mezzanine floors. The suggestion was that the work described in the specification included the construction of mezzanine floors, which it did, that Mr Nash had indicated a price for doing that work, and if he was successfully to be able to complete construction of the mezzanine floors it would be necessary for him to have obtained and have installed the metalwork which was the subject of the Crawley Metal Supplies invoice. Mr Nash's answer was that he never agreed to install any metalwork. He had not sought a charge for installing any metalwork, and there was no substance therefore in this item of claim.
96. I accept the evidence of Mr Nash in relation to this issue. As I have explained in relation to other items, in the light of my finding that there was no contract between the parties, the issue of what was or was not included within any particular price does not arise. It is a question of what is a reasonable price for Mr Nash to be paid for the work which he has done. He did not price for supplying metalwork, he did not seek to charge for supplying metalwork, he did not actually include any element in respect of metalwork in any figure which he communicated to the defendant. In those circumstances, it seems to me that there is no substance in this element.
97. The next element is trade discounts. This had been in dispute between the parties, but in his closing submissions Mr Pearman, on behalf of Mr Nash, accepted that, in the light of the evidence as it had come out, it was appropriate for Mr Nash to allow a credit in respect of trade discounts in the sum claimed, which was £9,060. I need, therefore, say no more about that element.
98. Item 8 related to the VAT content on materials. The issue which arose in relation to VAT again seemed to depend upon there being a contract between Mr Nash and the defendant. What Mr Fryatt submitted was that it was a term of that contract by virtue of what he had said in his letter of 22^nd September 2001 that Mr Nash would recover from suppliers to him who charged VAT whatever VAT had been charged, and would not seek to pass it on to the defendant. In the light of my finding that there was no contract, the point does not really arise, but in any event it seems to me that, on a proper construction of the letter of 22^nd September 2001, that is not what even Mr Fryatt then was seeking to achieve. I accept the submissions of Mr Pearman, that, on proper construction of the letter, the relevant references being "Material prices include VAT which I may recover" and "I presume also that VAT is again recoverable", what was being stipulated was not something that Mr Nash should do but rather Mr Fryatt's own personal belief as to what the position of the defendant would be in relation to VAT. So for those reasons the claim in respect of VAT content on materials put at £17,420 fails.
99. The last two elements in the "Other Tonbridge Estates costs" can be taken together. They were put as "Excess surveying and management costs, £6,875, and interest charges, £61,320". Without any attempt further to amend the Defence, in the bundle relating to disagreed works prepared by the defendant's solicitors, whilst acting, the figures which I have mentioned have become magnified so that the excess surveying and management costs figure had become £39,000 and the interest charges had become £102,111. Basically both of these elements were said to be costs incurred by the defendant as a result of the extended period taken before completion of the development of the site. The excess surveying and management costs, broadly speaking, were said to be the costs of Mr Watson, Mr Fryatt and various others in managing the project, and the interest charges were said to be the charges incurred by the defendant in respect of its borrowings to finance the development over the allegedly extended period before the works were complete.
100. The short answer to each of these elements of claim – it is not the only one – is that as Mr Nash had no obligation to do the work by any particular date, there can be no question of him being late and, therefore, there can be no question of a claim for damages in respect of any delay having any value whatsoever. Bearing in mind the length of time that I have already taken on this judgment and the matters still to be dealt with, I propose to treat that as a sufficient answer for the moment without dealing with the other objections which there undoubtedly are to those elements of cost, not least of which is that there was no evidence in support of any particular figure in respect of any of the relevant elements and no evidence that Mr Nash was aware that these costs or costs of this general nature might be incurred in the event that the works on site were unnecessarily protracted.
101. My conclusion, therefore, in respect of the totality of the alleged "Other Tonbridge Estates costs" is that the only one which succeeds is that which was ultimately conceded, trade discount in the sum of £9,060.
102. I turn now to consider the failure to deduct income tax and national insurance contributions and/or the making of any payment at all to Mr Nash without him being in possession of a CIS card. This matter was not dealt with, in my judgment, particularly satisfactorily at the trial. It would have been of assistance to have been shown the relevant statutory provisions, but that did not happen. The basic facts did not appear to be significantly in dispute. As I have said, Mr Nash did not have a CIS card. Payments were made to him without deduction of tax or national insurance contributions.
103. The evidence as to the consequences of those basic events was, in the first instance, that on behalf of the defendant contained in two witness statements of Mr Christopher Winter, who is a chartered accountant. In his first witness statement, which was dated 28^th April 2004, Mr Winter dealt with the matter at paragraphs 5 to 12 as follows:

"As stated above, I act as accountant to the defendant. In or around February 2004 Andy Fryatt mentioned his dispute with the claimant. I cannot recall how the conversation arose, but believe it was because I was discussing the defendant's accounts with Andy following commencement of the claim. I recall I mentioned to Andy that he had not seen the claimant's CIS documentation. CIS is an abbreviation for the Construction Industry Scheme, which is a compulsory registration scheme for contractors and subcontractors which determines their treatment for the purposes of taxation by the Inland Revenue. Once a party is registered under the scheme, the Inland Revenue issue subcontractors who meet certain qualifying conditions with subcontractors tax certificates. Subcontractors who do not qualify are issued with registration cards. Where a subcontractor holds a registration card, the contractor must make a deduction of 18% from all payments for labour on account of tax and national insurance contribution liabilities. Where the subcontractor holds a tax certificate, the subcontractor will pay him or her gross, i.e. with no amounts taken off. Registration cards are called CIS 4. Certificates are called CIS 5 and 6. Before making any payment under deduction, the contractor must see the subcontractor's registration card and ensure that it is genuine and the person producing it is the user of that card. In all the circumstances, if the contractor is not satisfied that a certificate is valid, a deduction from the payment must be made. Failure to operate the rules correctly may cause the contractor to be liable for a deduction which should have been made. The subcontractor can only be paid without deduction where the contractor is satisfied that the subcontractor is in receipt of a certificate or registration card.

In my view, the defendant, not having seen the claimant's CIS card, should not have made any payment to the claimant whatsoever. The Inland Revenue may deem the payments made to the claimant net of tax and would therefore gross the sums up. I confirm that from the defendant's records the claimant has received the sum of approximately £330,000 together with a cash payment of £12,000, making the defendant's total liability to the Inland Revenue of approximately £75,000."

104. Mr Winter made a second witness statement, to which I need not refer, but also a third, of which paragraphs 1 to 4 are relevant. There he said:

"Tonbridge Estates (Sussex) Limited has now had a PAYE visit from the Inland Revenue where the issue of Mr Nash was discussed. The Revenue's findings from the visit relating to Mr Nash are as set out in their letter and meeting notes and copies are attached as Appendix A. The copies of the letter and meeting notes have other matters blanked out. The Inland Revenue have chosen to deal with payments made as gross payments liable to deduction at 18%, giving rise to a liability of £61,713.72 owing by Tonbridge Estates (Sussex) Limited. During the meeting, Miss Penman, the relevant Inland Revenue official, also indicated that interest and penalties would be raised on these sums, but these would be sorted out at a later date. She also confirmed, when told that Mr Nash claims to have paid his tax on all his income, that she had no way of verifying this and would only wish to deal with Tonbridge Estates (Sussex) Limited on this matter. It was for Mr Nash to recover any overpayment of tax arising."

105. The letter written by Miss Sheraline Penman, Employer Compliance Officer at the South London Area Office of the Inland Revenue, exhibited to Mr Winter's statement was dated 20^th May 2004. The section concerning Mr Nash in the letter said this:

"You provided information that shows the company paid the subcontractor a gross amount of £342,884 without checking if a valid CIS 5 or CIS 6 was held. The monies were paid during the period from 26^th October 2001 to October 2002 as per the solicitor's schedule. You are also now aware that, in the absence of a valid CIS 5 or CIS 6, the 18% deduction should be applied to the payment, and I enclose a computation detailing the amounts due. In respect of Mr Nash and Mr King, there is a failure on the part of the contractor insofar as payments have been made without making the necessary deductions. The relevant legislation is set out in the Income and Corporation Taxes Act 1988 sections 559 to 567. In view of this, I intend to raise assessments under regulation 14.1 of Statutory Instrument 1993 No 743 as detailed at Appendix 1. Any comment or response you might wish to make at this stage should be made in writing to me at the above address."

Then, under the heading "Status":

"Please be advised that interest is accruing on a daily basis and will continue to do so until the duties are paid in full. I recommend that you consider making a payment on account of the final liabilities. If you wish to do so, please make your cheque payable to the Inland Revenue and send it to me at the above address."

A calculation attached to the letter did indicate that in respect of Mr Nash the under-deductions for which the Revenue contended gave a total figure of £61,713.72.

106. So far as Mr Nash is concerned, when the issue was first raised he consulted his own tax office, which is the West Kent Area Office of the Inland Revenue. Mr WG Trantler, HM Inspector of Taxes, wrote him a letter dated 7^th May 2004, which said this:

"Further to our telephone conversation yesterday, following the receipt of additional information from Mr Neilson I have today faxed a letter to your solicitors. I attach a copy of the letter for your information and records."

The letter to the solicitors said this:

"This letter is to confirm that from the personal self-assessment returns submitted by the above-named, Mr Nash, for the years 2001/2002 and 2002/2003 the following. 2001/2002, a turnover figure of £140,646 was declared, which I understand includes a payment of £127,006 from Tonbridge Estates paid in that year. 2002/2003, a turnover figure of £205,090 was declared, which I understand includes a payment of £194,848 from Tonbridge Estates paid in that year. The personal income tax liability for each of the years above has been calculated using the figures declared in the self-assessment returns detailed above."

107. The position thus appears to be that while Mr Nash has declared to the Inland Revenue all of his income derived from his work for the defendant and has paid or is liable to pay the appropriate income tax and national insurance contributions due, the Inland Revenue intends to seek payment from the defendant of income tax and national insurance contributions which ought to have been deducted but were not, plus interest and penalties. If the Inland Revenue acts on the information in the letter from Miss Penman and it has already been paid, or will look to Mr Nash to pay, the income tax and national insurance contributions on the income which he has declared, the Inland Revenue will therefore have been paid, at any rate to an extent, the relevant income tax and national insurance contributions twice, plus interest and penalties.
108. It is difficult to believe that the Inland Revenue actually intends to recover income tax and national insurance contributions twice over. If the South London Area Office dealing with the defendant's affairs were put in touch with the West Kent Area Office dealing with Mr Nash's affairs, it seems that that part of the problem at any rate might be capable of fairly speedy resolution. In any event, Mr Fryatt told me that the defendant has not paid and is not able to afford to pay the amount indicated by Miss Penman in her letter, or any interest or penalties. It is therefore the case that the defendant has not made any payment to the Inland Revenue of which Mr Nash will gain any advantage, and it is not in a position in the future to make any payment to the Inland Revenue from which Mr Nash will gain any advantage. On the contrary, it appears that he either has paid or is liable to the Inland Revenue to pay all of the tax and national insurance contribution properly due.
109. Insofar as the defendant may be liable to account to the Inland Revenue for non-deducted income tax and national insurance contributions or to pay interest or penalties, that liability seems to arise not from any mistake which caused it to pay excessive sums to Mr Nash but its own failure to apply the law in calculating, first, that any sum was due and, secondly, what sum was due. As I have said, if Mr Nash pays the tax and national insurance contributions which are in fact due on the income that he has declared, he has derived or will derive himself no benefit from the failure of the defendant to apply the law.
110. The question really here, as it seems to me, is whether Mr Nash has been or will be unjustly enriched as a result of a payment which has been made for his benefit by the defendant. That, on the material before me, is not the case. If, contrary to the evidence of Mr Fryatt, it proves to be the case in the future, the consequence then will be that very probably the defendant will have a claim in restitution against Mr Nash, but unless and until payment is made from which he derives advantage that is not the case. So the present claims in relation to the failure to deduct income tax and national insurance contributions fail. But I emphasise that does not determine the position finally for the future. What the future position may be will depend upon what payments, if any, are made in the future.
111. The last matter with which I need deal is the question of VAT. The evidence was that Mr Nash was not registered for VAT purposes until about 14^th December 2001. There was no clear evidence that he was ever paid by the defendant any sums in respect of VAT. He did raise invoices in which sums for VAT were claimed in respect of materials, but not labour. However, the payments actually made by the defendant were of round figure amounts, by and large. They had the look of being payments on account which did not specifically include any element in respect of VAT. In the result, I am not satisfied that any VAT was actually paid by the defendant to Mr Nash in addition to the sums to which he was otherwise entitled. The sums which Mr Nash claims in the present action do not, as I understand it, include VAT.
112. The remaining aspect of VAT that I need deal with briefly is whether Mr Nash agreed by contract with the defendant to obtain or to allow credit in respect of VAT which he paid on goods or services obtained for the purposes of the work which he did for the defendant if, contrary to my finding, the parties did make a binding contract. The answer I have already given. The answer depends upon the construction of the documents incorporated in any such contract and, in particular, those passages in Mr Fryatt's letter of 22^nd September 2001, to which I have already made reference and in respect of which I have already indicated my conclusion.
113. The result, if my arithmetic is correct, is that Mr Nash is entitled to judgment in the sum of £76,523.50. That is a figure exclusive of interest. Mr Pearman has already made some submissions to me in respect of interest. I have not heard from Mr Fryatt on that question. Bearing in mind that it is now 20 past 1, what I propose to do immediately is to adjourn until a quarter past 2, to enable the parties to check my arithmetic, which is a course I do urge upon them, bearing in mind that I have been doing the sums in the course of delivering this judgment, for Mr Pearman to calculate the sums which he claims by way of interest, so that I have a definite figure to consider at a quarter past 2, and for Mr Fryatt to consider the position of the defendant in relation to the claim for interest once Mr Pearman has been able to notify him what sums are being claimed.