HTA ARCHITECTS LIMITED HUNT THOMPSON ASSOCIATES (A FIRM) v (1) COUNTRYSIDE PROPERTIES PLC (2) TAYLOR WOODROW PLC (3) TAYWOOD HOMES LIMITED [2002] EWHC 482 (TCC)

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
[2002] EWHC 482 (TCC)Case No Case No: HT-01-253Venue St. Dunstan's House,, 133-137, Fetter Lane,, London, EC4A 1HD
Between
HTA ARCHITECTS LIMITED HUNT THOMPSON ASSOCIATES (A FIRM)Claimants(1) COUNTRYSIDE PROPERTIES PLC (2) TAYLOR WOODROW PLC (3) TAYWOOD HOMES LIMITEDDefendants
Before
His Honour Judge Richard Seymour Q.CMichael Douglas Q.C. (instructed by Hammond Suddards Edge for the Claimants)David Friedman Q.C. and Nerys Jefford (instructed by Campbell Hooper for the Defendants)Date 26 March 2002
[1]H.H. Judge Richard Seymour Q. C. : Introduction Towards the end of the 1990s the Greenwich Peninsula to the south-east of London was considered ripe for redevelopment. One of the schemes which was undertaken was that for the construction of the Millennium Dome. In July 1997 the Deputy Prime Minister, Mr. John Prescott, announced a competition for the design and development on a 13 hectare site of a housing project to be called "Greenwich Millennium Village" ( "GMV" ). The freehold owner of the site of GMV was English Partnerships ( "EP" ).[2]Messrs. Hunt Thompson Associates ( "HTA" ) was a firm of architects which was established in 1969. One of the founding partners in the practice was Mr. Bernard Hunt. The practice of HTA was transferred in December 1998 to a limited liability company which had been incorporated to take it over. That company was, and is, called HTA Architects Ltd. ( "HTA Ltd." ). HTA and HTA Ltd. are the Claimants in this action.[3]After the announcement of the competition for the design and development of GMV HTA decided to seek to form a team to submit an entry. The team needed to include both entities able to prepare appropriate designs and entities able to translate any design into structures. Essentially what was required was both architects, supported by other appropriate professional disciplines, such as engineers, and house builders.[4]In his efforts to put together a team Mr. Hunt approached representatives of Berkeley Homes Ltd. ( "Berkeley" ), Moat Housing Group ( "Moat" ) and Copthorn Homes Ltd. ( "Copthorn" ). Copthorn is a subsidiary of Countryside Properties Plc ( "Countryside" ). Countryside is the first Defendant in this action.[5]According to the evidence of Mr. Hunt in his first witness statement, dated 19 February 2002, Mr. Terry Sullivan of Berkeley suggested that HTA include in its team a firm of architects called Cole Thompson Associates ( "CTA" ). CTA had been involved in the development of a type of house called "an Integer home" . "Integer" is apparently a contraction of the words "intelligent" and "green" .[6]Mr. Hunt decided that it was appropriate to seek to involve in the team the well-known Swedish-based architect Mr. Ralph Erskine.[7]At an early point a fourth architectural practice became involved with the team. That practice was Messrs. Baker-Brown McKay ( "BBMK" ). The particular expertise of BBMK was in relation to the design of what was described as the "Teleservices Centre" .[8]By about October 1997 it had been decided that it was appropriate to include within the team a firm of engineers. So it was that Messrs. Battle McCarthy ( "BM" ) became involved.[9]Despite the initial interest of Berkeley, by about the beginning of September 1997 it had dropped out and its place had been taken by Taywood Homes Ltd. ( "Taywood" ). Taywood is a subsidiary of Taylor Woodrow Plc ( "TW" ). TW and Taywood are, respectively, the second and third Defendants in this action.[10]Also by about the beginning of September 1997 the place of Copthorn in the team had been taken by its parent company, Countryside.[11]On about 9 October 1997 Taywood, acting, on its case, on its own behalf and on behalf of Countryside and Moat, retained Messrs. Trench Farrow & Partners ( "TFP" ), a firm of project management consultants. The precise role undertaken by TFP in relation to the questions which I have to decide is a matter of controversy in this action. The Defendants' case is that TFP was retained, and had authority, only to negotiate, and to agree in principle, "Heads of Terms" , and had no authority actually to enter into a binding contract on behalf of those for whom it was acting. For convenience I shall call those on whose behalf TFP was acting hereafter in this judgment compendiously "the Developers" . The Claimants' case is that TFP had full authority to make a contract binding on the Developers. TFP in fact had a more general role in relation to the GMV project, as I shall call it, and that was to act as project managers in respect of the task of producing a competition entry on behalf of the Developers from HTA and the other professional firms which I have mentioned. I shall refer hereafter in this judgment to HTA and the other professional firms compendiously as "the Design Team" . I shall in this judgment call the Developers and the Design Team collectively "the GMT" , which is what they called themselves at the time.[12]The design competition had three phases. Phase 1 was an elimination phase intended to reduce the number of entrants in Phase 2, the competition proper. Phase 3 was the development phase, in which the successful competitor undertook the actual development of GMV.[13]The GMT presented a Phase 1 submission on 26 September 1997. As a result of that submission the GMT was selected to proceed to Phase 2. That success became known on 29 September 1997. A Phase 2 submission was made on 4 January 1998 and was followed by an oral presentation made on 6 February 1998. Again success was achieved. That success was notified to the GMT on about 11 February 1998. At the end of June 1999 relations between the Developers and at least HTA were severed. The present action arises out of that severance. The case of the Claimants is that the severance to which I have referred occurred in breach of a contract which the Claimants contend was made between HTA, acting on behalf of itself, CTA, Ralph Erskine, BBMK and BM, in relation to Stage 2 of the competition, but on behalf of itself and Ralph Erskine only in relation to Stage 3, on the one hand, and Countryside and TW, alternatively Taywood, on the other, on 18 November 1997 following exchanges of correspondence concluding with a letter sent by facsimile transmission on 18 November 1997. The Defendants deny that any contract was made. They further deny in any event that TW was a party to any contract which was made. None of CTA, Ralph Erskine, BBMK or BM are parties to the action, but no point has been taken on that on behalf of the Defendants. For reasons which have not been explained Moat has not been made a defendant, although, as I shall indicate later in this judgment, it would seem that, if the contract for which the Claimants contend was made, Moat was a party to it. The Preliminary Issue[14]The central issue in this action is whether or not the contract for which the Claimants contend was in fact made. I therefore directed that a preliminary issue be tried which was formulated as follows:- " Was a contract made between the Defendants or any of them and the 2 nd Claimant on or by 18 November 1997 and if so, what were the terms of the contract? (The Claimants' case on this issue is pleaded at paragraphs 13-19 of the Particulars of Claim; the Defendants' case on the issue is pleaded at paragraphs 11 to 30 of the Defence. Relevant background material is pleaded in the earlier paragraphs of the Particulars of Claim and Defence.) "[15]I have already set out in the Introduction section of this judgment such material as is relevant background to the consideration of the preliminary issue. The Claimants' pleaded case[16]The case set out in the Amended Particulars of Claim at paragraphs 13 to 19 inclusive in relation to the contract alleged is as follows:- " 13. The 2 nd Claimants [that is, HTA] believed, for the reasons set out below, that it was essential to establish a binding agreement which(a) governed the terms on which the design team would provide their services in support of the competition bid;(b) secured the appointment of the 2 nd Claimants/RE [that is, Ralph Erskine] team in respect of the subsequent design and development of the project, in the event of the competition bid being successful; and(c) governed the terms of that appointment. 14. The reasons for the 2 nd Claimants' belief were (a) the scale of the input required of the 2 nd Claimants, in particular, in the preparation of the competition submission (b) the very substantial financial benefits which would accrue to the JVP [an expression used in the Amended Particulars of Claim to mean the first and second, alternatively the first and third, defendants] if the submission were to be successful; (c) the danger that the JVP might, in the absence of a binding agreement, seek subsequently to impose whatever terms they wished and/or to find other consultants to take forward the proposals;(d) the personal commitment of the 2 nd Claimants to the project and its underlying principles;(e) the potential benefits to the 2 nd Claimants of the project. 15. Accordingly in August 1997 the 2 nd Claimants entered into negotiations to achieve such an agreement with the JVP and/or its agents Trench Farrow & Partners ("TFP"). In conducting those negotiations the 2 nd Claimants were acting on behalf of the design team as a whole (RE, BBMK, CT, BM and the 2 nd Claimants) so far as concerned work carried out in connection with the competition bid and on behalf of the 2 nd Claimants and RE so far as concerned appointment in the event of the competition bid being successful. TFP, by their letter of 10 November 1997 confirmed that they were fully authorised to act for JVP. 16.Between 26 August 1997 and 18 November 1997 there was a sequence of correspondence in which agreement was gradually negotiated until final, binding agreement was reached on 18 November 1997. The documents comprising and/or evidencing the agreement are referred to in paragraph 19 below. 17. The negotiations went through the following stages before agreement was finally reached: (a) In their fax of 26 August 1997 the 2 nd Claimants set out the basis on which the architectural team would be willing to work, addressing the issues set out at paragraph 13 (a), (b) and (c) above and confirmed its willingness to undertake the Stage 1 work at risk subject to an agreement being in place before the start of Stage 2 on 9 September 1997. (b) In their fax of 17 September 1997 the 2 nd Claimants confirmed agreement with JVP (reached orally the previous day) that the "at risk" period would be extended to 26 September 1997 on the understanding the agreement would be in place before that date. (c) It was only on 9 October 1997 that any written response was received from the JVP. This response did not address the issues set out at paragraph 13 (a), (b) and (c). (d) By their fax of 10 October 1997 the 2 nd Claimants emphasised that the design team could not embark on Phase 2 without the JVP's confirmation of the basis for doing so and left open the question of the team's attendance at a crucial EP meeting the following Wednesday. (e) In response to that fax, on 13 October 1997, Mr. Phipps of the 2 nd and/or 3 rd Defendants telephoned Mr. Hunt of the 2 nd Claimants to confirm JVP's agreement to the principles set out in the 2 nd Claimants' 26 August 1997 fax.(f) On 3 November 1997 TFP wrote to the 2 nd Claimants ... "at last" ) with proposals for a binding agreement which differed from the 2 nd Claimants' original proposals. Further correspondence then ensued between the parties, in particular a fax dated 5 November 1997 from the 2 nd Claimants to TFP and a letter dated 10 November from TFP to the 2 nd Claimants.(g) Despite the 2 nd Claimants' endeavours to avoid such a situation, the design team were now fully engaged in the Stage 2 work, without having received JVP's written confirmation of the 13(a), (b) and (c) issues. On 12 November 1997, with the full support of RE and the whole design team, Mr. Hunt orally informed Mr. Springgay of TFP that the design team was on the point of pulling out of the project unless agreement could be reached.(h) On 14 November 1997 there was a further conversation between Mr. Hunt and Mr. Springgay in which Mr. Hunt stated that the team would wait until 17 November 1997 for the resolution of the issues, failing which the team would pull out of the project. This was confirmed by a fax from Mr. Hunt to Mr. Springgay on 15 November 1997.(i) On 17 November 1997 TFP wrote a letter to the 2 nd Claimants dealing with the outstanding issues which remained to be resolved between the parties. Mr. Springgay was unable to fax the letter that day because Mr. Phipps of the 2 nd and/or 3 rd Defendants had asked to see the final wording before the letter was sent. Nevertheless, the terms contained in that letter were communicated to Mr. Hunt by Mr. Springgay in an oral conversation which took place on 17 November 1997. On hearing the terms, Mr. Hunt said to Mr. Springgay that the terms were acceptable and that the parties had a deal on which they could go forward. He withdrew the design team's threat to pull out of the project.(j) On 18 November 1997, TFP faxed the letter of 17 November 1997 to the Claimants. The sending of that letter confirmed and evidenced final agreement between the parties as orally indicated the previous day. After receipt of that letter, there was no further negotiation between the parties. The design team continued with their work, which subsequently resulted in success for the JVP in the competition. 18. The terms of the agreement were as follows:- (a) Composition of the design team The design team comprised the 2 nd Claimants, RE, CT, BM and BBMK. (b) Stage1 Fee All Stage 1 work would be carried out at the risk of the design team. (c) Stage 2 Fee There would be a fixed fee of £150,000 for the Stage 2 submission (which would be deducted from the Stage 3 payment referred to below in the event of the competition bid being successful). (d) Success Bonus In the event of the bid being successful a lump sum bonus of £150,000 would be paid to the design team, which sum would become due on exchange of contracts between JVP and EP and would be payable by four equal instalments at six monthly intervals starting on the date of exchange. (e) Terms of Appointment The terms of the contract would be the RIBA standard form adapted so far as necessary to the particular project. (f) Appointment If the submission was successful, the 2 nd Claimants and RE, would be appointed as the architectural team in respect of the Millennium Village project for 100% of RIBA Stages C to E and a guaranteed minimum of 50% of Stages F to L. The appointment was to take place after the competition had been decided and before commencement of the planning application which was due for preparation between February and April 1998. (g) Fees on Appointment The fees for the design team would be 5.5% of the project value payable in accordance with the RIBA stages:- Stage C (Outline proposals) 15% Stage D (Scheme design to planning application)15% Stage E (Detailed Design) 20% Stage F-G (Production information, tendering) 20% Stage H-L (Post contract administration) 30% (h) Expenses Fees were to include all normal expenses and disbursements but foreign travel, printing of documents for planning applications and tender documents were to be reimbursed at net cost. (i) Copyright Copyright in all documents and drawings would remain the property of the relevant Architect or Consultant. (j) Termination The 2 nd Claimants' appointment would be terminable only for non-performance. 19. Agreement in relation to the terms referred to in paragraph 13 above is contained in and/or evidenced by the following letters: (a) Composition of Design Team 26 August 1997 (the 2 nd Claimants to JVP) 17 September 1997 (the 2 nd Claimants to JVP) (b) Stage 1 Fee 26 August 1997 (the 2 nd Claimants to JVP) (c) Stage 2 Fee 3 November 1997 (TFP to the 2 nd Claimants) 17 November 1997 (TFP to the 2 nd Claimant) (d) Success Bonus 17 November 1997 (TFP to the 2 nd Claimants) – amount of bonus 10 November 1997 (TFP to the 2 nd Claimants) – time of payment (e) Appointment 17 November 1997 (TFP to the 2 nd Claimants) – extent of appointment 10 November 1997 (TFP to the 2 nd Claimants) – timing of appointment (f) Terms of Appointment 10 November 1997 (TFP to the 2 nd Claimants) (g) Fees on Appointment 17 November 1997 (TFP to the 2 nd Claimants) – overall percentage 3 November 1997 (TFP to the 2 nd Claimants) – percentage at each Stage (h) Expenses 3 November 1997 (TFP to the 2 nd Claimants) (i) Copyright 5 November 1997 (the 2 nd Claimants to TFP) 10 November 1997 (TFP to the 2 nd Claimants) (j) Termination 10 November 1997 (TFP to the 2 nd Claimants). "[17]Although expounded at some length in the Amended Particulars of Claim, what the Claimants' case seems to amount to is that the agreement for which they contend was contained in six documents, namely HTA's facsimile transmission dated 26 August 1997, HTA's facsimile transmission dated 17 September 1997, TFP's letter dated 3 November 1997, HTA's facsimile transmission dated 5 November 1997, TFP's letter dated 10 November 1997 and TFP's letter dated 17 November 1997. I turn, therefore, to consider those documents, and a number of others which seem to be relevant if the documents relied upon are to be set in their context. The correspondence between 26 August 1997 and 18 November 1997[18]The first of the documents relied upon on behalf of the Claimants as a contractual document is the facsimile transmission dated 26 August 1997. That document was written by Mr. Hunt but it was not addressed to any representative of any of the Defendants. Rather it was addressed to Mr. Nick Cook of Moat, to Mr. Terry Sullivan of Berkeley and to Mr. Trevor Selwyn of Copthorne. The text of the transmission was as follows:- " I am delighted to confirm that Ralph Erskine has agreed to act as lead architect (see Architectural Review article June 1995 attached). I cannot think of any other architect of international standing whose design approach comes closer to the underlying philosophy of the Millennium Village competition, and it is marvellous to be working with him. As per item 7 of the minutes of 11 August GMT meeting I have discussed and agreed with Nick Thompson [of CTA] the following Heads of Terms for your comment prior to formalising appointment of the architectural team before the start of Phase 3. Please could you let me have comments/queries by return as I am on holiday from 29 August to 6 September inclusive. 1. Architectural team structure1.1 Ralph Erskine (RE)/ Hunt Thompson (HTA)/ Cole Thompson (CTA)/ Baker-Brown McKay (BBMK), will function as a single integrated architectural team; flexible and overlapping roles, but broadly defined as follows:-1.2 Ralph Erskine. Lead architect/urban designer.1.3 Hunt Thompson Associates. Executive architect; single point responsibility for delivery of design to client and for project management of architectural and design team.1.4 Cole Thompson. INTEGER architect; responsible for delivering "intelligent and green" input into design.1.5 Baker-Brown McKay. Architects for Teleservices Centre. 2. Fee basis.2.1 Stage 1 (concluding 8 September). All work at risk.2.2 Stage 2 (concluding 10 November). All work at cost, i.e. salary + overheads + expenses only. Activity and resource plan agreed with developers/client in advance and translated into an agreed lump sum for architectural services. E.g.(i) 7 week design period. Average 6 person team @ £250 per day = £52,500.(ii) Average 4 persons @ £250 = £35,000. Plus VAT, plus expenses (printing, model, travel/accommodation – including from Sweden etc.). Subject to competition timetable not being extended.2.3 Stage 3 (finalising design, obtaining necessary approvals, construction details, contract administration etc.) To win it will be necessary to be innovative – time for design and for contract administration/quality control will be significantly greater than usual. Hence the amount of work will equate to the RIBA "Normal Service" (Stages C to K) and fees for architects services will be at RIBA recommended scale (6% of construction cost), less fees paid for Stage 2, plus VAT and expenses. i.e. Stages C to E as "Normal Service". Role in Stage F to K dependent on procurement route – e.g. could be Employers Architect for traditional procurement or Novated to Contractor or Employers Agent for design & build.2.4 Underlying assumptions (i) Heads of terms for the appointment of the architectural team as above and in accordance with RIBA Conditions of Appointment will be agreed before the start of Stage 2, conditional upon winning the competition. (ii) The design team's ability to deliver a high quality service and to manage its time effectively depends on a clear structure within the overall development team. We believe it is essential for the successful delivery of the project that one individual is given high level responsibility for co-ordinating the consortium's requirements and for being the single point of contact with the design team and our fee proposal is based on this assumption. (HTA would be willing to provide this expanded project management service if required). "[19]The facsimile transmission dated 26 August 1997 was thus really only concerned to set out in general terms the contemplated roles of each of the architectural practices intended to be involved and to propose fees for the second and third phases of the envisaged work if the competition entry met with success. There was no reference in the transmission to BM. None of the addressees of the transmission seems to have responded to it. HTA does not at the time seem to have chased anyone for a response. What is, however, clear, is that the initial architectural work, that required for Phase 1, was to be undertaken without charge.[20]The next document which is relied upon as being a contractual document is HTA's facsimile transmission dated 17 September 1997. Once again the author was Mr. Hunt. The transmission was addressed to Mr. Paul Phipps, described as of "Taylor Woodrow" , and to Mr. Richard Cherry, who was at the material time, and remains, a director of Countryside. Mr. Phipps was actually in September 1997 managing director of Taywood. A copy of the facsimile transmission dated 17 September 1997 was, according to the indication on it, sent to Mr. Cook of Moat. The facsimile transmission ended with a proposed agenda for a meeting to be held later on the day it was sent. The agenda items included:- " (ii) The team Role of each. Contribution to the vision. Any gaps? Cost? Landscape?… (vi) Consultants terms. "[21]The main text of the facsimile transmission dated 17 September 1997 before the agenda items was as follows:- " 1. To confirm some key points from yesterday's meeting:-(i) Taylor Woodrow (PP)/Countryside (RC)/HTA (BH) will act as a steering group responsible for shaping the form and content of the 26 September presentation, and for co-ordinating the input of other team members. HTA will be responsible for the project management of this process.(ii) The main task is to present "a greater evidence of a ground breaking, visionary approach" on 26 September. HTA will be responsible for developing this, with Erskine as a key element.(iii) The desirability of presenting Taylor Woodrow's input as coming from the PLC, and drawing on Capital Developments track record was agreed. PP will discuss this with Chief Executive John Castle, and requested "demystified" version of "vision" for this purpose from HTA. (Post meeting note: I will get onto this but would request PP not to wait for further material in view of tight deadlines. HTA's original text referred to by Nick Thompson is attached.) 2. Consultant team appointment. It was agreed that the consultant team will work "at risk" up to 26 September. The developers agreed to reimburse travel/accommodation costs during this period expended in integrating Ralph Erskine Architects into our team. I assume (unless I hear to the contrary) that the same applies to direct expenses incurred in producing the presentation (e.g. printing). The consultant team's input at no cost is made on the understanding that terms will be agreed in principle before 26 September along the lines of my 26 August fax (copy attached). 3. Progress report. My partner Ben Derbyshire had a long and productive conversation with Erskine yesterday, and is now en route to meet him. His enthusiasm and commitment appears to be growing. We think a joint Erskine/Derbyshire presentation of the vision, with sketches of initial design concepts, would be ideal – but it is too early to say how good a chance we have of delivering this. "[22]From the terms of numbered section 2 of the facsimile transmission dated 17 September 1997 it appears that at that time HTA was not seeking necessarily agreement to what was set out in the facsimile transmission dated 26 August 1997, but simply "that terms will be agreed in principle along the lines of my 26 August fax." In the context, and given the sparse "lines" of the facsimile transmission dated 26 August 1997, the agreement "in principle" being sought can only really have amounted to an indication that, if the Phase 1 submission was successful, HTA and the other architects involved would at least be paid their costs of working on Phase 2, and if the Phase 2 submission was successful, be paid some fee with a profit element. It does not appear that either of the addressees of the facsimile transmission dated 17 September 1997 responded to it, or that their failure to do so prompted any action on the part of HTA until after it was known that success had been achieved in Phase 1.[23]Mr. Hunt did return to the subject of the making of an agreement to retain HTA and the other firms involved in the GMV project in a facsimile transmission dated 2 October 1997 addressed to Mr. Phipps, to Mr. Richard Cherry, and to Mr. Cook of Moat. That facsimile transmission was in the following terms:- " We have very much enjoyed working with you on the project, and are delighted that the team has been shortlisted. It goes without saying that we are keen to work with you in whatever capacity you judge most helpful. Clearly we need to establish an action plan for Phase 2 as soon as possible, and as agreed with Richard I will set out some thoughts for discussion with you, hopefully before the end of this week. First, in view of the need to get in place a high calibre team to undertake a substantial piece of work at short notice, it is essential that we formalise the basis on which the design team is working. I enclose a copy of my 26 August fax setting out my proposals, and also of my 17 September fax confirming our understanding. Since those faxes English Partnerships have twice moved the goalposts, such that the Stage 2 design period has been almost doubled. I have not looked at the cost implications in any more detail, but £100K now looks a more likely figure to cover the cost of design team time (compared with £32K to £52.5K previously estimated) and even this may prove to be inadequate when we look closely at what we need to do to win. Before we get into detail. I would be grateful to you for your in principle confirmation that the basis outlined in my fax is acceptable to you. In addition HTA/Erskine have incurred expenses totalling around £7K (mainly travel/accommodation/and production of submission document) and I would be grateful for you [sic] confirmation that we may now invoice you for this – and procedures for doing so. I know that Richard and Paul are meeting tomorrow, and I would be grateful for your urgent response to this fax following your meeting so that I can mobilise the design team. "[24]From the terms of the facsimile transmission dated 2 October 1997 it appears that Mr. Hunt was then envisaging a need at some point for details of the terms of the appointment of HTA and the other architects involved in the GMV project to be considered, but that in advance of that time he wanted confirmation "in principle" that the sort of basis of payment contemplated in his facsimile transmission dated 26 August 1997 was acceptable.[25]Mr. Phipps replied to Mr. Hunt's facsimile transmission dated 2 October 1997 in a letter dated 9 October 1997 written on the printed stationery of Taywood. After noting the contents of the transmission Mr. Phipps went on, so far as is presently material:- " Firstly, I note that you are proposing an overall fee of £100,000 to cover the cost of the design team through Stage Two, and I must confess to being slightly surprised that this has increased bearing in mind that the time has been almost doubled. I do not think it is appropriate for us to finalise any form of fee until we have firstly established a greater appreciation of what is required during Stage Two, the briefing meeting has taken place, the level of activity which may be undertaken by our appointed Project Manager, and the extent of the involvement by Taylor Woodrow Construction's R&D Department – they would also be acting as a fee paid consultant. Also, on discussing matters with Richard and Alan Cherry yesterday, we would favour an arrangement whereby costs are kept to a minimum, but all parties did benefit from enhanced success bonus on our winning the project. Regarding your expenses to date, i.e. those relating to Stage One, I note your figure of £7,000 and would suggest that you provide a breakdown and invoice the three parties one third accordingly. "[26]From the terms of Mr. Phipps's letter dated 9 October 1997 it seems fairly clear that he was rejecting the idea of any agreement in principle at that stage as to the remuneration which might be paid to HTA and the other architects involved in the GMV project.[27]Mr. Hunt was not happy to receive Mr. Phipps's letter dated 9 October 1997. He responded the next day in a facsimile transmission in the following terms:- " I was extremely concerned to receive your 9 October fax. I thought we had a common understanding of the basic principles regarding the design teams involvement in the project, as set out in my 26 August fax, (and you will recall we discussed this when we met at Moat's offices). I hope our willingness and enthusiasm to be part of your team for this project go without saying. However the scale of the task in preparing a Phase 2 submission is such that we cannot embark on it without confirmation of the basis for doing so. I have been trying to reach you by 'phone but without success, hence this fax. However we clearly need to discuss and resolve this issue urgently, and in the meantime I suggest we leave open the question of the design team's attendance at the English Partnerships meeting on Wednesday. "[28]It is difficult to reconcile Mr. Hunt's assertion that he believed that the proposals in his facsimile transmission dated 26 August 1997 had been accepted with the absence of any response to either that transmission or that of 17 September 1997, and the fact that he was pressing in his facsimile transmission dated 2 October 1997 for "your in principle confirmation that the basis outlined in my fax is acceptable to you." However, Mr. Phipps seems to have responded to the facsimile transmission dated 10 October 1997 fairly promptly by telephone, for in a facsimile transmission dated 13 October 1997 to Mr. Phipps which was copied, amongst others, to Mr. Richard Cherry of Countryside and to Mr. Cook of Moat, Mr. Hunt wrote:- " Thank you for telephoning this morning and for your reassurance that the basic principles for the design team's involvement outlined in my 26 August fax (copy attached) are agreed by Countryside and yourselves. I confirm the outcome of our discussion as follows:(i) Stage 2 costs• design team's time and expenses on Phase 2 will be paid by the GMT developers, however• cost estimates quoted by me are illustrative only, and not yet agreed• HTA will prepare design team programmes, propose team structure and composition, and projected staff resources for your comment and approval, leading to an estimate of the cost of design team time which will be paid by the developers• we will aim for an initial agreement on these costs within the next two weeks(ii) Stage 3 appointment• if we win the competition the design team will be appointed to carry out full design services in accordance with the relevant institute's Conditions of Appointment and recommended fee scales.(iii) Success bonus We would be happy to discuss a formula along the lines suggested in your 9 October letter; I suggest we wait till we have an initial estimate of the Stage 2 costs before progressing this.(iv) Project Manager You have appointed Paul Springgay of Trench Farrow and are briefing him this evening. (Please could you ask him to contact me asap).(v) Project steering group We agreed the need for a small group of principals (e.g. Taywood, Countryside, MHG, HTA, PS) to agree strategy and meet regularly to oversee progress. (We urgently need to get together to discuss strategy). "[29]Mr. Hunt made contact with Mr. Springgay and they met on 16 October 1997. In a facsimile transmission dated 20 October 1997 Mr. Hunt confirmed to Mr. Springgay that one of the main conclusions from that meeting was:- " 1) Design team appointment You agreed the current situation is a serious obstacle to progress (with 3 weeks of tight programme now elapsed) and undertook to agree and document scope of service and terms of appointment by the middle of this week (Copies of faxes dated 26 August, 2, 10 and 13 October attached)"[30]The progress anticipated by Mr. Hunt in his facsimile transmission dated 20 October 1997 was not achieved. He sent a facsimile transmission dated 27 October 1997 to Mr. Springgay which included:- " First, though, I should confirm our discussion mid last week. As regards Stage 3 (i.e. if we win) I confirmed the position as stated in my 26 August fax and agreed at my 16 September meeting with Paul and Richard at Moat. As regards the costs in the current Stage 2, I confirmed our willingness to discuss a reduction linked to a success bonus. I imagine that the bonus would need to be say three times the amount of the cost reduction to make sense of this. N. B. It is important to recognise that the design team has already undertaken a considerable amount of work on spec, and that the costs quoted for Stage 2 are already on a non-profit basis. I await your response. "[31]On 28 October 1997 Mr. Hunt sent a further, hand-written, facsimile transmission to Mr. Springgay which included the comments that:- " …Members of the team must know whether they are appointed, and what role they have. We urgently need a reply to my fax of yesterday. And as regards roles, following receipt of your Action Plan yesterday I am completely unclear as to the role of the leader of the design team vs. the project manager. "[32]In a facsimile transmission to Mr. Richard Cherry, Mr. Phipps and Mr. Cook dated 29 October 1997 Mr. Hunt wrote:- " I need to report to you that lack of resolution as to whether members of the design team are appointed, and if so in what capacity and on what commercial basis, is now jeopardising the project. As requested by the development team on 11 August I set out in my 26 August fax the basis on which we would be happy to undertake the project, including the need to formalise the appointment of the team before the start of (the current) Phase 3. Four weeks have now passed since the start of Phase 3. Despite confirmation by me of your agreement to this basis in my faxes to Paul Phipps and Richard Cherry on 17 September, to Paul Phipps on 13 October, and numerous other communications the appointments have still not been formalised. This despite Paul Springgay's undertaking to me on 16 October to do so by the middle of last week. The goodwill that the team has shown in committing itself to the project is now wearing extremely thin. There is concern that if the situation is allowed to drift any further, the consequence will be either no formal design team appointment, or else appointment on a basis less satisfactory than that which we have discussed over the last two months – neither of which is acceptable. HTA and TF & P are finally in a position to communicate our requirements for inputs from the design team, yet uncertainty over the fundamental issue of appointment is jeopardising its ability to respond. We need to make rapid progress on all fronts and I have therefore requested the team to continue to allocate the necessary staff resources on a goodwill basis up to the end of this week to allow time for us to agree heads of terms, with a view to finalising formal appointments by 14 November. I hope you will agree the urgent need to resolve this issue within the timeframe I have indicated and look forward to working with you to do so. "[33]Contrary to what Mr. Hunt wrote in his facsimile transmission dated 29 October 1997, the then current phase of the competition was 2, not 3. In Mr. Hunt's usage, at any rate, there seemed to be a distinction between "heads of terms" , which were of such a nature that they could be expected to be agreed relatively quickly, and "formal appointments" , which followed on from agreement of "heads of terms" and took a little longer to agree.[34]Under cover of a transmission sheet dated 3 November 1997, upon which he wrote "At last!" , Mr. Springgay sent to Mr. Hunt a letter dated 3 November 1997 in which was set out a lengthy proposal. Mr. Springgay, Mr. Richard Cherry and Mr. Phipps all told me in evidence, which I accept, that both Mr. Cherry and Mr. Phipps had expressly approved the terms of the letter dated 3 November 1997 before it was despatched. The letter was in the following terms:- " Further to our recent discussions on the Design Team's terms of appointment, I have discussed the issue with the members of the Consortium and we are able to offer the following proposal: 1. Stage 2 Submission (up to formal presentation at end January) The Design Team, comprising Ralph Erskine, HTA, Cole Thompson, Battle McCarthy and Baker Brown McKay, will be paid a fixed fee of £110,000. This is as my faxed spreadsheet of 21. 10. 97 and our subsequent discussion. You will need to agree the exact distribution of this sum to the various members of the team. 2. Success Bonus If we are successful, the same Design Team will be paid a bonus of £150,000. This will become due on exchange of contracts with English Partnerships and will be paid in four equal instalments at six-monthly intervals, commencing on exchange of contracts. 3. Subsequent Appointments a) Architecture and Masterplanning The RIBA Scale of Fees as recommended in the "yellow book" only addresses projects up to £5m in value and, as such, is not really relevant to this £70m+ project. Allowing for the involvement of a "signature" architect, a fee for a full all-inclusive service of 5% is therefore considered appropriate. This would normally be broken down as follows: Stage C: Outline proposals 15% Stage D: Scheme design to planning application 15% Stage E: Detail Design 20% Stage FG: Production information and tendering 20% Stages HJKL: Post contract administration 20% For this scheme we will, in theory, achieve Stage C by the end of the submission on 5 th January, and Stage D by 30 th April 1998. Stages E-L will be carried out in phases to suit our build programme. As I understand the working relationship between yourselves and Ralph Erskine, Ralph's involvement will largely finish at the end of Stage D with yourselves and others responsible for the detailed design and production information. At this stage the Consortium, with the exception of Moat, have not worked previously with the proposed Design Team and do not feel that it would be right to commit themselves to the team for 100% of all future work unless and until a satisfactory working relationship has been established and can be seen to be working. They also do not want to preclude introducing other designers if it is felt they can bring something special to the team. As such, we propose to appoint the existing team (including Cole Thompson) for 100% of the work during Stages C and D and to guarantee a minimum of 50% of the work for Stages E-L. In practice, this may well rise to a much higher percentage if all goes well. With regard to Cole Thompson, we do believe the Integer concept is important to our submission and they must be accommodated within the team. Their request to be appointed for Stages E-L for 50 houses does not seem an unreasonable reward. Based on an overall fee of 5% of total construction costs, we propose therefore that the stage fees should be broken down as follows: Total R Erskine HTA(with Other architects BBMcK " eg Cole Thompson Stage C 0.75% 0.50% 0.20% 0.05% Stage D 0.75% 0.25% 0.40% 0.10% Stage E 1.00% - 0.50% (min) 0.50% (max) Stage FG 1.00% - 0.50% (min) 0.50% (max) Stage HJKL 1.50% - to be decided to be decided We invite your comments on the proposed Erskine/HTA split. b) Civil and Structural Engineering It is considered that an overall fee of 1% of the total construction costs for the Battle McCarthy team would be appropriate. This would be broken down as follows: Stage C 0.15% Stage D 0.20% Stage E 0.25% Stages FG 0.25% Stages HJKL 0.15% c) Mechanical and Electrical Engineering It is considered that an overall fee of 1.45% of the total construction costs for the Battle McCarthy team would be appropriate. This would be broken down as follows: Stage C 0.10% Stage D 0.15% Stage E 0.35% Stages FG 0.55% Stages HJKL 0.30% The £110,000 paid for the Stage 2 submission will be deducted from the Stage C payments paid above. The fees are to include all normal expenses and disbursements but foreign travel, printing of documents for planning submissions, tender documents, etc. will be reimbursed at net cost. The fees indicated above are based on a fully designed and co-ordinated scheme. In the event that a procurement route is selected which reduces the design workload for the consultants, the fees will be adjusted by negotiation. The above are to be regarded as the main Heads of Terms which will be fleshed out into a comprehensive formal agreement. Because, at this stage, neither the Consortium nor the Consultants can envisage whether a good working relationship will be established, it will be a condition of the Agreements that either side can terminate the Agreement at their discretion and without penalty at one month's notice. I will look forward to your response to this proposal."[35]The way in which Mr. Springgay concluded the letter dated 3 November 1997, with the reference to "the above [being] the main Heads of Terms which will be fleshed out into a comprehensive formal agreement" , indicated that what was being contemplated, at least by him, was that the matters set out earlier in the letter would serve as the agenda for a negotiation of much more detailed terms which would form a comprehensive agreement between the parties to it. However, it appears that the contemplated parties did not, by this stage, include CTA, at least in respect of anything arising after Stage 2. Under cover of a facsimile transmission dated 4 November 1997 Mr. Springgay sent to Mr. Hunt a copy of a draft of a letter which he intended to send to Mr. Nick Thompson of CTA. The letter as sent to Mr. Thompson was dated 5 November 1997, and differed to some degree from the draft. The differences are not material for present purposes. What is material is that the letter clearly envisaged that CTA would have an engagement separate from that, or those, of HTA, Ralph Erskine, BBMK and BM after the completion of Phase 2 of the competition for the GMV. The relevant part of the letter dated 5 November 1997 was in these terms:- " With respect to your appointment for this project, I have agreed the following points of principle with the Consortium: 1. The Design Team, of which you are an integral part, will be paid a fixed contribution towards their total costs for the current Stage 2 submission. Bernard Hunt is aware of the total amount and, as Design Team Leader, will allocate the portion of this fee to be allocated to your INTEGER team. 2. In recognition of the fact that the above is only a contribution, not a full commercial fee, the Consortium will pay a success bonus to the Design Team of £150,000 in the event that we are successful. Again, Bernard is responsible for allocating this bonus. 3. If we are successful, you will be appointed to carry out the preparation of construction drawings, tender documentation and contract supervision for the equivalent of 50 dwellings for 3.5% of the relevant construction cost. The fees are to include all reasonable expenses and disbursements but foreign travel, printing of tender documents, etc. will be reimbursed at cost. The above is intended to set the parameter for the minimum level of input and fee you will receive. In practice, your expertise may be better applied to the design of the visitor experience centre and show houses or, indeed, a mix of this and "normal" dwellings. This will become clearer as the Masterplan develops. The planning and detailed design of the dwellings will be carried out by Ralph Erskine to ensure continuity and that the whole scheme is seen to be by Erskine. Your role will be to work his design up into production drawings and oversee the implementation. You will, of course, work with Ralph during the design development to advise on the INTEGER aspects to be incorporated… "[36]Mr. Hunt responded to Mr. Springgay's letter dated 3 November 1997 in a facsimile transmission dated 5 November 1997. The copy put before me bore upon its face manuscript comments of both Mr. Springgay and Mr. Richard Cherry. Disregarding those comments the text of the transmission was this:- " I am responding as requested to your 3 November letter regarding terms of appointment. First some general points: i) The proposal falls short of the terms that the design team believed had been agreed, as confirmed in my 13 October fax to Paul Phipps. However my aim is to respond constructively, and to resolve the position swiftly. ii) I note that your letter was not copied to the development team, likewise this reply. Please may I have your confirmation that you are fully authorised to act as their agent on their behalf, and that we can treat correspondence from you as if it were from them. iii) In view of the fast programme and the need to create a climate of confidence, any agreement must incorporate(a) monthly invoicing and(b) payment within 14 days, interest at 3% over base payable on sums outstanding. Turning to your letter, and taking the items as numbered in it: 1 & 2. Stage 2 submission Your fee of £110,000 compares to our estimate of £203,466. You are asking us to forego £93k and offering us a 1 in 4 chance of £150k in return. Just to break even the bonus needs to be 4x the amount foregone and I therefore suggest increasing the fixed fee to £150k and the success bonus to £200k. The bonus payment is payable in full immediately if the GMT submission is selected as winner or joint winner of the competition. 3. Subsequent appointments (a) Architecture and Masterplanning (i) Your proposed fee of 5% compares with 6% stated in my 26 August letter (and as indicated for projects over £3m in the RIBA yellow book). We believe that the fee we proposed is the appropriate one in the particular circumstances, but we are prepared to agree to 5.5% subject to agreement on the other issues in this letter. (ii) Ralph Erskine has confirmed that his involvement is on the basis of designing the whole scheme up to Stage E . (The executive architect is involved in earlier stages, and works closely as part of Ralph Erskine's team in Stage E to ensure a smooth handover.) (iii) I believe Ralph Erskine's appointment to develop the design for the whole development to Stage E is agreed, and our understanding to date has been that the same commitment applies to HTA as executive architects. We do however acknowledge the concerns raised by the developers, and propose as follows: (i) HTA appointment for whole development (ii) agreed procedures for terminating the appointment, whilst safeguarding HTA's reasonable wish to ensure that the commercial benefits flowing from winning the competition are not jeopardised. See "Termination" below. (iv) Cole Thompson. We are keen to ensure the benefit of Nick Thompson's input. We are happy that he should obtain a "reward" which is at least the equivalent of what he is asking for. Our sole concern in meeting his request is the inefficiency of dealing with a small portion of Stages F to L differently from the whole. If HTA is protected from the cost, management and liability implications of this, we have no objection, other than that it is against the clients' interest. However I believe that the interest of both Nick and the client would be better served if he were to take on a show house/visitor experience role instead, and as agreed, I will therefore explore this further with Nick. (v) Fee split within the consultant team. I think it is premature to attempt a breakdown along the lines of the table at the top of page 3. (b) and (c) Civil , Structural, M&E Engineers Please liaise directly with Chris McCarthy. I understand that he is concerned about the overall fee level proposed for engineering services. N.B. We need to address the need for landscape and ecology services. Expenses Need to clarify that all costs incurred in the current Stage, and the cost of printing drawings generally, will be reimbursed. Copyright Copyright in all documents and drawings will remain the property of the relevant architect or consultant. Termination Termination by either party at one month's notice is accepted. If the services of a member of the design team are terminated, the developers will pay a sum equal to 20% of the portion of the consultants fee which would have been chargeable if the commission had not been terminated. The payment reflects loss of profit which would have been earned, and of the other benefits of reputation etc. which the consultant would have received. Client/Employer Clarification as to what legal entity(ies) will formally appoint consultants, and how the liability of the various developers will be reflected in workable appointment and payment arrangements. Formal Appointment The parties undertake to enter a formal agreement on the RIBA Standard Form of Agreement incorporating the above, and to complete this no later than Friday 12 December 1997. "[37]It is plain from the terms of Mr. Hunt's facsimile transmission dated 5 November 1997 that what was proposed in Mr. Springgay's letter dated 3 November 1997 was not acceptable to him. It is also plain that, at least in respect of work to be carried out after Stage 2, Mr. Hunt was inviting the Developers to deal directly with BM, rather than through HTA.[38]Mr. Springgay replied in his turn to Mr. Hunt's facsimile transmission of 5 November 1997 in a memorandum dated 10 November 1997. The evidence of Mr. Springgay, Mr. Richard Cherry and Mr. Phipps, which again I accept, is that Mr. Springgay did not show Mr. Cherry or Mr. Phipps a draft of the memorandum before it was sent, but he did send each of them a copy under cover of a memorandum to them and Mr. Cook dated 13 November 1997. When asked about the terms of the memorandum dated 10 November 1997 each of Mr. Cherry and Mr. Phipps said that he was perfectly content with what Mr. Springgay had written. The text of the memorandum dated 10 November 1997 was as follows:- " Further to your fax of 5.11.97, I have discussed your points with the client and the following is our response (your refs.): General ii) I confirm we are fully authorised to act for the developers. iii) Monthly invoices are agreed, based on percentages of pre-defined stages having been achieved. The developers fully intend to pay promptly and do not consider it necessary to incorporate an interest clause. 1&2: Stage 2 submission The £110,000 fixed fee must stand, but the developers are prepared to increase the success bonus to £200,000. However, this bonus will only become due upon exchange of an unconditional contract with E.P. and payment will be phased as my previous letter of 3.11.97. I would suggest that this should not be an issue as, once contracts are exchanged, you will be receiving almost immediate cash flow through the detailed design appointment. 3. Subsequent appointments(a) Architecture & Masterplanning i) the proposed fee of 5% must stand. Your letter of 26 th August was misleading in any event in not pointing out that the RIBA Scale fee of 6% was in fact for projects only up to £5m in value. iii) The developers share my confusion over the respective roles of Ralph Erskine and HTA during Stage E. Please provide a workplan showing exactly how this will work and the respective fees for each stage (C, D & E) proposed for Ralph Erskine and HTA. With respect to our commitment at this stage, the previous proposal (100% up to Stage D; min. 50% for Stages E-L) must stand. This may be amended to 100% for Stage E once we fully understand how this stage will work in practice. iv) The Cole Thompson involvement can be effectively managed and we are keen to secure their participation along the lines discussed. v) At this stage, we envisage a separate contractual relationship between the developer and each consultant, hence why we must understand the relationships and the fee splits.(b) & (c): Civil, Structural, M&E Engineers I will speak directly with Chris McCarthy. Expenses Agreed. Copyright Agreed in principle, but a clause in the formal appointment will need to be drafted to ensure that the client can still use and develop the scheme design if for any reason another architect is introduced after the completion of Stage D (or Stage E, depending on (iii) above). Termination Your proposed amendments are not acceptable as, in practice, your appointment would only be terminated for non-performance. In such a case, it would not be equitable for you to receive compensation for loss of profit. In this respect, the formal appointment will include a schedule of information to be provided, a programme for production of information and response times, etc. Client/Employer The legal entity to be formed to cover the three developers has yet to be defined but this should become clearer in the next few weeks. Formal appointment The RIBA Standard Form of Agreement will form a basis for your formal appointment, but amended to reflect this particular project and its requirements. It will be completed after GMT is selected as the preferred developer and before commencement of the planning application envisaged in the Stage 2 Brief for preparation between early February 1998 and end April 1998. I firmly believe that the terms now offered are very generous and should provide the motivation you need to focus on winning the competition. The developers are not at this stage prepared to enter any further negotiation. I am concerned that the discussions on this issues [sic] have deflected your efforts at a crucial time and we must get back on track to achieve the programme circulated on 21 st October. "[39]From its terms Mr. Springgay's memorandum dated 10 November 1997 seems to have been intended to put a stop to further discussion of any possible contract for the time being. That, it seems to me, was the purpose of Mr. Springgay writing in his concluding paragraph "The developers are not at this stage prepared to enter any further negotiation." At the same time it appears to have been contemplated that, at some appropriate point, there would need to be further consideration of a number of questions. In particular, the question of what exactly Ralph Erskine and HTA, respectively, were to do in Stage E seems to have been an issue which Mr. Springgay and those for whom he was acting wished to revisit, as well as the questions how each member of the team envisaged would deal with the others and how the total overall fee contemplated should be divided as between the various members of the team. Other matters which Mr. Springgay signalled in his memorandum would need to be considered further were the issue of copyright, to cover the possibility of the introduction of another architect after the completion of Stage D, the production of a schedule of information and a programme for production of information and response times so as to provide criteria by reference to which it could be determined whether HTA and others had been guilty of "non-performance" , and what amendments to the RIBA Standard Form of Agreement should be made to "reflect this particular project and its requirements" . Further, all of these matters were to be revisited in the context of separate agreements between each member of the Design Team and a legal entity yet to be formed.[40]Mr. Hunt responded to Mr. Springgay's memorandum of 10 November 1997 in a facsimile transmission dated 13 November 1997. What he said was this:- " As requested, this is a brief summary of what I said to you on the phone yesterday. 1. Your memo of 10 November does not represent an acceptable basis on which the design team can proceed. The issues are set out in my 5 November fax, but the headlines are: 2. Stage 2 submission. I have been unable to get agreement from team members to reduce the package from £203k to £110k as you propose. I believe I will be able to get agreement to the £150k+ package I proposed on 5 November. If you are unable to agree this please let me know by close of play tomorrow. I will then fax the team immediately, and let them know that you will negotiate with them directly. 3. Scale fee. It is disingenuous to suggest my 26 August letter was misleading. The figure quoted unambiguously was 6%. (Note that a fee in excess of the 6.5% recommended for Class 4 buildings, (apartment blocks) as opposed to Class 3 (estate housing and flats) would be appropriate for this project. 6% represents a reduction on this.) 4. Ralph Erskine. I consulted him via Johannes Tovat. His reaction: £203k package and 6% "not negotiable". More fundamentally he reinstated his position that if he is to be the architect, it means that it is his design, from concept to detail and execution. We have discussed how he achieves this in practice, working closely alongside an executive architect. Your proposal that the clients' commitment should extend to only 50% of Stages E to L is not compatible with this principle. Ralph said that if this is not resolved before close of play tomorrow he will withdraw. 5. Confirmation is required that if we win the team will be formally appointed before being asked to proceed with any further design development/preparation of planning application; and that payment for Stage C will be due at that time (early February anticipated). "[41]Mr. Hunt's facsimile transmission dated 13 November 1997 was clearly a flat rejection of what was proposed in Mr. Springgay's memorandum dated 10 November 1997. Mr. Springgay and Mr. Hunt then spoke on the telephone on 14 November 1997. The next day Mr. Hunt sent to Mr. Springgay a further facsimile transmission confirming the discussion. He said this:- " To confirm our conversation yesterday. We agreed to defer the deadline for resolution of the outstanding issues to close of play on Monday. To summarise where we now stand:(i) I set out proposals on 26 August, and we have committed substantial resources since in the belief that these were accepted by the developers.(ii) The counter proposal in your 3 Nov. fax is not acceptable.(iii) We demonstrated our flexibility and willingness to compromise in my 5 November response. It is important to be clear that we must reach agreement on all the issues covered by this fax on Monday, and that although I hope we will always be flexible in our search for "win/win" solution, we cannot agree to further concessions. I hope our absolute commitment to working with you to win this competition for our clients is not in doubt – but that neither is our resolution, and Ralph's, to terminate our involvement if we cannot agree on Monday. "[42]Mr. Springgay and Mr. Hunt had a discussion on the telephone on the afternoon of 17 November 1997. Mr. Hunt's account of that conversation in his witness statement dated 19 February 2002 was as follows:- "20.1 On Monday 17 November 1997 I was telephoned by Paul Springgay who informed me of the terms which were going to be offered by the JVP in respect of the remaining outstanding issues. He was acutely aware of the deadline we had set and the need to conclude a deal on that day. Although he had a letter already drafted, he apologised for the fact that he was not faxing the letter but explained that Paul Phipps had asked to have sight of the final wording, and was not available. However, he provided his assurance that Paul Phipps's agreement was not in doubt. Accordingly our conversation was conducted on the basis that the JVP's offer was firm, and that Paul Phipps's agreement was taken as read.20.2 The key issues were that the Stage 2 Bid Submission fees would be agreed at £150,000 together with a success fee of £150,000 and that the architectural and master plan fee was to be increased to 5.5%, i.e. the figure that we had insisted on in my letter of 5 November 1997. As regards the extent of the appointment it was confirmed that Ralph Erskine/HTA team would be appointed for 100% of the development stages C to E, and a guaranteed minimum of 50% of Stages F-L for the remainder of the project with the prospect of this being extended to 100%. This was subject to termination as before for non-performance, i.e. confirmation that termination would only occur for non-performance as per Trench Farrow's letter of 10 November 1997.20.3 I was pleased that the JVP had understood that the threat made in my letter of 15 November 1997 to terminate our involvement if we did not reach agreement by 17 November 1997 was absolutely serious, and that they had responded by the deadline.20.4 I was satisfied that that [sic] the negotiations, culminating in the improved terms now being offered were an acceptable basis for the Design team's appointment and that the negotiations had covered all the issues necessary to conclude an appointment of the Ralph Erskine/HTA team. Accordingly, I told Paul Springgay that we accepted the terms, that we now had a deal on which we were prepared to go forward, and that we accordingly withdrew our threat to pull out of the project. This was a watershed moment in the project and I was delighted that I had achieved my objectives in relation both to the Design team's remuneration for preparing the submission, and for HTA/Ralph Erskine's appointment in the event of winning the competition. "[43]I confess to some confusion as to why at this point, and in relation to work in Phase 3 for which separate appointments for CTA and BM were contemplated, HTA was seeking to act not only on its own behalf, but also on behalf of Ralph Erskine, but not on behalf of BBMK, which had initially been introduced to the GMV project by HTA. This confusion was not allayed by any evidence which I heard, and the matter remains a mystery to me.[44]Mr. Springgay in a supplementary witness statement dated 25 February 2002 commented on paragraphs 20.1 of Mr. Hunt's witness statement dated 19 February 2002 as follows:- "3.1 This deals with my phone conversation with Mr. Hunt on 17 November 1997, which I deal with at paragraph 26 of my first statement. Mr. Hunt says that I informed him of the terms which were going to be offered. What I was actually discussing was in principle heads of terms and I covered the issues which I subsequently committed to writing in my memo to Mr. Hunt of the same date (which was finally sent on the following day)… For the avoidance of doubt, if that is what is being implied by Mr. Hunt, I did not read out to him on the telephone the memo which I subsequently sent to him, nor did I suggest to him that I was doing so.3.2 Further on in the paragraph, Mr. Hunt said that I provided my "assurance that Paul Phipps' agreement" to the draft memo was not in doubt. This is not true. I said that I believed Mr. Phipps would find the contents of the memo to be acceptable but would need to seek and await his approval. The conversation was not conducted on the basis that what I said was any sort of firm offer, nor that Paul Phipps' agreement was taken as read. "[45]Both Mr. Hunt and Mr. Springgay were cross-examined as to the accounts of the conversation between them on 17 November 1997 which I have set out. It emerged from the cross-examination that it was not in dispute between them that Mr. Springgay had indicated during the conversation what provision in respect of what matters was intended to be proposed in the memorandum, and that Mr. Hunt was not contending that the memorandum or some part of it had been read out to him, rather than summarised. Mr. Springgay told me that at the end of the conversation Mr. Hunt had not said what he said he had said, but that he would wait to see the memorandum and was confident that he would be able to secure agreement from the Design Team to what was proposed. I shall indicate my findings of fact on the difference between Mr. Hunt and Mr. Springgay as to what was said on 17 November 1997 later in this judgment. Mr. Springgay told me that he was expecting to hear further from Mr. Hunt after Mr. Hunt had received the memorandum, but he did not do so. It was not in dispute that Mr. Hunt did not respond to the memorandum.[46]Following the conversation on 17 November 1997 Mr. Springgay sent to Mr. Hunt by facsimile transmission on 18 November 1997 a memorandum dated 17 November 1997. The memorandum was marked as being copied to Mr. Phipps, Mr. Richard Cherry and Mr. Cook of Moat. It was sent under cover of a facsimile transmission sheet upon which was written the message:- " Bernard, I finally obtained Paul Phipps agreement to the attached this morning. There is still obviously some flesh to put on the bones but these are the main points. "[47]The terms of the memorandum dated 17 November 1997 written by Mr. Springgay to Mr. Hunt were as follows:- " Further to my memo of 10 November, your subsequent fax of 13 November and our discussion this afternoon, the Consortium will agree to the following revisions to the heads of terms:- Stage 2 Submissions Increase the design team fees to £150,000 with a success bonus of £150,000 (as your fax of 27 October). The success bonus had previously been increased to £200,000 in recognition of a £110,000 Stage 2 fee. Architectural & Masterplan Fee The fee for a full design to be increased to 5.5%. Extent of Appointment The Ralph Erskine/HTA team will be appointed for 100% of the development for Stages C-E (subject to termination as before for non-performance). For a minimum of 50% of the development they will also be appointed for Stages F-L inclusive, with the possibility of this being extended to 100% of the development. The formal agreement will make it a condition that Ralph Erskine maintains the Lead Designer role throughout Stages C-E. As requested in our memo of 10 November we still require a workplan to show how you will interface with Ralph Erskine and the proposed fee split between HTA and Ralph. With request [sic – presumably "respect" was intended] to the last point above your most important role will be to act as the interface between Ralph Erskine and the rest of the design team and the clients. The debacle last night when a number of people gave up their Sunday evening to come to HTA's office to hear a presentation of Ralph's latest Masterplan, only to discover that he hadn't turned up, does raise concerns about how effectively you will be able to perform this role. This is obviously something which will need to be carefully monitored. I hope you will now feel able to move forward and focus fully on winning this competition. "[48]The significance of the message on the facsimile transmission sheet dated 18 November 1997 was that the approval of Mr. Phipps to the despatch of the memorandum dated 17 November 1997 had, by the time the facsimile transmission was made, been obtained. Mr. Richard Cherry accepted in his evidence before me that he was aware of, and approved, the terms of the memorandum dated 17 November 1997 before Mr. Springgay spoke to Mr. Hunt on 17 November 1997. The fact that a copy of the memorandum dated 17 November 1997 was sent to Mr. Cook of Moat indicates that the memorandum was written on behalf of Moat as well as on behalf of the others of the Developers.[49]Mr. Michael Douglas Q.C., who appeared at the trial of the preliminary issue on behalf of the Claimants, submitted that a binding agreement had been made on the telephone on 17 November 1997 in the terms for which the Claimants contended, but subject to a condition precedent that the approval of Mr. Phipps to the terms of the memorandum be obtained. That condition was met, he contended, and that it had been met was communicated by the sending of the memorandum dated 17 November 1997 under cover of the facsimile transmission sheet dated 18 November 1997. He submitted that the effect of the agreement for which the Claimants contended was that a deal was done on behalf of the whole of the Design Team in relation to fees to be paid by the Developers in respect of Phase 2 of the competition and a deal on behalf of HTA and Ralph Erskine alone in relation to the employment of those practices as architects on Phase 3 in the event that the competition was won. He submitted that it was plain that there was an intention to make a binding agreement in relation to the fees to be paid in respect of Phase 2 of the competition, and that, as it had not been suggested that there was some different intention in respect of that part of the agreement for which he contended which related to Phase 3, it followed that there had been an intention to make a binding agreement in respect of that also. That struck me as a bit of a bootstraps argument, but I shall return to it later in this judgment. Mr. Douglas relied strongly upon the fact that Mr. Hunt had threatened that HTA and Ralph Erskine would cease their respective involvements in the GMV project unless agreement was achieved in accordance with the deadline which Mr. Hunt had set. Mr. Douglas submitted, in effect, that the Developers capitulated to that threat. Whether that is a correct conclusion depends, in my judgment, not on the presence or absence of a threat as such, but upon the analysis of the exchanges between the parties in accordance with the applicable principles of the law of contract. The case for the Defendants[50]At its most simple the case advanced on behalf of the Defendants by Mr. David Friedman Q.C. and Miss Nerys Jefford was that no contract of any description had been made between HTA and any of the Defendants in the manner contended for on behalf of the Claimants.[51]It was submitted by Mr. Friedman and Miss Jefford that the contract contended for was one made by Mr. Springgay acting as agent for the relevant parties, that is to say, Countryside and either Taywood or TW, but Mr. Springgay had no authority to make a contract on behalf of any of those parties. The significance of that submission, which initially was quite prominent as part of the case of the Defendants, diminished somewhat during the course of the hearing. It became clear that the point was not some assertion that Mr. Springgay had had no authority to write documents of which he was the author which were sent to HTA, but rather that his authority was limited to negotiating, or agreeing non-binding heads of agreement. Thus what was in effect being submitted by Mr. Friedman and Miss Jefford was that no contract could have been made, even if such would otherwise have been the effect of exchanges between HTA and Mr. Springgay, because Mr. Springgay had had no authority, in the course of writing documents which he was authorised to write, to bring about the legal consequences for which the Claimants contended. It was, to say the least, a difficult submission. Mature reflection seems to have resulted in Mr. Friedman and Miss Jefford considering that the Defendants had better points, although the point was not abandoned.[52]Mr. Friedman and Miss Jefford submitted that, on an objective consideration of the documents relied on on behalf of HTA, the alleged agreement for which HTA contended could not be discerned. They submitted that on such a consideration it was plain that the parties to the relevant correspondence were not intending to conclude a binding agreement until formal agreements had been prepared and executed, that being the force of references to "Heads of Terms" and to agreement "in principle" , and/or until terms beyond those which had been the subject of consideration in the correspondence had been agreed. They submitted that the documents relied on on behalf of the Claimants indicated that there were matters upon which agreement was necessary, or in relation to which Mr. Springgay had stated that provision needed to be made, which had not been agreed by 18 November 1997. The effect of the failure to reach agreement about those matters, they submitted, was that no contract had been concluded. The particular issues as to which Mr. Friedman and Miss Jefford submitted agreement was necessary or was desired by Mr. Springgay but had not been achieved by 18 November 1997 were:-(i) the identity of the party to employ HTA and the other members of the design team;(ii) the amendments to "The RIBA Standard Form of Agreement" which were "to reflect this particular project and its requirements" ;(iii) termination;(iv) the identity of the members of the design team;(v) the relationship between the members of the design team; (iv) the nature and form of the proposed contract or contracts, and in particular whether there was to be one contract to which all members of the design team were parties, or separate contracts with each, and what form of contract was to be made with BM as engineers; (iiv) fees; (iiiv) copyright; (ix) payment terms. Mr. Friedman and Miss Jefford also submitted that any agreement which could be discerned in the documents upon which Mr. Douglas relied was incomplete to such an extent that it was unworkable or void for uncertainty. The Law[53]There was little dispute between Mr. Douglas, on the one side, and Mr. Friedman and Miss Jefford, on the other, as to the principles which I should apply in order to determine whether the contract for which HTA contended had been concluded. There was, however, a vigorous difference as to the result which should be achieved by applying those principles to the circumstances of the present case. It is, I think convenient to rehearse the principles of law by which, in circumstances such as those of the present case, the question whether a contract has been concluded falls, in my judgment, to be answered because some significant aspects of those principles were implicit, rather than explicit, in the submissions made on behalf of the parties before me, and a clear articulation of all of the relevant principles points the way, as it seems to me, to the correct conclusion in this and other, similar, cases.[54]The concept underlying a contract, meaning by that expression an agreement which is binding in law and thus creates legal rights and obligations, is simply that of agreement. For an agreement to be legally binding other conditions have to be satisfied. There has to be consideration. There has to be an intention to enter into legal relations. But without agreement there can be no contract on any view. The question therefore arises, how is one to tell whether an agreement has been made? The simplest form of an agreement is the case in which one party formulates a proposal and another party says, "I agree" . The essence of the agreement is a meeting of minds, a conscious assent by one to the totality of what has been proposed by another. In any case in which the process by which the agreement is said to have been made is other than the most simple a degree of analysis is likely to be required in order to ascertain whether there has been agreement, but that analysis cannot be undertaken unless one knows what one is looking for and what the indicia of it are.[55]In the written submissions which were put before me on behalf of each of the parties before the commencement of the trial there was a degree of equivocation as to the nature of the enquiry into whether an agreement had been made and as to the indicia of one. Both sides agreed, as it seems to me rightly, that in the context of an agreement which is alleged to be a contract, the test of whether there has been agreement is objective. I was reminded by both sides of the observations of Steyn LJ, as he then was, in G. Percy Trentham Ltd. v. Archital Luxfer Ltd. [1993] 1 Lloyd's Rep. 25 at page 27:- " Before I turn to the facts it is important to consider briefly the approach to be adopted to the issue of contract formation in this case. It seems to me that four matters are of importance. The first is the fact that English law generally adopts an objective theory of contract formation. That means that in practice our law generally ignores the subjective expectations and the unexpressed reservations of the parties. Instead the governing criterion is the reasonable expectations of honest men. And in the present case that means that the yardstick is the reasonable expectations of sensible businessmen. " I shall return later in this judgment to how that passage continues, but that the process of considering whether parties made an agreement is a purely intellectual one involving the dispassionate application of established rules – the adoption of an objective approach – cannot, it seems to me, be disputed. The same approach is, in my judgment, to be adopted to the issue of intention to enter into legal relations – that is to say, the question is to be approached objectively in the light of what the parties communicated to each other and how the parties acted, without regard to any private thoughts of one or other of the parties to the supposed contract which were not communicated to the other.[56]In their opening submissions Mr. Friedman and Miss Jefford drew to my attention a comment of Lindsay J. in Jarvis Interiors Ltd. v. Galliard Homes Ltd. [2000] BLR 33 in paragraph 47 at page 43 of the report which began, "Even given a broad disposition to find a contract if one can, having regard to what was said and done and, more particularly, to what was not said or done…" . In that case Lindsay J. was delivering the leading judgment in the Court of Appeal on an appeal from this court in a case in which the issue was whether a binding contract had been concluded between the parties. H.H. Judge John Toulmin C.M.G., Q.C. had decided that there was no concluded contract. His decision was upheld by the Court of Appeal. The context of the remark of Lindsay J. to which Mr. Friedman and Miss Jefford drew my attention was that it introduced the statement of a conclusion by Lindsay J. that "I am unable to find anything overtaking the "Subject to Contract" effect which I attribute to the combination of the Preliminaries and the Letter of Intent." Mr. Friedman and Miss Jefford suggested that what was to be derived from the comment to which they drew my attention was that there is a pre-disposition on the part of the Court to find a contract if it can.[57]In their closing submissions Mr. Friedman and Miss Jefford returned to the point and elaborated upon it as follows:- " 3. We accept that the Court does have such a disposition but what it means requires further analysis. It is an encapsulation of three different propositions, all of which we accept. They are as follows:-3.1 The Court does not require strict precision from businessmen: as to this see the passage from Treitel cited at paragraph 132 of the Claimants' Opening.3.2 The Court does not require meticulous detail from businessmen: as to this see the second passage from Chitty cited at paragraph 133 of the Claimants' Opening.3.3 Performance may sometimes make it easier to find a contract: as to this see G. Percy Trentham Ltd. v. Archital Luxfer Ltd. [1993] 1 Lloyd's Rep 25 at 27 per Steyn LJ. Two points about this should be noted.3.3.1 We are not here addressing an issue about acceptance by conduct. That is a separate point. We are addressing the passage which appears about 20 lines from the end of the left hand column and begins "The third matter…"3.3.2 This is not a case in which partial execution makes it easier to find a contract for any of the reasons suggested by Steyn LJ. The reasons are:(a) From a very early stage the partial execution was against a background of a dispute about the very matters which are now in issue.(b) Such partial execution as occurred before the dispute arose was partial execution which did not impact on the need for a formal appointment, on what the terms of that appointment were or on the importance of the matters which had not yet been agreed. 4. There are, however, two corollaries to the Court's broad disposition to find a contract if it can. They are equally or perhaps more important than the disposition itself. They are as follows:-4.1 The Court does not impose on the parties contracts which they did not make. It is not for the Court to make a contract or impose terms which the parties did not agree…4.2 The Court respects party autonomy. It is the parties who are masters of their own contractual fate. Thus the Court is bound if the parties agree that something further be required, whether it be the execution of a formal document or the agreement of further terms… "[58]On analysis, therefore, it would seem that Mr. Friedman and Miss Jefford were not really contending that there is a pre-disposition on the part of the Court to find a contract if it can, but rather that the governing principle is that it is for the Court to give effect to the wishes of the parties, objectively ascertained, as to whether they desire to enter into an agreement, and, if so, on what terms.[59]Mr. Douglas rather took up the suggestion that the Court is pre-disposed to find a contract if it can. He hinted that the passage which I have quoted from the judgment of Steyn LJ in G. Percy Trentham Ltd. v. Archital Luxfer Ltd. should be understood as indicating that the test of whether an agreement had been made was whether, on the facts of the particular case, it would be "the reasonable expectations of honest men" that there should have been an agreement.[60]Mr. Douglas drew to my attention the words of Lord Wright in Hillas & Co. Ltd. v. Arcos Ltd. (1932) 147 LT 503 at page 514:- " But it is clear that the parties both intended to make a contract and thought they had done so. Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as a matter of machinery where the contractual intention is clear but the contract is silent on some detail. "[61]Mr. Douglas also reminded me that in G. Scammell and Nephew Ltd. v. Ouston [1941] AC 251 at pages 268 to 269 said this:- " There are in my opinion two grounds on which the court ought to hold that there never was a contract. The first is that the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention. The object of the court is to do justice between the parties and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanations, tendered by those who think there was a bargain, of what the bargain was. I do not think it would be right to hold the appellants to any particular version. It was all left too vague. There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain. In my opinion that requirement was not satisfied in this case. But I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion, their agreement was inchoate and never got beyond negotiations. They did, indeed, accept the position that there should be some form of hire-purchase agreement, but they never went on to complete their agreement by settling between them what the terms of the hire-purchase agreement were to be. The furthest point they reached was an understanding or agreement to agree upon hire-purchase terms. "[62]The theme of the suggestion that the Court is pre-disposed to find a contract if it can is that the approach of the Court is, as it were, "Contract = Good, No contract = Bad" , so that the Court should strive to find an agreement and therefore a contract. In my judgment that supposed theme does not exist. I accept the submission of Mr. Friedman and Miss Jefford that it is not the function of the Court to make a contract for parties who have not made one for themselves. That was made plain by Lord Wright in Hillas and Co. Ltd. v. Arcos Ltd. in the passage to which Mr. Douglas drew my attention. It was also made clear by Lord Wright in the passage from his speech in G. Scammell and Nephew Ltd. v. Ouston which I have set out in the preceding paragraph of this judgment. The effect of the comments of Lord Wright to which Mr. Douglas drew attention, in my judgment, was that the court will strive, if satisfied that parties objectively wished to make an agreement, and wished such agreement to be legally binding, to uphold it, but that the questions whether the parties wished to make an agreement and wished any such agreement to be legally binding were to be ascertained from a consideration of the words which they used in their communications with each other. Lest it be thought that Lord Wright was a lone voice in the wilderness, the point that it is no part of the function of the Court to impose upon the parties an agreement which they did not make for themselves was made by Lord Pearson in Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board [1973] 1 WLR 601. The issue in that case was whether a term should be implied into a contract. In the course of his speech, at page 609, Lord Pearson formulated the test to be applied in determining whether to imply a term in a contract as follows:- " Faced with the conflict of judicial opinion in this case, I prefer the views of Donaldson J and Cairns LJ as being more orthodox and in conformity with the basic principle that the court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be. The court's function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been more suitable. An unexpressed term can be implied if and only if the court finds that the parties must have intended that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term which went without saying, a term necessary to give business efficacy to the contract, a term which, although tacit, formed part of the contract which the parties made for themselves. "[63]Both sides agreed that a convenient statement of the principles to be applied to the question of whether there was a concluded contract in the present case was to be found in the judgment of Lloyd LJ in Pagnan SpA v. Feed Products Ltd. [1987] 2 Lloyd's Rep. 601 at page 619:- " As to the law, the principles to be derived from the authorities, some of which I have already mentioned, can be summarised as follows:(1) In order to determine whether a contract has been concluded in the course of correspondence, one must first look to the correspondence as a whole (see Hussey v. Horne-Payne ).(2) Even if the parties have reached agreement on all the terms of the proposed contract, nevertheless they may intend that the contract shall not become binding until some further condition has been fulfilled. That is the ordinary "subject to contract" case.(3) Alternatively, they may intend that the contract shall not become binding until some further term or terms have been agreed; see Love and Stewart v. Instone , where the parties failed to agree the intended strike clause, and Hussey v. Horne-Payne , where Lord Selborne said at p.323:
"…The observation has often been made, that a contract established by letters may sometimes bind parties who, when they wrote those letters, did not imagine that they were finally settling terms of the agreement by which they were to be bound; and it appears to me that no such contract ought to be held established, even by letters which would otherwise be sufficient for the purpose, if it is clear, upon the facts, that there were other conditions of the intended contract, beyond and besides those expressed in the letters, which were still in a state of negotiation only, and without the settlement of which the parties had no idea of concluding any agreement [ My [Lloyd LJ's] emphasis] (4) Conversely, the parties may intend to be bound forthwith even though there are further terms still to be agreed or some further formality to be fulfilled (see Love and Stewart v. Instone per Lord Loreburn at p. 476). (5) If the parties fail to reach agreement on such further terms, the existing contract is not invalidated unless the failure to reach agreement on such further terms renders the contract as a whole unworkable or void for uncertainty. (6) It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word "essential" in that context is ambiguous. If by "essential" one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by "essential" one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by an "essential" one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the Judge "the masters of their contractual fate"
. Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens everyday when parties enter into so-called "heads of agreement". "[64]In the passage quoted in the preceding paragraph Lloyd LJ, like Lord Pearson in Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board , emphasised that it is for the parties to an alleged agreement to decide whether they wish to be bound and, if so, by what terms. The correct understanding of the words of Lindsay J. in Jarvis Interiors Ltd. v. Galliard Homes Ltd. , to which Mr. Friedman and Miss Jefford drew my attention, is, it seems to me, in their context, that, even if one were disposed to find a contract if one could, in the circumstances of that case it could not be done. In other words, it was a rhetorical device to emphasise the difficulty of the task facing the appellant in that case, not a statement of principle. Again, the passage in the judgment of Steyn LJ in G. Percy Trentham Ltd. v. Archital Luxfer Ltd. upon which Mr. Douglas relied was, in my judgment directed to that part of the enquiry into whether a binding contract had been concluded which involved the need to consider whether there was an intention to enter into legal relations. I think that it is clear that Steyn LJ cannot have intended to be understood as holding that the law would find a contract whenever "the reasonable expectations of honest men" would be that there should be one. That would be to run a substantial risk that parties neither of whom at the time wished to be bound contractually to the other would find that the law thrust a contract upon them. That consequence would be contrary to long-established principle restated in the cases to which I have referred.[65]There are solid practical reasons for leaving it to the parties to determine whether they wish to enter into a contract. It is not the case that unless parties who have commercial dealings make a contract there are no legal rules which govern their relationship. The rules in question are simply different from those arising under the law of contract – see, for example, British Steel Corporation v. Cleveland Bridge and Engineering Co. Ltd. [1984] 1 All ER 504. It is undoubtedly the case that the relevant rules, those concerning restitution, are still in a statement of development – see, for example Crown House Engineering Ltd. v. Amec Projects Ltd. (1989) 48 BLR 32 – but it should not be supposed that the law is incapable of rising to the challenge of developing appropriate refinements of the law as necessity arises. In some spheres of economic activity, and particularly in the construction industry, parties in a commercial relationship consciously desire to avoid a contractual relationship in some circumstances and deliberately structure their relationship so as to avoid the conclusion that there is a contract, for example, by use of a letter of intent. It is no part of the function of the court to disappoint the expectations of parties in such circumstances.[66]In relation to the law governing contract formation, it is, in my judgment, less important conceptually what the rules are than that they should be clear, comprehensible and readily applied, at least in principle. This is particularly so, it seems to me, because, first, the rules, for the reasons which I have explained, are to be applied objectively through an intellectual process of evaluation of the facts of the particular case with no predisposition either to find, or not to find, that the result is a contract, and, second, in practice a dispute as to whether a contract has been concluded is likely to arise once relations between parties have broken down, so that the respective contentions of the parties will reflect their respective assessments of whether the balance of advantage, in the context of the breakdown of relations, lies either in contending that a contract was concluded, or that it was not. A further consideration which emphasises the importance of an objective and cerebral approach to analysis of the relevant material in any given case is that in some circumstances, and in my judgment the present case is an example, the aim of one of the parties to a negotiation is to secure a binding agreement, while the aim of the other party is, if possible, to avoid such. One can only sensibly address which has been successful in achieving its aim if there are rules which are to be applied without any predisposition towards any particular result.[67]Given that the question whether an agreement has been made is to be approached objectively, without any predisposition towards any particular conclusion, by application of established rules, I return to the issue by what application of what rules is the matter of whether there was an agreement to be resolved?[68]Traditionally, the enquiry was, had one party made to the other an offer which the offeree had accepted unequivocally. That approach was described trenchantly by Lawton LJ in Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corporation (England) Ltd. [1979] 1 WLR 401 at page 405 in this way:- " The modern commercial practice of making quotations and placing orders with conditions attached, usually in small print, is indeed likely, as in this case, to produce a battle of forms. The problem is how should that battle be conducted? The view taken by the judge was that the battle should extend over a wide area and the court should do its best to look into the minds of the parties and make certain assumptions. In my judgment, the battle has to be conducted in accordance with set rules. It is a battle more on classical 18 th century lines when convention decided who had the right to open fire first rather than in accordance with the modern concept of attrition. The rules relating to a battle of this kind have been known for the past 130-odd years. They were set out by the then Master of the Rolls, Lord Langdale, in Hyde v. Wrench , and Lord Denning MR has already referred to them; and, if anyone should have thought they were obsolescent, Megaw J in Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. called attention to the facts that those rules are still in force. "[69]In the context of an agreement said to have been made in correspondence Lord Diplock said in Gibson v. Manchester City Council [1979] 1 WLR 294 at page 297:- " My Lords, there may be certain types of contract, though I think they are exceptional, which do not fit easily into the normal analysis of a contract as being constituted by offer and acceptance; but a contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first are in reply to one another is not one of these. "[70]In his submissions Mr. Douglas sought to suggest at one stage that an agreement in circumstances such as those of the present case could be made other than by the acceptance by one party of an offer made by the other. In particular, Mr. Douglas reminded me of the words of Lord Denning MR in Port Sudan Cotton Co. v. Govindaswamy Chettiar & Sons [1977] 2 Lloyd's Rep. 5 at page 10:- " In considering this question, I do not much like the analysis in the text-books of inquiring whether there was an offer and acceptance, or a counter-offer and so forth. I prefer to examine the whole of the documents in the case and decide from them whether the parties did reach an agreement upon all the material terms in such circumstances that the proper inference is that they agreed to be bound by those terms from that time onwards. " The purpose of reminding me of that expression of opinion was, I think, to suggest that it was not necessary, in order to find a contract, to ask the traditional question, was there an offer which was unequivocally accepted, and answer that question in the affirmative. Rather, it was, or might be, enough to justify the finding of an agreement, that by trawling through correspondence one could find that at different times particular matters had been agreed which in sum could be said to amount to an agreement.[71]Mr. Douglas also relied on the passage in the judgment of Steyn LJ in G. Percy Trentham Ltd. v. Archital Luxfer Ltd. at page 27 of the judgment which continued beyond the point at which my citation earlier in this judgment ceased and was in these terms:- " Secondly, it is true that the coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance. See Brogden v. Metropolitan Railway (1877) 2 AC 666; New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. [1974] 1 Lloyd's Rep 534 at p.539 col.1 [1975] AC 154 at p. 167 D-E; Gibson v. Manchester City Council [1979] 1 WLR 294 . The third matter is the impact of the fact that the transaction is executed rather than executory. It is a consideration of the first importance on a number of levels. See British Bank for Foreign Trade Ltd. v. Novinex [1949] 1 KB 628 at p. 630. The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised in negotiations as inessential. In this case fully executed transactions are under consideration. Clearly, similar considerations may sometimes be relevant in partly executed transactions. Fourthly, if a contract only comes into existence during and as a result of performance of the transaction it will frequently be possible to hold that the contract impliedly and retrospectively covers pre-contractual performance. See Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1 WLR 333. "[72]Mr. Douglas accepted that the present was not a case of a fully executed transaction. What had given rise to the claims in the action was the fact that HTA was not permitted to provide architectural services in connection with the later stages of the GMV project. When pressed as to how I should determine whether an agreement had been concluded in the present case, I think Mr. Douglas really accepted that one had to find an offer on the part of HTA which was accepted on behalf of the Defendants. I consider that that is realistic. I do not need to concern myself in this action with how, conceptually, an agreement might be made without there being an offer and an acceptance, assuming such to be possible. Equally, I do not need to concern myself with what sort of evidence, other than evidence of an offer and an acceptance, might be sufficient to prove an agreement. The agreement contended for on behalf of HTA was an agreement alleged to have been made in writing in the exchanges of correspondence which I have already set out, coupled with the effect of the conversation between Mr. Hunt and Mr. Springgay on 17 November 1997 for which Mr. Douglas contended. There seems to be unanimity of judicial view that such an agreement can only be made by the making by one party of an offer which is unequivocally accepted by the other.[73]Mr. Douglas submitted that in order to determine whether there had been an offer and an acceptance it was necessary to consider the whole course of the correspondence between HTA and the Defendants or TFP on their behalf. He referred me to the decision of the House of Lords in Hussey v. Horne-Payne (1879) LR 4 App Cas 311. Mr. Friedman and Miss Jefford relied on the same principle and the same authority. However, it seemed to me that actually each side meant something different when submitting that I should look at the whole course of the correspondence. Mr. Douglas's submission on analysis was that I should extract from the exchanges in correspondence any element ever apparently agreed and aggregate such elements so as to make an overall agreement at the end. Mr. Friedman and Miss Jefford submitted that on a consideration of the correspondence as a whole it was plain that there never was an agreement because of the matters as to which the parties wished to reach agreement but did not.[74]Another authority relied on by Mr. Douglas was Rossiter v. Miller (1878) 3 App Cas 1124. In the course of his speech in that case Lord Blackburn said:- " I quite agree with the Lords Justices that (wholly independent of the Statute of Frauds ) it is a necessary part of the Plaintiff's case to shew that the two parties had come to a final and complete agreement, for, if not, there was no contract. So long as they are only in negotiation either party may retract; and though the parties may have agreed on all the cardinal points of the intended contract, if some particulars essential to the agreement still remain to be settled afterwards, there is no contract. The parties, in such a case are still only in negotiation. But the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, shew that they continue merely in negotiation. It is a matter to be taken into account in construing the evidence and determining whether the parties have really come to a final agreement or not. But as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed. "[75]The purpose for which Mr. Douglas drew my attention to the decision in Rossiter v. Miller was in support of his submission that it was no necessary obstacle to the conclusion of a binding agreement that it was contemplated that a formal agreement would be drawn up in the present case. However, the passage from the speech of Lord Blackburn which I have quoted in the preceding paragraph does shed light on what was meant by the decision in Hussey v. Horne-Payne in relation to a consideration of the totality of the relevant correspondence. The decision itself indicates that the purpose of a consideration of the totality of relevant correspondence is not to pick and choose out of it agreement of particular items at particular points so as to construct an edifice which does not itself appear at any single point. Rather the purpose is to ensure that the appearance of agreement at some stage as a result of the application of a conventional offer and acceptance analysis, which would involve looking at each item in the correspondence only in the context of its immediate chronological neighbours, does not create a false impression of agreement. That such is the purpose is demonstrated, as it seems to me, by Lord Blackburn's comment in Rossiter v. Miller that "So long as they are only in negotiation either party may retract;" . In other words, a party in negotiation is not stuck forever, no matter what afterwards happens, by what he may agree in the course of negotiations. Until the moment of final agreement he may retract all or any of what he might up to the point of retraction have agreed. This is important, for it means that in looking at negotiation over a course of correspondence it is not legitimate to suppose that what is agreed at one point in one context, should be treated as agreed at a later point in a different context. In my judgment it is only if one can, on a fair reading of the relevant correspondence as a whole, construe the document which ultimately is relied on as the offer as incorporating by reference or by inference matters agreed earlier in the negotiations, that they are to be treated as included. Otherwise they are not to be treated as included. A conclusion that matters considered earlier in negotiations are not to be treated as included by implication, if not expressly referred to, in the otherwise final offer could result in the analysis that the supposed agreement was not an agreement. It would do so unless it appeared that agreement on the matters not mentioned was no longer required. Application of the law to the facts of the case[76]In my judgment it is plain that the contract contended for on behalf of HTA is not made out. The last document in the series of correspondence relied on on behalf of HTA was the memorandum dated 17 November 1997 written by Mr. Springgay to Mr. Hunt. It was by acceptance of an offer contained, or recorded, in that document, if at all, that a contract was made between HTA and the Defendants. That memorandum began, "Further to my memo of 10 November, your subsequent fax of 13 November and our discussion this afternoon, the Consortium will agree to the following revisions to the heads of terms" . It seems to me that the reference to "the heads of terms" in the context of the correspondence between the parties was a reference to the letter dated 3 November 1997 written by Mr. Springgay to Mr. Hunt. Thus, in my judgment, for the purposes of considering whether any, and, if so, what, offer was made to HTA which might have been capable of acceptance so as to give rise to a binding contract, one needs to read together the letter dated 3 November 1997, the memorandum dated 10 November 1997 written by Mr. Springgay to Mr. Hunt, and the memorandum dated 17 November 1997. Looking at those documents together it is apparent, first, that although a design team comprising Ralph Erskine, HTA, CT, BM and BBMK is identified, there is no indication in the relevant documents as to which of those entities is to do what in relation to the period after success in the competition, if achieved, or, indeed, before that time. A particular matter unresolved but arising from the memorandum dated 10 November 1997 was the production of a workplan showing the respective roles of Ralph Erskine and HTA. The memorandum dated 17 November 1997 made it clear that such a workplan was still required. The memorandum dated 10 November 1997 indicated that the Defendants were not themselves, or any of them, contemplating entering into any agreement with HTA, but envisaged that a joint venture company would be formed which would, all being well, in the fullness of time enter into separate agreements with each member of the design team. The terms of any such agreements would, it was contemplated, be based on the RIBA Standard Form of Agreement, but "amended to reflect this particular project and its requirements" . What amendments might be sought was not addressed, but I think that the "requirements" referred to must have been those desired by the joint venture company to be established, rather than something objectively justified. It was plain, however, that some further, formal agreement with each member of the design team was contemplated. The question of copyright was raised in the memorandum dated 10 November 1997 and it was made clear that some provision was required to enable the use by another architect, if one was brought in after Stage D, of work done prior to that. However, no specific provision was suggested, nor was any provision accepted by HTA. In all the circumstances it is clear, in my judgment, that the memorandum dated 17 November 1997 contained no offer specific enough to be capable of acceptance so as to give rise to a binding contract. That was in fact a reflection of the fact that the parties, objectively, were still in negotiation, and had no thought of entering into a binding agreement at that stage. What was under discussion were "Heads of Terms", not in the sense, which is conceptually possible, of a preliminary agreement to continue in operation until a later, fuller agreement had been made, but in the sense of identifying the most important matters which would need to be addressed in negotiations for formal appointments. In other words, what was, objectively, under discussion was a sort of agenda for future negotiations, albeit with an indication of what provision was likely to be included in respect of the significant matter of remuneration.[77]In my judgment what I have earlier in this judgment called Mr. Douglas's bootstraps argument does not avail the Claimants because the underlying premise is false. The underlying premise is that the Developers and the Design Team intended to make a binding agreement in relation to the sums to be paid in relation to the work of the Design Team in respect of Phase 2 of the competition. On the back of that premise Mr. Douglas seeks to haul up an agreement in relation to work on Phase 3 of the GMV project by the bootstraps of Phase 2. His submission was that there was no indication that in the interchanges between the parties in the period with which I am concerned a different intention existed in relation to Phase 3 from that which existed in relation to Phase 2, so that there was an intention to make a contract in respect of both Phases. I accept that on the evidence, viewed objectively, it is not possible to discern a different intention in relation to Phase 3 from that in relation to Phase 2. However, what follows, in my judgment, is not the conclusion for which Mr. Douglas contended, but that, it being clear that the parties did not intend to deal differently with work on Phase 2 as compared with work on Phase 3, the question is whether, looking at all the matters under discussion, whether relating to Phase 2 or to Phase 3, objectively a contract had been concluded. The answer, it seems to me, is negative.[78]I do not accept that in any event any offer capable of acceptance made, or recorded, in Mr. Springgay's memorandum dated 17 November 1997 and in the documents which in my view are to be taken to have been incorporated therein was actually accepted. I reject Mr. Hunt's evidence that he agreed on the telephone with Mr. Springgay on 17 November 1997 to accept terms set out in the memorandum dated 17 November 1997 which he had not then seen and which had at best been summarised to him. I formed the view from seeing and hearing him give evidence that Mr. Hunt is a cautious man. He had had a difficult time trying to pin down the Defendants, on any view. He had been concerned that there was a need to ensure that Mr. Springgay had been authorised to send his letter dated 3 November 1997 and that the Defendants would not seek to disown Mr. Springgay if he, Mr. Hunt, agreed to what was set out in the letter dated 3 November 1997. I am sure that he would have wanted, and did want, to see something in writing before indicating anything to Mr. Springgay about the proposals summarised by Mr. Springgay on the telephone. I am also sure that Mr. Hunt would not, against the background of the previous unsatisfactory dealings, from the point of view of HTA, with the Defendants, have simply accepted an indication from Mr. Springgay that Mr. Phipps was most unlikely to dissent from, or to want to alter, the proposals set out in the memorandum dated 17 November 1997. I am satisfied, therefore, that Mr. Springgay is correct in his recollection that Mr. Hunt's reaction when he spoke to him on the telephone on 17 November 1997 was that he wanted to see the memorandum before committing himself or any other member of the design team.[79]It is common ground that neither Mr. Hunt nor anyone else on behalf of HTA or any other member of the design team responded to Mr. Springgay's memorandum dated 17 November 1997. Mr. Douglas indicated in opening the case on behalf of HTA that, if necessary, he would wish to argue that the proposals contained in Mr. Springgay's memorandum dated 17 November 1997 were accepted by the conduct of HTA in proceeding with work on the competition for the GMV project after receipt of the memorandum. Mr. Friedman objected that that point was not open to HTA on its statement of case. I think that Mr. Friedman is correct in that. If I had thought that the point mattered I should have been inclined to give permission for a further amendment of the Amended Particulars of Claim to enable Mr. Douglas to advance the point as to acceptance by conduct. However, the point does not matter in the light of my conclusions that there was no offer capable of acceptance and no intention to enter into legal relations. Nonetheless I should indicate that there was no evidence that HTA's conduct after 18 November 1997 evinced an intention to accept such an offer as that which HTA contended had resulted in the contract pleaded. On the contrary, HTA and the other members of the design team had been working on the competition for some time and had expended considerable cost and effort without there being any contract with anyone in respect of such work. That situation, working on the competition, merely continued. Insofar as one can identify anything done which could be said to relate specifically to the contract contended for, it was the rendering of invoices for a success fee totalling £150,000, respectively in the proportions 37.5%, 37.5% and 25%, to each of Taywood, Countryside and Moat, each of which invoices was dated 4 March 1998. As the pleaded case of HTA is that what was agreed was that the total success fee would be payable in four equal instalments at six monthly intervals starting with the exchange of contracts between the Developers and EP, the rendering of such invoices is plainly not conduct referable to any such agreement. The answer to the preliminary issue[80]The answer to the preliminary issue is thus that no contract was concluded between HTA and the Defendants or any of them. It is not necessary to consider the second part of the preliminary issue.

Cited in 1 later judgment