Dispute - decision as to the quantum of the claim between the Plaintiff
and the Defendant
[2021]JRC234
Royal Court
(Samedi)
21 September 2021
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Before :
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T. J. Le Cocq, Esq., Bailiff, and Jurats
Blampied and Thomas
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Between
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Sir Bob Murray CBE
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Plaintiff
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And
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Camerons Limited
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Defendant
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Advocate N. M. C. Santos-Costa for the
Plaintiff.
Advocate S. M. J. Chiddicks for the
Defendant.
judgment
the bailiff:
Introduction
1.
On 8th
September 2020, this Court handed down a Judgment in the above captioned
proceedings (see Murray v Camerons Limited [2020] JRC 179) (the
Judgment) in which the Court set out the basis upon which a contract existed
between Sir Bob Murray CBE (“the Plaintiff”) and Camerons Limited
(“the Defendant”) concerning the property known amongst other
things as Les Lumieres West in the parish of St Brelade (the Property).
2.
In the
Judgment the Court set out the basis upon which the claim by the Defendant for
payment from the Plaintiff should be calculated and although the Court
expressed the hope that that exercise could be conducted by agreement that did
not prove to be the case.
Accordingly the parties are now before the Court for a decision as to
the quantum of the claim between the Plaintiff and the Defendant.
3.
It is not
necessary to set out the details of the genesis and progress of the
relationship between the Plaintiff and the Defendant. This is fully referred to in the
Judgment. However, the Judgment
contains certain guidance as to the way the question of quantum should be
approached and it is appropriate therefore, to set out the relevant parts of
the Judgment which are as follows:-
“…..217. In our view, notwithstanding any
subjective belief on the part of the Plaintiff there was a contract between the
Plaintiff and the Defendant on the terms of the JCT Standard Form. The price had in effect originally been
agreed in November 2014 and was based upon the RNJ Cost Report and the
documentation underpinning that.
Once those specifications had changed the price referred to in November
2014 as the cap or otherwise became irrelevant. It was and must have been understood by
both parties that the price would change.
The programme had been agreed as had the completion date. The works were to be conducted in
accordance with JCT Standard Contract and the Defendant had made it entirely
clear at every point that this was not to be a fixed price contract and they
would not be providing any discount.
Whatever the Letter of Intent may have been intended to achieve when it
was initially created in our judgment the contractual arrangement had
significantly mutated to the JCT Standard Contract and the Plaintiff and the
Defendant had conducted themselves, and were content to do so, in the manner
provided for by that JCT Standard Contract. This to us is demonstrated by the
parties’ acceptance of and adoption of retentions, pay less provisions,
architect’s instructions, OHP and interim valuations and
certificates. Although a final
price had not been agreed a mechanism for establishing cost, through
CCR’s, AIs, certifications (including 6.5% OHP) had been established and
the reasonable observer would have concluded that this was the agreed method of
proceeding and agreed as applying to the work that the Defendant was doing.
……………..
219. In our judgment, the Defendant is
entitled to the 6.5% OHP. In our
judgment however, there should be no up lift for CDP as the Plaintiff had
always refused this. There should
be no uplift for potential claims from sub-contractors, unless the Defendant
can show that bills have been submitted by those sub-contractors. Furthermore, there should be no up lift
in the contract sum for legal costs.
That in our view is how the price falls to be calculated. We see no basis to revisit sums already
paid before certified.
…………
227. Accordingly in our judgment the
Defendant is entitled to be paid for its work on an agreed value basis, with
OHP, and to the extent that that work is covered by AIs then on that basis.
228. We do not think that there was to be an
uplift for CDP as this appears to be an aspect that the Plaintiff had always
refused to accept and similarly there was not to be an uplift for potential
claims from sub-contractors unless the Defendant can show that bills have been
submitted by those sub-contractors.
There was to be no uplift in the contract sum for legal costs.
229. For the avoidance of doubt, however, we
do not find on the evidence before us that there is any basis to revisit the
Intermediate Contract and the sums paid for the Enabling Works nor, as we have
indicated above, do we find the allegations made by the Plaintiff against the
Defendant established”.
4.
Prior to
the hearing before us, it became apparent that there was a difference in
approach between the experts appointed for the Plaintiff and the Defendant and
the parties sought further directions from the Court. In a brief ex tempore judgment of
the 4th February 2021 (the February Judgment) the Court (Le Cocq,
Bailiff, sitting alone) gave the following guidance:
“1. It seems to me that the basis of valuation
must be, as far as it is possible, to follow the guidance given in the in the
Judgment of the Royal Court. That
was after hearing all of the evidence and, without suggesting that this is a
problem in this case, it does not appear to be possible at this stage to raise
issues of fact which could and should have been pleaded before the Court when
the matter was heard and which gave rise to that Judgment. Therefore, there cannot be in my view be
any suggestion that the works done were not done to a sufficient standard or
that the factual material agreed within the interim valuations were agreed on
some wrong basis.
2. The starting point should, in my view be
the interim valuations which is the starting point anticipated in the
Judgment. That is not to say that
it is the finishing point however, it must be reasonable for any degree of
duplication in payments to be addressed if, for example, work has been carried
out, already paid for out of the enabling works, or in some way the interim
valuations of covered work which was not in fact done, but I do not see that
that should be a great deal of difficulty for the experts to agree a common
view on.
3. Other than it seems to me it is
helpful and informative to look at the case of Imperial Chemical Industries
Limited v Merit Merrell Technology Limited [2018] EWHC1 577 (TCC) which has
been referred to by both parties as guidance to the experts in this case, but
ultimately the Court will sit to resolve this at the three-day hearing in April
……”
5.
We have
received reports and heard extensive oral evidence from the experts. We heard firstly from Mr Mark Hackett
(“Mr Hackett”) who is the Defendant’s expert and then from Mr
Duncan Hughes-Phillips (“Mr Hughes-Phillips”) who is the
Plaintiff’s expert. We do not
in this Judgment set out full details of their respective evidence but it is,
however, important to identify the approach of each expert. Each expert expressed the view to us
that their approach was consistent with the Judgment and with the February
Judgment.
The approach of the Defendant’s expert
6.
The
approach of the Defendants’ expert, Mr Hackett, was set out in the
introductory paragraphs of his report dated 29th October 2020.
7.
In
Paragraph 1.2.3 of his report he says:
“My input remains
directed to matters of quantum and I do not attempt to express any view on
legal, liability and technical issues outside this remit. My instructions require me to provide an
independent, professional opinion based on the Royal Court’s findings as
set out in its Judgment dated 8 September 2020 (JRC 179) and, in particular,
taking into account the following (the paragraph references given below are to
the Judgment):
(a) The contractual position and
correct approach to quantification is that Camerons is entitled to be paid for
its work on the “Agreed Value Basis” (paragraphs 227 and 230).
(b) Camerons is entitled to overhead
and profit (paragraph 227).
(c) To the extent that work is
covered by AIs and Camerons is entitled to be paid for that work on the basis
set out in the AI (paragraph 227).
(d) There is no uplift for the
Contractor’s Designed Portion (paragraphs 219 of 228).
(e) There is no uplift for potential
claims from Sub Contractors unless Camerons can show that bills have been
submitted by those Sub-Contractors (paragraphs 219 and 228).
(f) There is no uplift in the
contract sum for legal costs (paragraphs 219 and 228).
(g) There is no basis to revisit
sums paid for the Enabling Works (paragraph 229).”
The approach of the Plaintiff’s expert
8.
The
Plaintiff’s expert, Mr Hughes-Phillips, sets out his methodology in a
separate appendix (Appendix B) to his report dated 23rd November
2020. That appendix comprises some
7½ sides explaining the overall steps taken and how the individual
elements of those steps had been established. The overall methodology is set out at
paragraph 2 of Appendix B of Mr Hughes-Phillips’ report which states:
“This methodology
includes the following steps:
(a) Establish the Contract Sum and
scope of the Main Works;
(b) Establish the changes that CL
have claimed to the Contract Sum (“The Changes”).
(c ) Establish which of the changes are
variations (“The Variations”) or are items which should be included
in the Adjusted Contract Sum;
(d) Calculate the Adjusted Contract
Sum;
(d) Establish to what extent the
work included in the Adjusted Contract Sum was properly completed;
(f) Calculate the NFA;
(g) Calculate the payment
due.”
9.
Thereafter
in his methodology Mr Hughes-Phillips explains that he has implemented each of
the above steps. NFA means
“Notional Final Account” which, so Mr Hughes-Phillips states, is
pursuant to the JCT form of contract which states:
“….. the Contractor
shall as reasonably practicable prepare and submit an account. The account
shall set out the amounts referred to in Clauses 8.12.3 to 8.12.3.4 and,if
applicable,8.12.3.5 namely:
·
The total
value of work properly executed at the date of termination of the
Contractor’s employment, ascertained in accordance with these Conditions
as if the employment had not been terminated, together with any other amounts
due to the Contractor under these Conditions;
·
Any sums
ascertained in respect of direct loss and/or expense under Clause 4.23 (whether
ascertained before or after the date of termination);
·
The
reasonable cost of removal under Clause 8.12.2;
·
The cost
of materials or goods (including site materials) properly ordered for the Works
which the Contractor has paid or is legally bound to pay;
Any direct loss and/or damage
caused to the contractor by the
termination.”
10. We will not go into the full details of Mr
Hughes-Phillips’ approach but we note that in paragraphs 4 & 5 of
Appendix B, in which after stating that the Enabling Works was in flux as to
scope and that, items of work moved in and out of the main works as a result he
says the following:
“This causes an issue for
my assessment because whilst the Court decided that:
“In our view,
notwithstanding any subjective belief on the part of the Plaintiff there was a
contract between the Plaintiff and the Defendant on the terms of the JCT
Standard Form. The price had in effect originally been agreed in November 2014,
and was based upon the RNJ Cost Report and the documentation underpinning
that.”
6. I cannot use this as the
starting point without further analysis.
This is because if I use the Court starting point, the changes between
the scope of the Main Works in November 2014 and in January 2015 would not be
taken into account. This would
potentially mean that:
(a) Work that was subsequently
instructed and paid within the Enabling Works would also be included in the
main works, and thus paid twice; or
(b) Work that was included in the
enabling works and subsequently moved to the Main Works would not be paid at
all.”
Some areas of contention
11. The approach of the Plaintiff’s expert
was dealt with at some length in the Plaintiff’s written closing
submissions. In contrasting the
approach of the two experts at paragraph 55 of the closing submissions the
Plaintiff states:
“The key difference
between Mr Hughes-Phillips and Mr Hackett is that Mr Hughes-Phillips has
undertaken a detailed forensic analysis, starting with the interim valuation 14
… to track through the various stages of the Project, including a review of the negotiations,
agreements and payments made at various stages, how much was paid at each stage
and for what (applying the “Agreed Values” approach), to establish
what proposed changes were, or were not variations, pursuant to the JCT.”
12. Mr Hughes-Phillips’ approach is roundly
criticised by the Defendant. An
approach based on a Notional Final Account, so the Defendants argue was not in
accordance with the terms of the Judgment.
The Defendant refers to paragraph 114 of Appendix A of Mr.
Hughes-Phillips’ report in which he says:
“I am instructed to
consider these issues and to prepare a Notional Final Account, presented in a
manner which will enable the Court to consider these issues on an alternative
basis to T & T’s Interim Valuation 14”.
13. This, so it is argued by the Defendant, is a
clear departure from Interim Valuation No. 14 which is simply not authorised by
the Judgment or the February Judgment.
Such an approach had not previously been pleaded nor was it raised in
the hearing which gave rise to the Judgment although that hearing was to have
covered both quantum and liability.
14. Mr Hackett, at paragraphs 3.14 – 3.17 of
his Reply dated 25th February 2021 comments on Mr
Hughes-Phillips’ Notional Final Account, and specifically, at 3.14 of
that Reply Mr Hackett says:
“Mr Hughes-Phillips
states that he has been instructed to provide a Notional Final Account
(“NFA”) which he describes as something “pursuant to the
termination of the employment of a contractual organisation”. The belatedly introduced concept of an
NFA is irrelevant for three reasons.
First, the outgoing contractor (i.e. the Defendant) was not in default
and the termination was instead for convenience. Secondly, the only final account which
is relevant here, applying the agreed values basis set out in the Judgment of
the Royal Court, is one that reflects the Defendant’s proper entitlement
taking into account the mechanisms by which values were agreed (and if not
agreed by valuing the same in accordance with the JCT contract which was also
found to apply) and the works which were performed and/or the rights which were
accrued by the time of termination.
Thirdly, this approach has not been pleaded, and even if it had been, Mr
Hughes-Phillips has misapplied it.”
15. We accept Mr Hackett’s concerns in this
regard. Mr Hackett criticises Mr
Hughes-Phillips’ report as offering opinions which first require a
finding as to liability which, so Mr. Hackett says, is an issue not to be
trespassed upon by a quantum expert.
16. Mr Hackett then at paragraphs 3.19 to 3.20 of
his reply makes submissions as to the quantity of work performed. Mr Hughes-Phillips says he has identified
that there were instances where certain works were not carried out. At paragraph 3.20, Mr Hackett then says:
“Even if it is
permissible for Mr. Hughes-Phillips to reject entitlement in respect of Works
which he says were not performed, an even-handed approach would require similar
emphasis upon those works which were performed but in respect of which no
financial entitlement was recognised by Mr Hughes-Phillips.”
17. Under the section relating to
“claw-backs” from the Enabling Works, Mr Hackett repeats the
statement in the Judgment to the effect that the Court did not find any basis
to revisit the sums paid for the Enabling Works and points out that Mr Hughes
Phillips in his analysis has sought to claw back the sum of £53,000 in
respect of items paid for under the Enabling Works Contract. Mr Hackett at paragraph 3.23 goes on to
say:
“To overcome the embargo
on removing sums of money from the enabling works contract, Mr Hughes-Phillips
contrived a basis for saying that the monies in question should instead be
deducted/credited from monies due under the Main Contract. Apart from undermining the Royal
Court’s finding in relation to the Enabling Works Contract, Mr
Hughes-Phillips’ argument also falls foul of the general position which
is that the Defendant is at least entitled to be paid the gross amount
certified.”
18. Again, we agree with Mr Hackett’s
criticism of Mr Hughes-Phillips’ approach.
19. As we have already indicated we have not gone
into the full detail of the written evidence before us nor the oral
evidence. To do so would have
increased inordinately the length of this Judgment.
20. Mr Hughes-Phillips chose not to use the
starting point specified in the Judgment and applied a different methodology to
achieve a Notional Final Account. This
is not in accordance with the terms of the Judgement and so we discount his
calculations. Mr Hughes-Phillips
was also not entitled to claim claw backs by taking the Enabling Works into his
account as this was not sanctioned by the Court.
21. In particular we reject Mr
Hughes-Phillips’ contention that a NFA should be calculated in accordance
with the JCT contract.
22. As we have stated, the final contract price was
never fixed and the various documents to which we have been taken illustrate a
process by which the final contract price was being identified but was never in
fact finalised. The tendered sum,
faced with a changing specification, becomes less meaningful. It does not, therefore, surprise us that
changes occurred in the various costings as to time and the specifications
moved on and we do not think that it is realistic to apply those parts to the
JCT form of contract which works on the assumption that there is a finalised
contract sum or indeed finalised plans and drawings. Indeed, at one point, in the questioning
between the Plaintiff’s counsel and the Defendant’s expert it was
suggested that the tender price was fixed and no variation was possible. This is not, on our understanding, in
accordance with the express wording of the JCT form of contract, but, in any
event, in our judgment and as we have said, the price was evolving and was
never fixed.
23. We noted with some surprise that the architect
was not called to give evidence before us and indeed he had not given evidence
before us at the trial that gave rise to the Judgment. In the context of the quantum argument,
this seems to us to be particularly puzzling as it was the architect who was
the certifier of the amounts due for payment under the Interim Certificates and
was, of course, the author of the architect’s instructions that were
issued during the course of the development and which to a significant extent
underpin the Interim Certificates.
He would have been, we must assume, in a position to confirm how
accurately he would have viewed the figure which is certified in the Interim
Certificate and given valuable evidence as to the process that actually took
place in this case and whether there was any question as to what reliance
should be placed upon it. To the
extent that there were questions about the inclusion of certain figures within
the Interim Certificate or whether it was complete and to which date, he would
presumably have been able to provide very useful comment. He was, however, not called for reasons
that we do not fully understand. In
the circumstances, however, we proceed on the basis that the Interim
Certificate is an accurate assessment.
The Defendant’s Entitlement
24. The Gross Certified Amount, under the Interim
Certificate No. 14 was £2,577,742. The defendant had valued the works up to
and including 3rd February 2016 in the sum of £2,992,632. This was reduced by the
Plaintiff’s Quantity Surveyor (T & T) to the amount certified, a
deduction of £414,890. It is
clear that the Plaintiff made a very substantial deduction from Camerons’
valuation of the works done and thus starting from the amount certified is
likely to be favourable to the Plaintiff and detrimental to the Defendant. Nevertheless, the Defendant’s
expert has used this figure as his starting point in accordance with the
Court’s formula. We note that
prior to the appointment of T & T all Camerons’ valuations were
accepted by the Plaintiff’s quantity surveyor (RNJ). This changed shortly after T & T took
over, from which point the architect (Godels) issued Pay-less Notices for every
application from October 2015 and Camerons responded to these Pay-less Notices
by stating that the reductions were grossly unfair. Camerons requested that T & T visit the
site to review the Pay-less Notices. T & T did not respond nor did they
visit the site.
25. The safest basis of assessment of amounts due
in this case is to begin with the Interim Certificate No. 14 which is based on
figures claimed by the Defendant, agreed by the quantity surveyor as to
quantity, and signed off by the architect, after reducing the claim by Pay-less
Notices. This amount may only be
varied in accordance with the guidance given in the February Judgment.
26. We also observe that in the February Judgment
we indicated that whilst the Interim Certificate was a starting point it was
not the finishing point and it was clearly appropriate that the amount
certified should be adjusted in accordance with costs incurred and work done. The defendant has calculated that it is
entitled to a final payment of £337,333, excluding interest. The table that follows sets out this
calculation with reference to the submissions made in respect of each item. We accept the Defendant’s analysis
of these items and refer to its closing submissions without repeating any of
the detail.
Analysis of figures
27. As the Plaintiff’s expert, Mr
Hughes-Phillips, has chosen to disregard the Court’s instructions as to
the approach to be taken in calculating a final account for the work done by
the defendant in the construction of Les Lumieres West we have adopted the
Defendant’s analysis as this is based on the Court’s instructions.
28. Accordingly, we find that the Plaintiff owes
the Defendant £337,333 as detailed in the table below:
29. We are prepared to deal with matters arising on
the paper.
Authorities
Murray
v Camerons Limited [2020] JRC 179.
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£
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£
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Interim Certificate 14
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2,577,742
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Items credited in final account dated February 2017 (Hackett
29/10/20 page 22)
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34,434
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Credits conceded by the defendants ref to paragraphs in their
closing submissions
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Drainage -para 71
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1,159
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Further adjustments in final account -para73
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Roof
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2,036
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External Works
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983
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Architect's Instructions
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5,326
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Preliminary fixed charges -para 74
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18,422
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Total deductions
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-62,360
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Additions re defendants closing submissions
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Architect's Instructions - paras 138 to 142
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35,954
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Remeasures/Builders work in Connection -paras 143 to 151
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23,802
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Outstanding sub-contractor applications/bills
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Astons (Mechanical and Electrical)-paras 152 to 159
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33,676
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Granite Le Pelley ( Natural Stone)- paras 160 to 165
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40,236
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AWS (windows and external doors) -paras 166 to 172
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8,508
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Additional preliminaries - paras 173 to 181
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Target cost savings not achieved
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20,000
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Additional QS resource
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108,618
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Total Additions
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270,794
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sub-total
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2,786,176
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OHP @ 6.5% on net addition (£208434)
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13,548
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OHP on £26,800 paid to Astons by JP Mauger para 157
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1,742
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TOTAL DUE TO CAMERONS
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2,801,466
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Paid to Camerons
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2,448,855
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Retention paid to Astons by Plaintiff
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15,278
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Total paid to date
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2,464,133
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The Defendant's Entitlement (excluding
interest)
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337,333
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