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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 103
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CA106/07
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OPINION OF LORD MENZIES
in the cause
FLEMING BUILDINGS
LIMITED
Pursuers;
against
MRS JANE FORREST OR
HIVES
First Defender:
and
MR WILLIAM FORREST
Second Defender
________________
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Pursuers: S. Smith, MacRoberts
Defenders: Malone, Solicitor Advocate, Bell & Scott
15 July 2008
Introduction
[1] In
about May 2001 the first defender purchased a house and ground at 17 Fairyknowe
Gardens, Bothwell. She and her husband, the second defender,
intended to build an extension to this house and thereafter to live in it
themselves. The extension was
constructed but the work was defective and the defenders decided to demolish
the extension and the original house and build a new house on the site. They instructed Mr Gordon Gibb to
be their architect and Mr Peter Imrie to be their chartered
surveyor. In August 2005 invitations
were sent out to contractors to submit tenders for this project, and in
September 2005 the pursuers returned the completed tender documents
offering to do the works for about £833,000.00.
The tenders at this stage were too high, and contractors were invited to
tender for a revised project in October 2005. The pursuers returned the completed tender
documents for this work in the sum of £521,791.03. The pursuers attended a meeting with the
defenders and others on 30 November 2005, and by letter dated
2 December 2005 the pursuers wrote to the defenders' architect
offering a saving to the client of £8,000.00, making a revised tender sum of
£513,791.03. By letter dated 20 December 2005 Peter
Imrie wrote to the pursuers stating inter
alia
"We have been
authorised by the client KWF Holmes Ltd whose registered office is at
Silverwells House, 114 Cadzow Street,
Hamilton, ML3 6HP,
to accept the tenders submitted by you on the 2 November 2005 in the amount of £521,791.03
further revised by your letter dated 2 December 2005
in the amount of £513,791.03."
[2] There
was a pre-start meeting on 10 January 2006
and work commenced on the site on about 23 January 2006. On 17 July 2007
the pursuers' solicitors served a notice of adjudication on the defenders. In the course of the adjudication
proceedings, the defenders' solicitors submitted inter alia that there was no contract between the parties and
accordingly the adjudicator had no jurisdiction and should resign. After sundry procedure, including hearing the
evidence of three witnesses for the pursuers and four witnesses for the
defenders, and legal submissions on behalf of both parties, the adjudicator
found that the parties to the contract were the pursuers and the
defenders. In her decision letter, which
was dated 26 September 2007,
she decided that the defenders were to pay the pursuers the sum of £112,598.75,
within seven days of the date of the decision, together with interest on
sums certified in interim certificates and a joint and several liability for the adjudicator's fees and expenses in
relation to the adjudication.
[3] The
defenders have made no payment to the pursuers in respect of these sums, so the
present commercial action for payment was raised in late
October 2007. The matter came
before me by way of a preliminary proof, which lasted for eight days in March
and May 2008. The issues to be canvassed
in this preliminary proof were set out by the Court in interlocutors dated
6 February and 17 March 2008. These were first the issues contained in
statement A and B3 of the pursuers' note of issues (No 9 of Process). These were in the following terms:-
"A. Whether or not the Adjudicator's decision
is ultra vires
1. The power to refer the
parties' dispute to adjudication is
derived from a clause in the pursuers' revised tender of 2 December 2005. Only if this tender was accepted by the
defenders, and a contract concluded between the parties thereby, did the
Adjudicator have jurisdiction.
2. The defenders set out
additional grounds upon which they seek to have the Adjudicator's decision set
aside ope exceptionis. These are:
that she failed to take account of the evidence of Mr Thomson, and
the affidavit of Mr Imrie; and that
she failed to have regard to the argument that there was no contract at all
(ie. neither with the defenders nor with KWF Homes Ltd). This raises the issue:
2.1 Whether it is open to the
defenders to seek to reduce the Adjudicator's decision on any of these grounds;
2.2 Where it is open to them
to do so, whether any of these grounds are well-founded.
B. Retention and set-off
3. The defenders have
pleaded retention and set-off on the basis of an (as yet) unspecified claim for
damages. Whether or not they may do so
depends on whether a valid notice of intention to withhold payment was in
accordance with the contract."
The Court also allowed the
preliminary proof to consider the question "if no notice of intention to
withhold was given, does that preclude the right of retention or set off by the
defenders?".
Finally, the Court extended the scope of the preliminary proof to
include the "breach of natural justice" point as contained in paragraph 3 of
the defender's note of argument No 18 of process, which was in the
following terms:
"3. The adjudicator's
decision should in any event be reduced as being
contrary to the rules of natural justice.
3.1 The principle issue for
determination was whether there was a contract between the parties.
3.2 A key witness for the
Defenders was the QS Mr Peter Imrie.
Mr Imrie provided an affidavit confirming that a building contract
had been completed in the name of KWF Homes Ltd, and KWF Homes Ltd was to be
the party to the contract. Mr Imrie
was on holiday and was not contactable during the adjudication. On his return, he advised that he would be
willing to participate in a conference call.
3.3 Whilst Mr Imrie had
provided an affidavit, he did so prior to the issues becoming focused by the
adjudication, and it was not possible to put the evidence of the Pursuers'
witnesses in respect of the written contract to him. The Defenders were grossly prejudiced by the
Adjudicator's refusal to hold a conference call with Mr Imrie. Mr Imrie was available for a conference
call on 21st September 2007. The adjudicator's decision was not due until 26th September 2007. In these circumstances, given the short
timescales within which adjudication is meant to operate, it would have been
reasonable for the adjudicator to conduct a conference call with
Mr Imrie."
[4] There
was a considerable body of documentary evidence referred to at the preliminary
proof. In addition, I heard evidence
from four witnesses on behalf of the pursuers and four witnesses on behalf of
the defenders. In their closing
submissions parties laid considerable emphasis on the question of the
credibility and reliability of these witnesses.
In these circumstances it is appropriate that I should attempt to
summarise the most important of the productions relied on (although I make it
clear that I have taken account of all of the productions and also the terms of
the Joint Minute for the Parties, No 20 of process), and thereafter set
out the evidence of the witnesses rather more fully than is my normal practice.
Documentary Evidence
- By letter dated 22 December 2004 Gordon Gibb wrote to the
defenders with an amended fee proposal, the architect's appointment being
administered under the terms conditions and limitations of SCA/2000
published by the RIAS.
- The application for building warrant for the
erection of a building at 17 Fairyknowe Gardens, Bothwell which was
received by the Local Authority on 1 March 2005 was made by Mr
& Mrs Forrest. Building Warrant
was granted on 14 July 2005.
- By letters dated 11 August 2005 Peter
Imrie invited contractors to submit a tender for a proposed new build
house at 17 Fairyknowe Gardens, Bothwell for
Mr & Mrs Forrest.
- By letter dated 5 September 2005 the pursuers returned
completed tender documents; again the covering letter
indicated that the proposed new build house was for
Mr & Mrs Forrest.
- On 4 October 2005
Peter Imrie wrote to the pursuers inviting them to submit a fresh
tender. Again this was for
"proposed new build house at 17 Fairyknowe Gardens, Bothwell
for Mr & Mrs Forrest".
- By letter dated 2 November 2005, bearing the same heading,
the pursuers submitted a tender.
The formal tender document, on the page signed on behalf of the
pursuers, bore the following heading:
"Form of Tender
Tender for: New Build House, 17 Fairyknowe
Gardens, Bothwell
Client: Mr & Mrs Forrest"
- The bill of quantities defined the employer
"client" as Mr & Mrs Jane Forrest. At page 1/7 it is provided that the
works shall be completed in accordance with the SBBC form of contract with
contractors Designed Portion with Quantities. (It was not disputed that this was a
reference to the SBCC Scottish Building Contract Contractors designed
portion with quantities, which provides by clause 7 that if any dispute or
difference arises under or by reason of breach of this contract either
party may refer it to adjudication in accordance with clause 41a.).
- No. 6/17 of process was a minute taken by
Ken Rodger of the pursuers of a meeting held at the office of Gibb
Architects at 11am on Wednesday 30 November 2005. This minute stated that the meeting
followed the revised tender of £521,000,00 for
the house, that the architects pointed out that a few areas of the
pursuers' tender were higher than others and wondered if the pursuers
could look again at their price and get back to them before Friday
2 December. It was recorded
that Ken Rodger would look at prices and discuss overall response
with other directors. The list of
those present included John & Jane Forrest as
"clients".
- By letter dated 2 December 2005, the pursuers wrote to
John Thomson of Gibb Architects.
Again the heading showed the new house "for
Mr & Mrs Forrest".
The pursuers offered a saving "to your client" of £8,000.00.
- No. 6/19 of Process was a draft letter
(apparently not sent) from John Thomson of Gibb Architects to the
pursuers, referring to the pursuers' letter of 2 December 2005
and stating "on behalf of our clients,
Mr & Mrs Forrest, we accept your tender sum of
£513,791.03." The draft is stamped
"draft for approval by client".
- On 16 December 2005
John Thomson of Gibb Architects sent an e mail to Peter Imrie in the
following terms: "Further to our
discussion earlier today, we look forward to receiving a copy of the letter
accepting Fleming Buildings' tender on behalf of
Jane & William Forrest."
- By letter dated 20 December 2005 Peter Imrie wrote to the pursuers. As noted above, this letter started "we
have been authorised by the client KWF Homes Limited whose
registered office is at Silverwells House, 114 Cadzow Street, Hamilton, ML3 6HP to accept the tenders
submitted by you on the 2 November 2005 in the amount of
£521,791.03 further revised by your letter dated 2 December 2005 in the amount of
£513,791.03. A formal building
contract is being prepared and will be forwarded to you for completion
prior to site commencement". The
letter went on to specify the conditions of contract which applied to the
works.
- By letter dated 20 December 2005, Mr Thomson wrote to
Forbes & Whiteford Limited (who were contractors who were competing
with the pursuers for this work) stating "we refer to your recent tender
submission for the project listed above and subsequent meeting in our
office to discuss the details of the project with our clients,
Mr & Mrs Forrest.
After much deliberation our clients have decided to accept a tender
received from Fleming Buildings Limited." This letter was copied to the defenders.
- There was a pre-start meeting on 10 January 2006, attended by, amongst
others, the defenders, Mr Mike Burrows and Mr Walter Kerr,
both from the pursuers, and John Thomson from Gibb Architects. Minutes of that pre-start meeting were
distributed to all those who attended.
The defenders were described in the minutes as "client". There was no reference to KWF Homes Limited
(hereafter "KWF") in this minute.
- No 7/1 of process was a certified true copy letter dated 9 January 2006 from the Assistant
General Manager/Credit of Airdrie Savings Bank addressed to the pursuers,
in the following terms:
"Dear Sirs,
KWF Homes Limited
We confirm that bank
approval has been granted to provide funding in favour of KWF Homes
Limited to contract for the construction of a new build detached property at 17 Fairyknowe Gardens, Bothwell on a fixed price
contract basis."
- After the commencement on site there were 25 site meetings, the
first of which was on 8 February 2006 and the last of which
was on 19 March 2007. Both defenders attended each of these
meetings. Minutes were taken by
Gibb Architects of each of these meetings, and distributed to all
those present. In each of these
minutes the defenders are designed as "client". There is no reference to KWF in any of
them. Minutes of these meetings
were also taken on behalf of the pursuers, but not distributed to
others. In many (but not all) of
the pursuers' minutes the defenders are designed as "client": there is no
reference to KWF in any of the pursuers' minutes.
- By letter dated 10 January 2006 John Thomson of
Gibb Architects wrote to the pursuers enclosing for signature a copy of
the F10 notification form.
- By letter dated 13 January 2006 the pursuers replied
returning a copy of the form and confirming that they had passed the
original to the Health & Safety Executive.
- By letter of the same date they sent the form to the
Health & Safety Executive. The
F10 form is a standard form, partly printed and partly hand written. The hand written sections were completed
by John Thomson of Gibb Architects.
The defenders were designed as the client. Section 10 of the form, which contained provision
for a declaration of a planning supervisor was
scored out by Mr Thomson. The form
was signed by Mr Mike Burrows on behalf of the pursuers.
- During the course of the works Gibb Architects issued 12 architects
instructions, the first being dated 16 February 2006 and the last being
dated 19 March 2007. In each of these instructions the
defenders were designed as the employer, and the
pursuers as the contractor. In none
of them is there reference to KWF.
- Gibb Architects issued 9 architects certificates, the first of which
was dated 15 March 2006 and the last on 1 December 2006. In each of these certificates the
defenders are designed as the employer.
In none of them is any reference made to KWF.
- On 13 January 2006 John Thomson sent
about 17 letters in identical terms to the occupiers of other properties
in Fairyknowe Gardens. Each of these letters was headed "new
house - 17 Fairyknowe Gardens, Bothwell" and began "on behalf of
our clients, Mr & Mrs Forrest, we would like to notify
you that works to their new home will be commencing on site on
Monday 23 January 2006."
Each of these letters was copied to Mr Mike Burrows of
the pursuers.
- Peter Imrie issued several valuation claim forms, on each of
which the employer was stated to be the defenders. No reference was made in any of these to
KWF.
- By e mail dated 1 December 2006 paving contractors wrote
to Gibb Architects stating inter
alia "your clients Jane & William Forrester (sic) have requested
D J Knight Paving Services to quote for the surfacing
of the driveway at 17 Fairyknowe Gardens, Bothwell with natural
stone paving cubes and to prepare the foundation and drainage."
- By letter dated 19 December 2006 the defenders wrote to
the pursuers intimating that they wished to deduct Liquidate and Ascertained
Damages. This letter was on paper
headed "Mr & Mrs William & Jane Forrest,
17 Fairyknowe Gardens, Bothwell, G71 8RW" and was signed by
each of the defenders, above the words William and Jane Forrest. There was no reference to KWF in this
letter.
- By letter dated 20 April 2007 the first defender
wrote to Gordon Gibb to advise that his appointment would be
terminated with immediate effect from the date of the letter. This letter bore the heading "KWF Homes
Limited, Flat 2/4, 169 Hamilton Road, Mount Vernon, Glasgow, G32 9QT".
- By letter dated 27 April 2007 Gordon Gibb of Gibb
Architects replied to the first defender (making no reference to KWF)
maintaining that under the conditions of his appointment he was entitled
to reasonable notice in writing, that no such notice had been given, and
that Gibb Architects' appointment would be terminated on 4 May 2007, and that they would
remain Architects and Contract Administrator for this project until that
time.
- In a different category because they are excluded from the terms of
the joint minute are letters on headed note paper from KWF Homes Limited,
11 St John's Boulevard, Uddingston, relating to termination of Gibb
Architects' employment as Contract Administrator dated 10, 20, 25 &
30 April 2007. That dated
10 April was addressed to the pursuers and signed by the first
defender above the words "Jane Forrest KWF Homes Limited"
and stated inter alia...... "I write
to confirm my intention to terminate the employment of Gibb Architects." That dated 20 April was in the same
form enclosing a copy of the termination letter to
Gibb Architects. That dated
25 April was in the same form and intimated that
Mr Brian Patterson had been appointed as the new contract
administrator. That dated
30 April was in the same form, addressed to Mr Gibb and
maintaining the position that his appointment was terminated with
immediate effect from the date of the letter of 20 April "due to
professional misconduct and abusive behaviour".
- Also excluded from agreement in the joint minute were two letters
dated 5 May 2007, each on KWF Homes
Limited note paper from the address at 11 St John's Boulevard, Uddingston. Neither had the first defender's name on
them. Each was addressed to the
pursuers. One of these enclosed a
withholding notice in the sum of £246,465.00 in respect of architect's
certificates 11 and 12. The
other stated that "as Gibb Architects issued these to you after he was
dismissed on 20 April 2007, they should be
ignored."
- Also excluded from the agreement in the joint minute was a letter
from Peter Imrie to the pursuers dated 13 April 2006 in the following terms:
"Dear Sir or Madam
New Build House at 17 Fairyknowe Crescent, for KWF Homes Limited
We herewith enclose the
Building Contract as discussed and agreed for your attention. We would request that you complete and sign
the document and return it to our offices."
- As part of the same production there was lodged the
standard terms of the Scottish Building Contract Contractors Design
Portion with Quantities, with the words "draft for typing" written in
pencil at the top of the first page.
The gaps in the standard form were completed in pencil and
identified the employer as KWF Homes Limited, registered office Silverwells House, 114 Cadzow
Street Hamilton, ML3 6HP.
- Also excluded from the agreement in the joint minute was a letter
from Peter Imrie to the pursuers dated 29 June 2006 addressed to the pursuers. This letter stated:
"Dear Sir or
Madam,
New Build House 17 Fairyknowe Crescent, for KWF Homes Limited
We herewith enclose the SBCC
Building Contract with Contractors Design Portion duly completed as discussed
and agreed for your attention and agreement.
Please complete this document in accordance with the guidance note for
signing as attached and return to my office in due course. A copy of the completed and signed document
will be issued to you."
[5] This
production appeared to be a principal rather than a copy. Written across the top in handwriting were
the words "file copy", and attached to it was a post it sticker with the words
"Ann do not post this as I will hand deliver thanks Peter" written on it.
[6] The
foregoing list of productions is not intended to be exhaustive, but is rather a
list of those documents which featured most frequently in the evidence and
which were relied upon most heavily in submissions. There were other documents, including mail
sheets, extracts from diaries, file notes and internal or personal memos which
featured in the evidence but which I have not felt it necessary to list here.
Witnesses for
the Pursuers
[7] (i) Mr Gordon Gibb had practised as
an architect for 22 years before the preliminary proof, his practice involving
a mixture of commercial and domestic buildings.
He first became involved with the site at 17 Fairyknowe Gardens when the defenders asked
him to act as an expert witness in their dispute with their previous
architect. Thereafter the defenders
asked him to look at drawings prepared by other architects for a new house on
the site. He was quite sure that it was
not KWF Homes that instructed him; the house was specifically for the
defenders' needs and they intended to live in it. His appointment was in terms of SCAA/2000
"Scottish Conditions of Appointment of an Architect" published by the RIAS. At some stage Mr Gibb became aware of
KWF; he was involved in carrying out
some design work for a commercial development of about 12 flats in Kilmarnock,
in which KWF were the developers. By
contrast, Mr Gibb was clear that the works at 17 Fairyknowe Gardens were for the defenders as
individuals. Mr Gibb was involved
principally in dealing with the clients, and Mr Thompson (who was employed by
Gibb Architects between about May 2005 and early 2006) was more concerned with
the details. Generally Mr Thomson
had to report to Mr Gibb and Mr Gibb was responsible for the
contractual side of matters.
[8] That
the defenders were personally involved as the employers in these works was
clear from the documentation, said Mr Gibb. They were named in the building warrant, and
in both sets of tender documents.
Mr Gibb was present at the meeting on 30
November 2005 when the defenders interviewed the two potential
contractors, including the pursuers.
There was no discussion at that meeting about the identity of the contracting
parties. The pursuers did not offer to
reduce their tender at this meeting - they were asked to go away and see if
they could reduce their price. This
resulted in their letter of 2 December 2005 in which they offered to
reduce the price by £8,000. Mr Gibb
stated that he must have discussed this with Mr and Mrs Forrest, and they
decided to accept this offer. Neither of
the defenders suggested that they would prefer the contract to be with KWF and
not themselves. Thereafter the draft
letter of 14 December 2005 was prepared, but was not
sent to the pursuers because Gibb Architects were waiting for the defenders'
consent to issue it. Mr Gibb
emphasised that he had a particular concern that a tender is accepted in proper
terms on behalf of the client. It would
normally be the architect who accepted a tender; he could not explain why Peter Imrie
purported to do so in this instance. Until
the adjudication he had never seen Peter Imrie's letter dated 20 December 2005 purporting to accept the revised tender on behalf of
KWF. If he had seen this earlier, his
first reaction would have been that as the offer was made to Mr and
Mrs Forrest, it could not be accepted by KWF. He would also have been concerned about Peter
Imrie accepting the revised tender rather than Gibb Architects as the contract
administrator. There was no doubt in his
mind as to who his clients were, namely the defenders.
[9] Mr Gibb
did not attend the main part of the pre-start meeting on 10 January 2006, although he "topped
and tailed it". He met with the
defenders before the meeting began, and then left, returning just before the
end. There was no discussion while he
was there about changing the identity of the employers from the defenders to
KWF. Before the meeting he had spent at
least half an hour with the defenders, and there was no mention of such a
possible change. This was a major
change, and Mr Gibb would have expected it to have been brought to his
attention and reflected in the minutes.
[10] When shown No 7/5 of process, which bore to be a note extracted
from Peter Imrie's diary headed "Pre-start meeting 17 Fairyknowe Gardens" (the
date of which was missing from the production) Mr Gibb observed that Peter
Imrie was not at the pre-start meeting (as is clear from the Minutes of that
meeting which were circulated). With
regard to the entry in this excerpt "Client re KWF Homes Ltd contractor
confirmed acceptable that even if KWF Homes requested bank details + ref" this
was not discussed at the pre-start meeting in his presence, and had not been
discussed at the meeting on 30 November.
He expressed the view that a contractor would never accept a development
company as employer without first having received bank details and a reference
in relation to that company, because development companies are here today and
gone tomorrow.
[11] With regard to the Form F10 Notice, this had not been
issued by the pre-start meeting (despite the indication to the contrary in the
excerpt from Mr Imrie's diary). The
F10 was sent to the pursuers for signature on 10 January and completed and
sent out on 13 January. It was
important to note two things from this form:
first, that the client was specified as Mr and Mrs Forrest, and second, that the passage relating to a planning
supervisor was scored out. This was
because a planning supervisor is not required for a domestic development. It would have been appropriate to delete this
passage only if the clients were domestic clients having the works carried out
for their only use. If the clients had
been KWF, it would not have been appropriate to make this deletion.
[12] Throughout the whole progress of the works Mr Gibb stated
that he considered that his clients were the defenders and that
they were the employers of the pursuers.
In none of the site meetings which Mr Gibb attended was there any
suggestion that KWF had any involvement in the matter. This is why Mr Gibb designed the
defenders as the employers in all his architect's instructions and
certificates, which were discussed in detail with the defenders. He described the suggestion that the
defenders' names appeared on the architect's instructions not as individuals
but as directors of KWF as absurd - although Gibb Architects had worked with
KWF on other development sites, in Kilmarnock and elsewhere, the project at
17 Fairyknowe Gardens was for the defenders themselves and he was very
clear that they were his clients and the employers in the contract. He could not imagine that they were involved
not in a personal capacity but as directors of KWF. Although towards the end of the works the
defenders questioned the amounts certified as payments to the pursuers, they
never questioned the designation on the architect's certificates of themselves
as employers. Contractual terms are of
the highest importance to an architect, and Mr Gibb was pretty sure that
he checked the architect's instructions and certificates before they were sent
out.
[13] Mr Gibb stated that Mrs Forrest asked his advice in
March 2006 just as everyone was dispersing from a site meeting at 17 Fairyknowe
Gardens; she asked if he thought that it would
be a good idea to change the designation of the employers from the defenders to
KWF. He replied that he did not think
that this was a good idea, and that it would probably not be accepted by the
pursuers in any event. He observed that
it was an advantage to be a private client, as the chances of a builder going
to adjudication against a private client were less than against a developer,
and there was no statutory right to adjudication. He could think of no good reason for
Mrs Forrest to seek this advice from him if she already believed that KWF
were the employers. The advice which he
gave at that time was consistent with the advice which he subsequently gave to
the defenders by email dated 22 June
2006, in which he observed that
"one thing in your favour in any subsequent negotiation with
the contractor is that, unless anything is written in the Bill to the contrary,
there is no statutory right to go to adjudication under a contract for the
erection of an individual dwelling for the sole use of the owner."
The defenders never responded to
this email to correct him or to say that this was not a contract for the
erection of an individual dwelling for the sole use of the owner.
[14] Mr Gibb stated that he had two meetings to discuss
liquidate and ascertained damages with the defenders, these being on 19 and
21 December 2006. The first of
these meetings was attended by the defenders, and the second by the defenders
and Mr Hives, who was the first defender's father. At the first meeting Mr Gibb drafted the
letter dated 19 December 2006. He explained very clearly to the defenders
the effect of the clause of the standard term contract referred to, and that
they were being asked to sign this letter as individuals, being the employers
in the contract.
[15] Increasingly Mrs Forrest's father Mr Hives became
involved in the project. He told
Mr Gibb that the first defender was ill and could not cope with running
the project anymore so he was taking over.
He first became involved in a relatively minor way in about April 2006
when the plumbing work commenced, and by about November 2006 he was very
involved. Mr Gibb had reservations
about Mr Hives' involvement, because he was not the client and nobody had
agreed to him becoming the client instead of Mr and Mrs Forrest. Mr Gibb said that Mr Hives was very
offensive and threatening to him and to others including Peter Imrie. He remembered one meeting in particular,
quite late in the project works, when he was in the house with Mr Hives
and Mr Imrie, and Mr Hives was attempting to have the pursuers
demolish all internal walls;
Mr Imrie observed that the pursuers were merely doing what
they were supposed to do under the contract.
Mr Hives lost his temper with Mr Imrie and was very offensive
him and told him to "shut up".
Mr Gibb observed that Mr Imrie was a mild man, but eventually
he stood up and said "I'm not taking that from you John, you're not even the
client, William and Jane are the client" and left the
meeting. In about December 2006
Mr Hives told Mr Gibb that the pursuers would not get another penny
for this project, and over the next few months Mr Gibb realised that this
was the defenders' intention. He formed
the view that Mr Hives was trying to get him to instruct as much
additional work as possible, in the knowledge that nobody would be paying for
this. In Mr Gibb's opinion,
although the pursuers did make some errors (the hardwood floor was poorly
fitted and there were some areas of poor workmanship) Mr Hives' position
became so extreme that it became almost ludicrous. When Mr Gibb suggested ways in which
costs could be saved, and discussed these with Mr and Mrs Forrest, Mr Hives
would have none of it. Mr Hives'
conduct became increasingly oppressive and threatening towards Mr Gibb,
until Mr Gibb's appointment as architect and contract manager was
eventually terminated. When
Mr Gibb's secretary telephoned him to tell him that the letter from the
first defender dated 20 April 2007
and headed "KWF Homes Ltd, Flat 2/4, 169 Hamilton Road,
Mount Vernon" had been received, this was
the first time that Mr Gibb had received any letter from KWF in relation
to this contract. His immediate reaction
was two-fold - first, KWF were not the client, and second, that the contract
could not be terminated in this way because in terms of his contract he was
entitled to reasonable notice. He
therefore responded by the letter of 27 April 2007 confirming that his
appointment would be terminated seven days from the date of that letter on
4 May 2007. This letter was
addressed to the first defender in her individual capacity at her home address,
because Mr Gibb's contract was with the defenders as individuals. No-one challenged his assessment of what
constituted reasonable notice in the circumstances. When asked if it was possible for the
defenders to be Mr Gibb's clients in terms of his contract, but for KWF to
be the employers in the building contract, Mr Gibb was of the view that the two
contracts must match up: the employer in
the building contract had to appoint an architect, and Gibb Architects were
named in the contract. Mr Gibb believed
his clients to be the defenders and had no reason to believe that KWF were his
clients.
[16] In cross-examination Mr Gibb agreed that he would expect
his minutes of meetings to reflect accurately the capacity in which Mr and Mrs
Forrest attended site meetings. He
accepted that the Minutes of Site Meeting No 23 held on 23 February 2007 were not accurate in
describing Mr Hives as the client, and he remembered thinking how he
should describe Mr Hives, but as he was Mrs Forrest's father he took
the view that it was appropriate to design him as client along with the
defenders. He observed that site
meetings were merely a record of what was discussed, and did not have such a
significant contractual effect as architect's instructions. It was put to him that Mr Imrie, Mr Thomson
and the defenders recalled the pursuers being asked at the tender interview
meeting on 30 November 2005 if they were prepared to contract with KWF; Mr Gibb considered that they were wrong in
this regard, and he was certain that this was not discussed in his
presence. He would have taken issue with
this because the identity of the contracting parties was of utmost importance
to the architect and contract manager - for example because of health and
safety requirements and the need to appoint a planning supervisor if the
employer was a corporate developer rather than an individual building for his
own occupation. Mr Gibb did not see
the acceptance of tender before it was sent out, and neither Mr Thomson
nor the defenders nor Mr Imrie ever discussed with him instructions to put
this contract in the name of KWF. If
such instructions had been given he would have expected to be aware of this -
he was overseeing the project and Mr Thomson knew that he had to discuss
important contractual matters with Mr Gibb and accept direction from
Mr Gibb on these. Indeed, on one
occasion, Mr Thomson told Mr Gibb that he did not need Mr Gibb
leaning over his shoulder, but Mr Gibb pointed out that he had specialist
knowledge about contractual matters and had to supervise Mr Thomson. Something as important as the identity of the
employers goes to the heart of the contract, and Mr Gibb was of the view
that this would inevitably have been referred to in the Minutes. He had no awareness of KWF being discussed,
although he accepted that the pursuers admitted that there was some discussion
about this. He would have felt uneasy
about KWF being the employers in the building contract, but the defenders being
his employers. This would raise
difficulties. This was why, when
Mrs Forrest wrote to him on KWF headed paper purporting to terminate his
contract he replied to her as an individual at her home address, because his
contractual relationship was with the defenders and not with KWF.
[17] Mr Gibb was asked if he ever saw Mr Imrie handing
contract documents to the pursuers, and he replied that he saw Mr Imrie
handing what he thought was just a blank form to Mr Ronnie Burrows. He observed that Mr Imrie never got down
to doing things when he was supposed to do them. At the first site meeting on 8 February 2006, it was noted
that Mr Imrie would forward the formal building contract to the pursuers
on the following day. This had not been
done by 21 February 2006. At the meeting on 9 March 2006 Mr Gibb remembered
Mr Imrie saying words to the effect of "here is a form, its
not quite the right one but it will do".
He understood that this was rejected by the pursuers. On 23
March 2006 Mr Imrie was asked to prepare a completed form for
signing, and on 11 April 2006
it was noted that the contract was to be handed over to the pursuers on the
following day. Mr Gibb had never seen
the letter from Mr Imrie to the pursuers dated 13 April 2006 and was not aware of it. However, the minutes of the meeting of 27 April 2006 record that "we still
await completion of the contract document by PI". The minutes of 18 May 2006 record that the contract documents were
handed over to the pursuers by PI for signing, but it appeared from subsequent
minutes that these were the wrong contract documents. Mr Gibb had never seen the letter from
Peter Imrie to the pursuers dated 29 June
2006. The reason that the
signing of the formal contract documents ceased to be mentioned in the minutes
was that nobody mentioned the topic at meetings. Mr Gibb never saw a signed or completed
contract. He saw the tender and bill of
quantities, but he did not see the purported acceptance of tender by KWF until
after the adjudication.
[18] With regard to the termination of his contract, Mr Gibb
observed that Mrs Forrest expressed her desire, erroneously through her
company, that she did not want him to continue as architect, and in these
circumstances it was appropriate to bring the relationship to an end. Mr Gibb expressed the view that it would
have been a breach of contract to terminate immediately. Seven days was the period referred to in the
building contract, and this was the time that he required to put things in
place in order that his contract could be concluded properly. He then issued the certificate of extension
of time and asked Mr Imrie to provide a valuation of works outstanding, so
that he could deduct the appropriate amount from the certificate. He granted an extension of time to the
pursuers of 37 weeks, for the reasons carefully stated in his extension of time
letter.
[19] (ii) Mr Ronald
James Burrows was aged 40 and had been a director of the pursuers for about
ten years, this being the family firm.
He was responsible for sales and contracts (as senior contract
manager). He was not involved in the
tender process relating to 17 Fairyknowe
Gardens; he first became involved at the start
of the site works early in 2006. He
understood the defenders to be the employers in the contract, because in any
dialogue or discussions about the contract they were the clients. At the commencement of digging works on site,
Mr Thomson introduced Mr Forrest to him as the client. He did remember seeing the letter from
Mr Imrie dated 20 December 2005
purporting to accept the tender "by the client KWF" but this was before his
direct involvement. He attended site
meetings. He understood that it was
Mr Imrie's role to provide contract documents for signing. Mr Imrie provided no contract documents
until the meeting on 9 March 2006; on that date what
he provided was simply a standard form of building contract with boxes still to
be completed. It was the wrong form, and
Mr Burrows' recollection was that it did not have any parties' names or
designations filled in. He did not
remember Mr Imrie ever handing over a completed form of contract for
signature by the pursuers. It was
minuted that on 27 April 2006
completion of the contract document by PI was still awaited. At no time during the contract did
Mr Burrows see the letter from Peter Imrie dated 13 April 2006 and the standard form with
pencilled completions apparently attached to it. If this had been received by the pursuers,
Mr Burrows would have seen it. He
explained the pursuers' system for logging incoming mail, and the four
directors of the pursuers see all incoming mail. He went through mail sheets produced on
behalf of the pursuers and explained that these were prepared each day. He would go through this mail sheet, and the mail,
and sign the sheet at the bottom. The
letter dated 13 April 2006
from Peter Imrie was not recorded in these mail sheets and he had no
recollection of seeing it at about that time.
At the meeting on 18 May
2006 he did not think that any contract documents handed over for
signing contained the identities of the contracting parties. By 6
June 2006 the pursuers had still not received the correct form from
Peter Imrie. Mr Burrows explained
that Mr Imrie had provided an incorrect document, without designations of
parties. This was left at the reception
in the pursuers' offices to enable Mr Imrie to collect it. It remained there for some 10-14 days;
thereafter Mr Burrows did not know what had happened to it. No replacement document was left at
reception. The pursuers' system for
logging mail records hand delivered items as well as posted items. The pursuers had also produced mail sheets
covering the period 29 June to 7 July 2006;
there was no record in these of the letter dated 29 June 2006 from Peter
Imrie to the pursuers having been received, either through the post or by hand
delivery. Again, there was no reference
in Gibb Architects' minute of the meeting of 4 July 2006 to contract
documents having been delivered, and Mr Burrows own minutes of that
meeting (incorrectly identified as having occurred on 27 April 2006) show that
he still had not received contract documents from Peter Imrie. Mr Burrows never signed a contract form
and never received a completed correct contract for signature. He was on site throughout the period of the
works and during all that time he considered the defenders to be the clients.
[20] Mr Burrows did not recall seeing the letter dated 10 April 2007 signed by the first
defender on KWF notepaper during the contracts works, and he had never seen the
letter dated 20 April 2007
addressed to him. He did not recall ever
having seen the two letters dated 5 May
2007 from KWF addressed to the pursuers enclosing withholding
notices for Valuations 11 and 12. None
of these letters were recorded in the pursuers' mail sheets for the relevant
periods, each of which was produced. If
these had been received by any means by the pursuers then this would have been
recorded on the mail sheets.
[21] In cross-examination Mr Burrows stated that he did not
attend the meeting of 30 November
2005, and nobody discussed what had happened at that meeting with
him. He saw the letter referring to KWF
and this project, but he had no thoughts about this letter when he saw it. He was only introduced to the client when the
pursuers started on site, which was 23
January 2006. He did not
attend the pre-start meeting on 10 January
2006 and there was no discussion about it within the company. He did not remember any discussion in which
Mr Mike Burrows, the managing director of the pursuers, mentioned to him that
the defenders wished KWF to be the employers.
Although he saw blank draft contracts at site meetings, he never saw a
completed document. He did not accept
that the contract form which Peter Imrie provided at the meeting on 9 March 2006 was complete apart
from the pursuers' insurance details; Mr Burrows observed that normally
a quantity surveyor would issue a draft contract, but the pursuers never saw
this in this case. Again his
recollection was that on 18 May 2006
what was presented was a blank document for the pursuers' comments: Mr Burrows never recalled seeing a standard
form contract with blank spaces filled in.
Mr Burrows' understanding was that KWF actually paid the pursuers
for their work.
[22] (iii) Mr
Kennedy Matthew Rodger was aged 60 and was an estimating director with the
pursuers. He had worked with the
pursuers for almost 37 years. He was involved
in the tendering process for the works at 17 Fairyknowe
Gardens and in preparing the
revised tender. He understood the
clients to be the defenders, and nobody suggested to him that anyone else might
be the clients. He attended the tender interview
meeting on 30 November 2005,
as far as he could recollect, all those present remained throughout the
meeting. The defenders said that the
revised tender was still slightly above their budget and asked if the pursuers
could reduce their price. There was no
mention of the contracting parties.
Following upon this meeting Mr Rodger prepared the letter dated 2 December 2005 offering to reduce
the price by £8,000. This was the first occasion on which the pursuers had
mentioned this reduction. Thereafter he
remembered that the pursuers received a letter from Peter Imrie accepting the
tender on behalf of KWF. Michael Burrows
spoke to Mr Rodger about this acceptance letter from Peter Imrie. Mr Rodger understood that someone had
spoken to Michael Burrows asking him if the pursuers had any difficulty about
contracting with a company rather than individuals, to which
Mr Burrows had replied that he wasn't sure if this was would be acceptable
but he would consider it and investigate the company involved. Then the pursuers received the F10 form
stating that the clients were the defenders and with no provision for a
planning supervisor, Mr Rodger assumed that they had had second thoughts
and were proceeding as individuals. Mr
Mike Burrows had been concerned about the possibility of contracting with a
company and had said that he would need some time to think about this and to
investigate the company. However, when
the F10 form was received this was significant to the pursuers in identifying
who were the clients.
[23] Thereafter in the Spring of 2007
Mr Rodger remembered receiving a letter intimating that Mr Gibb's
appointment as architect would be terminated.
This was handed over at a meeting which Mr Mike Burrows and Mr
Rodger attended with the defenders on 5
June 2007. At this meeting
they were introduced to the new architect and handed this letter. Apart from this one letter which was on KWF's
notepaper, Mr Rodger saw no correspondence from KWF and had not seen the
letter dated 5 May 2007
enclosing a withholding notice.
Mr Rodger confirmed the details of the mail sheets system operated
by the pursuers, which was completed each day and passed around all of the
directors, who signed it.
[24] In cross-examination Mr Rodger reiterated that he was at
the meeting of 30 November 2005
and that Mr Mike Burrows was not asked, in his hearing, whether, the
pursuers would contract with KWF. Walter
Kerr was the pursuers' drawing office manager and was not present at the
meeting of 30 November 2005. Normally Mr Mike Burrows would
acknowledge an acceptance of tender, but this was not done on this occasion
because he was not sure if he was willing to work for someone other than the
defenders. Mr Rodger left it at
that, because Mr Mike Burrows was handling this matter. It was suggested to Mr Rodger that the
site meeting minutes showed that a completed contract was handed over to the
pursuers for signature, and Mr Rodger disagreed strongly with this and
maintained that he had never seen a completed contract for signature. He was certain that it had never been handed
over. He agreed that payments for the
works were made by KWF, but this raised no suspicions in his mind that they
might be the employer - it is not uncommon in building projects for persons
other than the employer to make payments.
All certificates for payment were made out in the name of the defenders,
and as long as the pursuers received the money that was all that concerned
them. Mr Rodger never saw any
notices of withholding, and if they had been received by post or by hand delivery,
they would have been included on the pursuers' mail sheets.
[25] (iv) Mr
Michael Burrows was aged 41 and had been managing director of the pursuers
for about ten years. After the pursuers'
revised tender was sent out, he attended the tender interview meeting on 30 November 2005, together with
Mr Rodger. Walter Kerr was not
present. The pursuers were told that
their plumbing price was too dear, and were asked to see if they could reduce
their price; they
agreed to go away and see if they could do so.
There was no discussion at that meeting as to the identities of the
contracting parties. Mr Rodger
re-estimated and the pursuers reduced the price by £8,000. Mr Burrows thought that the pursuers
then received a fax from John Thomson saying that the defenders were going to
accept the tender and identifying a date for a pre-start meeting. The fax dated 19 December 2005 from John Thomson might have been
the fax that he was thinking about.
Mr Burrows then received the letter from Peter Imrie dated 20 December 2005 bearing to accept
the tender on behalf of KWF. At a quick
glance he thought that this was an acceptance of the pursuers' offer, but he
then realised that it was not in the name of the defenders, so he deliberately
refrained from acknowledging the letter.
This letter came in just before the Christmas break, when the pursuers
shut down for two weeks. The pre-start
meeting was the first occasion on which this matter could be discussed. Between receipt of the letter and the
pre-start meeting on 10 January 2006,
Mr Burrows had no discussions with the defenders or with Gibb Architects
as to whether KWF should be the client.
[26] The pre-start meeting was attended by Mr Mike Burrows together
with Walter Kerr, the defenders, John Thomson, and Hector Munro. Peter Imrie was not present. Mr Burrows remembered that during
informal discussions after the meeting the first defender asked him if the
pursuers would be happy if KWF were the clients. At the same time she gave him the letter from
Airdie Savings Bank. He explained that
the pursuers were always concerned with unknown companies in case they did not
get paid, particularly with regard to retention monies held for a period of
twelve months. Generally the pursuers
dealt with "blue chip" clients such as Health Boards. His response to the first defender was that
the directors of the pursuers would have to consider the point, and that he did
not have the power to agree to it there and then. It was clear at that time that the defenders
wished to proceed with the contract, and the pursuers presumed that the request
about changing the contracting parties was just for funding purposes. The pursuers remained concerned, as the
contract price was not guaranteed. At a
directors' meeting after the pre-start meeting, concerns remained. Mr Mike Burrows went to Companies House
to investigate KWF and found that the defenders were the sole directors of the
company, that it had been recently formed, that no trading accounts had been
published and that it owned one property which was subject to a bank
guarantee. This did not fill him with
confidence.
[27] No record of the discussion between the first defender and Mike
Burrows appeared in the minutes of the pre-start meeting, which Mr Burrows
received about two or three days later.
Mr Thomson, who prepared those minutes, was not party to the
conversation between the first defender and Mr Mike Burrows regarding KWF
although he was probably in the same room.
Mr Burrows referred to his handwritten notes of matters to discuss
at the pre-start meeting, item 3 of which was "contract with Mr and Mrs
Forrest". He believed that if it had
been agreed at the meeting that the client was to be KWF, he would have noted
this (in the same way that he noted that the revised sum agreed was
£513,000). He was asked about Peter
Imrie's handwritten notes (No 7/5 of process), and he denied that he had stated
either at the meeting of 30 November 2005 or the pre-start meeting of
10 January 2006 that KWF would be acceptable as the clients. There was no discussion about bank details or
a reference in relation to KWF at the meeting on 30 November 2005, but there was such a discussion
in his conversation with the first defender as parties were dispersing after
the pre-start meeting. Walter Kerr was
not present at the meeting of 30 November (and Mr Rodger's minutes of
that meeting do not record him as being present).
[28] Mr Burrows confirmed that the F10 form was an important
document which had to be completed and sent to the Health and Safety Executive
before work commenced. The pursuers
received the F10 form on the day after the pre-start meeting. They took it from the terms of this form that
the defenders were prepared to continue with the contract as individuals rather
than seeking a change so that the employers were KWF - not only were they named
as the clients, but if the works had been for a development company such as
KWF, there would have been a requirement for the appointment of a planning
supervisor. The pursuers were happy to
proceed on this basis because this was clearly a domestic contract for
individuals who intended to occupy the house themselves On this basis they signed the form and
sent it to the Health and Safety Executive.
[29] Mr Mike Burrows had no role directing the administration
of the contract on site, and attended no site meetings. He anticipated that the pursuers would be
presented with a form of contract for signing, but this was never done. They never signed a completed contract form
nor were they ever provided with a completed correct contract document for
their signature. He was aware that an
uncompleted contract form was left in the pursuers' reception area, and after
some time it disappeared and the receptionist told him that it had been
uplifted by someone, but nothing was left in its place. Until a week before the preliminary proof in
March 2008 he had never seen the letter dated 13 April 2006 from Peter Imrie to the pursuers. He checked the incoming mail for the pursuers
every day. All incoming mail (whether
hand delivered or sent by post) is put on a mail sheet by the office administrator,
and then circulated to directors at about 10 or 10.30am
each day. Similarly, he never saw the
letter from Peter Imrie addressed to the pursuers dated 29 June 2006. Neither of these appeared on the mail sheets
for the relevant periods. Again they did
not receive either of the letters on KWF notepaper dated 5 May 2007 and addressed to them, at any time
during May 2007. Mr Burrows stated
that he may have been shown one or both of these when he had a meeting with the
defenders in early June and was introduced to Mr Paterson who he was told
was to replace Mr Gibb as architect.
The list of alleged outstanding defects which was attached to the second
(longer) of the letters of 5 May 2007
did not tie up with any complaints being made at that time about alleged
defects. No complaints had been received
at that time about defects in the front door and the garage floor being laid
off-level or doors and frames not being correctly fitted; these complaints were first brought to
the attention of the pursuers by a letter dated 21 May 2007 addressed to
Mr Ronnie Burrows of the pursuers from Bluestone Chartered Building
Surveyors, which letter referred to "a lack of meaningful progress with her
house" and which was copied to the first defender but not to KWF. There was no suggestion of any defects in the
drainage until the pursuers performed tests for building control in late May. Similarly, Mr Burrows did not receive
the letters dated 10 April, 20 April or 25 April which were purportedly
sent to the pursuers.
[30] In cross-examination it was put to Mr Burrows that
Mr Rodger had said that Mr Burrows had discussed the purported
acceptance of 20 December 2005
shortly after receiving it, and that Mr Burrows had told Mr Rodger
that by that time he had discussed with someone the possibility of KWF becoming
the clients. Mr Burrows stated that
Mr Rodger's evidence in this regard was wrong, and he had had no
discussions with anyone regarding KWF before receiving that letter. At that time Mr Burrows did not consider
that the pursuers had a contract with anyone - the letter of 20 December 2005 had no effect. Not much happened between the date of receipt
of that letter and the pre-start meeting on 10 January as the pursuers were on
holiday for two weeks. They did not need
to order the timber kit for the project, because they make such things
themselves. There was ample time for this
work to be done after 10 January and before it was required in the project
timetable.
[31] Mr Burrows was asked if the pursuers had a contract with
the defenders as at the pre-start meeting, and he replied that the pursuers
thought that it was the defenders' intention to proceed with the project and
they were awaiting the necessary documentation to be drawn up. Although they had not accepted the revised
tender in writing, they were at the pre-start meeting and told the pursuers to
proceed. Although the first defender
asked Mr Burrows after the pre-start meeting had concluded whether the
pursuers would be prepared to contract with KWF, Mr Burrows was not
prepared to undertake to do so. He said
that taking the defenders' presence at the pre-start meeting, their instructions
at that meeting, and the receipt of the F10 thereafter specifying the defenders
as clients and deleting the requirement for a planning supervisor satisfied the
pursuers that they were contracting with the defenders. It was then that the pursuers sent out
acceptances of tenders by subcontractors.
Although he was shown the letter from Airdrie Savings Bank dated 9 January 2006 and although he was
asked whether the pursuers would be prepared to contract with KWF, he never
agreed to do so. He stated that the
pursuers considered the possible change, decided against it, and so carried on
as normal. By the time that the pursuers
started on site, they were quite clear that their clients were the defenders
and not KWF.
[32] Although Mr Burrows remembered receiving a contract
document form, he could not remember if it was a blank form or if any name was
filled in for the client;
in any event, it was the wrong form of contract, and the pursuers
would not have been prepared to sign even if it had been the correct form of
contract if the employer was stated to be KWF.
He did not recall ever seeing a contract which was ready for signature; a contract form
came in, but he did not open it or look at it because he was told that it was
the wrong contract. The pursuers
received a telephone call as soon as Mr Ronnie Burrows got back with the
contract saying that it was to be changed.
He was quite sure that the pursuers did not receive the letter from
Peter Imrie dated 29 June 2006,
nor did they receive the letters dated 5
May 2007 regarding the withholding notice. He was asked who paid for the works, and he
replied that the certificates were sent out to the defenders, and cheques in
payment were issued by KWF. This caused
him no difficulty, because the pursuers frequently receive payments on company
cheques when their clients are individuals, or from funding bodies when clients
are corporate or public entities. The
pursuers were not concerned with who paid for the works; as long as they receive an architect's
certificate, and it is honoured, that was fine by them.
Witnesses for the Defenders
[33] (i) Mr John Thomson was aged 49 and worked with Gibb
Architects between May 2005 and February 2006.
He had worked as an architect with another firm for about one year
previous to this. He began to work on
the Fairyknowe Gardens
project within about one week of starting with Gibb Architects; initially the
clients were the defenders, and at that time KWF did not exist, but he thought
around October 2005 that the defenders told Mr Gibb that things would be
managed through KWF. He was asked in
whose name the invitation to tender for the works at Fairyknowe
Gardens ran; at first he was unable to answer this
question, but after some thought he answered that he could not be absolutely
100% certain but he thought that these were in the name of the defenders.
[34] Mr Thomson was at the meeting at about the end of November
2005, which was also attended by Peter Imrie, Gordon Gibb, the defenders, Mike
Burrows and Ken Rodgers. The issue of
whether KWF Homes might be the employers was raised, and Mike Burrows said that
he didn't think that this would be a problem but that he would require a letter
of assurance from the company's bankers.
The meeting was set up for the client to get a feel for who she (sic) wanted
to go forward with. After the meeting,
Mr Thomson drafted a letter of acceptance of tender, after the pursuers
had offered to reduce their tender price by £8,000. He showed this letter to Mr Gibb who
pointed out two errors to him - first that the clients should be KWF and not
the defenders, and second that the letter should make reference to the original
tender sum and to the revised tender sum.
Mr Thomson said that he did not know this, and he remembered this
clearly as he learnt something that day.
Thereafter he remembered emailing the letter to Mr Imrie. On 16 December
2005 he emailed Mr Imrie stating:
"Further to our
discussion earlier today we look forward to receiving a copy of the letter
accepting Fleming Buildings' tender on behalf of Jane and William Forrest."
He explained this by saying that
the contractual implications of KWF did not register with him - he always
thought of the clients as Jane and William.
He recognised the letter dated 20 December
2005, but he could not say if this was issued by Mr Imrie or
by Gibb Architects. He thought it was
issued however, and remembered Mike Burrows saying in a telephone conversation
that they were in the process of signing the paperwork. At the pre-start meeting he remembered
vaguely a discussion between Mike Burrows and the first defender after the
business on the agenda had been completed.
He did not remember any details of the meeting, but he did remember a
letter being handed to Mike Burrows at the end.
He did not think that Mike Burrows was surprised to receive this letter; it was handed over
because the defenders had asked at the initial interview meeting whether the
pursuers would have any difficulties with KWF being the contracting
parties. Mr Thomson never saw the
letter from the bank, but he thought it was from Airdrie Savings Bank. He confirmed that he had prepared the minutes
of the pre-start meeting on 10 January
2006; when
asked why he described the defenders as the client, he replied that he tended
not to focus on the "bit at the top of the minutes" and that this was an error
on his part. He made the same error when
preparing the minutes of the first site meeting on 8 February 2006.
When asked why there was no reference to KWF in those meetings, he
replied that he did not know whether there was in fact a signed contract. He understood that KWF were the employers,
because the letter accepting the tender went out in their name. Mr Thomson attended no site meetings
after the first site meeting.
[35] On the Friday that he left Gibb Architects, he went through
with Mr Gibb each of the jobs on which he had been involved. He did not mention to Mr Gibb that he
understood the clients to be KWF Homes, because he took this as read - it was
common knowledge. Gibb Architects were
involved on behalf of KWF in relation to another development in Kilmarnock. Mr Thomson accepted that he issued the
first architect's instruction, and that this might have identified the
employers as the defenders rather than KWF - he was in a rush to send out the
certificate before he left Gibb Architects.
He also accepted that he probably drafted the F10 notification, and he
was familiar with the health and safety regulations underlying this form. There was no discussion about the contracting
parties before this form was sent out - as far as he was concerned, the
pursuers had asked for and received an assurance as to KWF's financial status,
and there did not appear to be any issue about the identity of the client.
[36] In cross-examination Mr Thomson stated that the defenders
told him that in terms of future developments they would like to set up all
future contracts through KWF. This was
mentioned in about October 2005 in the course of preparations for the Kilmarnock
development. The defenders told him at
the tender stage in relation to the Fairyknowe
Gardens project that they wanted it
to be done through KWF Homes.
[37] Mr Thomson conceded that Mr Gibb was better at
matters of contract than he was himself, and that Mr Gibb was punctilious
about such matters. However, he was
adamant that Mr Gibb knew about the change of client from the defenders to
KWF; he was
sure that this was raised at the tender interview in November, but he had not
looked for any handwritten notes of that meeting. He remembered preparing the draft letter
dated 14 December 2005
addressed to the pursuers, in which the tender bore to be accepted on behalf of
Mr and Mrs Forrest. This was correct at
that time, because Mike Burrows had not yet indicated the pursuers' consent to
the clients being changed to KWF. It was
pointed out to him that he had stated in examination-in-chief that he showed
this draft to Mr Gibb who pointed out to him that one of the errors
contained in the draft was that the clients should be KWF; when he was asked how this could be
correct, Mr Thomson replied "I know what you are saying", but was unable
to provide an explanation for his earlier evidence. He could picture the conversation which he
had with Mr Gibb. He also sent out
the email of 16 December 2005
in which he looked forward to receiving a copy of the letter accepting the
pursuers' tender on beh