Scottish Court of Session Decisions

The pursuers seek decree for payment of fees claimed in respect of architectural services rendered in connection with an abortive construction project at Culloden. They became involved in the project at the invitation of the Leonard Cheshire Foundation who wanted to promote a housing development. The pursuers were initially requested to identify a site for the development, and they advised that the land at Culloden would be suitable. At the material time the land was owned by the defenders. The project required public sector funding and eventually foundered when the required funds were not made available.

The pursuers aver that in about August 1995, the defenders embarked on the project for the Foundation. By then there had been a considerable amount of architectural work done. The contract was intended to be on a "design and build" basis. The Foundation were to be the defenders' client. The pursuers were to be included in the design team as architects for the Foundation's component of the total work. It is averred that these matters were agreed at a meeting including all three parties held on 30 August 1995. It is averred that it was common practice in the industry for there to be a direct professional relationship between the architect and the contractor in a design and build contract. The pursuers further aver that following the meeting on 30 August, the parties' representatives agreed in a telephone discussion the rate of remuneration to be paid to the pursuers. It is for fees based on that agreement that the pursuers seek decree in the first place.

The defenders contend that the case is irrelevant. They say that it is founded on novation, and that the pursuers have failed to aver with sufficient precision the terms of the contract they had with the Foundation, and the time and the formalities of the transaction effecting the novation of that contract as between the pursuers and defenders.

In my opinion the case must proceed to proof before answer. It is implicit in the defenders' approach to the relevancy of the pursuers' pleadings that any basis on which the defenders might be liable to the pursuers would necessarily involve the discharge of the Foundation's obligation and the substitution of an obligation defined by that discharged obligation. However, as Mr Scott observed, it is not necessary that a prior subsisting obligation be discharged before a subsequent obligation emerges. The examples cited, Erskine III. iv. 22, and University of Glasgow v Yuill's Trustee 1882 9 R. 643, are somewhat removed in factual context from the present. But North v Bassett [1892] 1 QB 333 illustrates the practical context in which an issue such as the present arises. It is common practice for the bills of qualities for building and civil engineering projects to make provision for the payment of the professional fees incurred in connection with the work both before and after the contract is let. In effect the employer meets his obligation to the professional advisers who may have provided preliminary services through the mechanisms of the construction contract. In the ordinary case on payment the total obligation will be discharged. Parties will pay little regard to the legal analysis of the changes in relationship involved. But if a question were to arise whether the execution of the construction contract discharged the employer's liability in a question with a professional adviser who was not paid by the contractor, it is by no means plain that one would immediately arrive at the view that there had been novation operating to extinguish the prior obligation. It would be a question of fact to be resolved on an examination of the whole circumstances of the case.

Whether the defenders entered into an agreement to meet the pursuers' professional charges in whole or in part is itself a question of circumstances to be determined objectively: Gloag on Contract 2nd ed. page 7; and Muirhead & Turnbull v Dickson 1905, 7 F. 686. The scope of the enquiry is widened by the observations of Lord Fraser and Lord Keith in Morrison-Low v Paterson 1985 S.C.(H.L.) 49.

In addition to their primary case, the pursuers contend that the defenders are personally barred from denying liability. The defenders contend that there are no relevant averments in support of the plea of personal bar, citing Cantors' Properties (Scotland) Ltd v Swears & Wells Limited 1978 SC 310. Mr Scott argued that personal bar would arise if the issue turned on novation, and in some way the inference could be drawn that the defenders had not expressly consented to novation of the prior relationship with the Foundation to themselves. In that situation there would nevertheless be actings which took place upon the faith of the minuted agreement of the defenders to a novation. Those actings could set up a contractual obligation to pay. In my view the personal bar case is artificial and contrived. The circumstances relied on are said primarily to support the contention that there was an actual agreement. It is in that context that they have some coherence. If the pursuers had not believed that the defenders had agreed to pay, which is their primary position, they would not have continued to carry out the work. They contend that objectively there was an agreement to pay. It is difficult to see how, in present circumstances, there can be an independent case based on the hypothesis that there was no obligation to pay, but that they nevertheless proceeded on their faith in the unilateral actings of the defenders as instructing an obligation to pay.

Since I consider that there is a case to answer on the principal claim for payment, it is unnecessary to deal separately with the alternative conclusion which is based on an ordinary contract for professional services after the defenders were in the saddle. It is clearly relevant.

I shall sustain the first plea in law of the defenders to the extent of repelling the third plea in law of the pursuers, and otherwise allow parties a proof before answer of their respective averments.