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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 182
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CA97/05
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OPINION OF LORD CLARKE
in the cause
WILLIAM LIPPE
ARCHITECTS LIMITED
Pursuers;
against
JAMES INNES
Defender:
________________
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Pursuers: Mackenzie;
Beveridge & Kellas
Defender: A. Clark;
Brodies, W.S.
30 November
2006
Introduction
[1] The
pursuers are the successors to the rights and obligations, formerly vested in
the firm of architects, known as William Lippe Architects, of which the
partners were William Lippe and his wife, Mrs Anne Georgina Lippe. The pursuers, have a place of business in
Inverurie, Aberdeenshire as did the said firm.
In the present commercial action the pursuers sue the defender for
£42,548.82, being a sum they claim they are entitled to recover, as successors
of the said firm, for architectural and other services carried out by the firm
for the defender. These services related
to the possible development, for residential housing, of farmland and buildings
known as Upperboat Farm, Inverurie owned by the defender.
[2] The
circumstances leading up to the firm carrying out the services in question are
averred by the pursuers in Article 3 of condescendence as follows:
"In or about
January 2000 Mr Lippe mentioned to defender that part of land comprising
the said farm had the potential to be developed for residential housing. The defender was interested in such
development potential. Mr Lippe
informed the defender that it was necessary to have the land zoned in the next
local plan as land for residential development, and thereafter to apply for
planning permission. Mr Lippe wrote
to the defender by letter dated 18 January
2000, noting the discussions which had taken place, and making
suggestions as to what would have to be done to realise the development
potential of the relevant land. On or
about 22 February 2000, the defender verbally instructed Mr Lippe to
provide his services for the purpose of having the relevant land zones (sic.) as land for housing development in
the Aberdeenshire Local Plan, to carry out the work preparatory to an
application for planning permission or the conclusion of an agreement between
the defender or any successor in title and the planning authority in terms of
section 75 of the Town and Country Planning (Scotland) Act 1997, allowing
development of the relevant land for residential housing, and to make any
necessary planning applications."
In Article 4 of condescendence
are to be found the pursuers' averments regarding the agreement between the
parties, as to the contractual basis upon which the firm was to be reimbursed
for any work carried out in accordance with the defender's instructions, and on
his behalf.
[3] The
relevant averments are as follows:
"It was clear to
Mr Lippe and the defender that the professional services of the firm which
would be involved in carrying out the necessary services would be substantial,
and that these services would command a substantial fee. Mr Lippe had already suggested possible
financial arrangements with regard to payment for the firm's services in the
said letter dated 18 January 2000. Accordingly the parties verbally agreed on or
about 22 February 2000 that the pursuer would be remunerated, in the event
of planning permission allowing development of the land for residential housing
being obtained, or by the firm having done all that was necessary for the
defender or any successor in title to obtain such planning permission, or for
the defender or any successor in title to be in a position to enter into an
agreement with the local planning authority in terms of section 75 of the
Town and Country Planning (Scotland) Act 1997 allowing such development, by 3.8
percent of the monies received for the new residential properties sold
following development of the land, or of the monies paid to the defender by a
third party developer for the sale of the relevant land, plus Valued Added Tax,
or alternatively by the firm receiving title to the plot mentioned in the said
letter of 18 January 2000."
In Article 6 of condescendence the
pursuers aver:
"The pursuers
have called upon the defender to make payment of the fee due to them in
accordance with the agreement above referred to."
It is clear that the "agreement
above referred to" was the verbal agreement averred in Article 4 to have
been concluded at the meeting held on 22 February
2000. The defender denies
that there was ever any agreement by him to remunerate the firm on the basis
claimed by the pursuers in this action.
The defender had an additional line of defence, namely that, in any
event, the responsibility for paying the firm in respect of the services
carried out on his behalf was, in due course, taken up by a third party Bancon
Homes Limited ("Bancon Homes"), who purchased the land from the defender and
continued with the development of the land, thereafter, using the firm's
services for that purpose. As will be
seen, at the proof before answer in this case, that line of defence was
abandoned by the defender.
The evidence
[4] The pursuers' principal
witness, all proof, was Mr William Lippe, who has practised as an
architect for over 20 years. A
significant part of his work has been in relation to the obtaining of planning
permissions for development of land. He
became acquainted with the defender, in or about 1998, through a shared
interest in go-karting. Mr Lippe
became aware that the defender owned significant areas of farming land and
that, in particular, he owned the land known as Upperboat Farm, Inverurie. Mr Lippe suggested to the defender that
two fields and certain pig farm buildings, at that location, owned by the
defender, had the potential for residential housing development. He wrote to the defender setting out what he
described as "proposals" in that respect.
The letter is No.1 in the joint bundle of documents lodged on behalf of
the parties. It is dated 18 January 2000 and is marked as
"strictly private and confidential".
Because of the significant role this letter played in the parties'
dispute, it is appropriate that I should set out its terms in full. It reads:
"Thank you for
affording me some time recently to discuss the Upperboat |Development. As discussed we believer that the site has
potential for residential development and that there are various courses of
action but would suggest the following.
1 We would attend Community
Council Meetings, Local Authority and Public Meetings, Public and Planning
Forums, Business Association Meetings, Inverurie Strategy Meeting, Local Authority
Planners Local Plan Team with a view to promoting the Upperboat site for
inclusion in the New Aberdeenshire Local Plan 2001-2006. The whole scenario of the revised Local Plan
commences in April and will take approximately one year.
2 This alternative would be
to prepare and submit a Planning Application over and above the Local Plan
promotion in respect of the site, showing a general layout, roads, sub-division
feus and landscaping offering planning gain incentives to the Local
Authority. These are:
(1) Removal of the Piggery
and therefore allowing the Council to sell off their own land at St James'
Place for housing;
(2) to provide them with a
car park for their fishers serving the River Don;
(3) to provide additional
amenity area and extended walkways along the River Don connecting the Port
Elphiston and Davidson Park areas to the Golf Course walkways.
There will also be
further requests for planning gain, typically in terms of financial
contribution towards affordable housing, community projects, education etc.,
but these can only be determined upon submission and negotiation with the
Planning Officers."
The letter then continued as
follows:
"3 In respect of fees there
are two options:
(1) That we would carry out
professional architectural services on an hourly basis. We estimate approximately 300 hours over a 1
to 2 year period which would equate to a fee of approximately £12,000 plus
expenses and VAT and which would be invoiced quarterly;
(2) Incentive based - where
the fee would only be paid upon satisfactory zoning of the land and would be
paid upon sale of the site. This is much
longer term for ourselves where we also take considerable risk and based upon
an unknown end value. However we have
assumed that as the scheme is shown on the enclosed drawing with the riverside
being developable, and would be disappointed if the land did not realise and
return a value to yourself in excess of £1,000,000 and hopefully nearer
£2,000,000. However the value would be
very much dependent upon costs of taking infrastructure into the site, sewers,
water, hydro, road construction etc., and these can only be researched and
advised as part of promotion or submission of the site.
In terms of this
incentive based proposal we would suggest
Alternative 1. A fee
of 3.8% of the sale price of the land.
Alternative 2. That
we receive Title to Feu No.45 as shown on the enclosed site plan, extending to
approximately 1 acre which includes the landscape, duly serviced by the
develop/purchaser of the overall development site, to be used for one house for
ourselves. Should the enclosed layout
not be successful then an alternative site of similar size and nature to be
agreed.
Should you decide to
follow the route of the Planning Application then you would incur a fee payable
to the Local Authority, being a planning and advertisement fee amounting to
£4,900. These fees are paid directly to
the Local Authority.
There may be some
advantage in following this latter route, particular in relation to the
planning gain issue, but would prefer to meet with yourselves to discuss this
in greater detail. We trust that the
foregoing is of interest to yourself, but look forward to meeting to discuss
how best to proceed."
[5] The
witness, Mr Lippe, said in evidence that either of the two proposals as
regards promoting the development of the land contained in the letter would
involve substantial work by his firm as architects. On page 2, the reference to "expenses"
would include printing and photocopying costs and travel costs. In the event of taking on his firm the work
described on what was described in the letter as "an incentive basis" then, if
the land was not, in the event, zoned for residential housing, the firm would
be paid nothing. The witness said that
in writing the letter, in the terms he did, he had in mind that it would be
appropriate to make a planning application in respect of the land for
residential development to focus the minds of the planning authorities on the
question as to whether the land should be zoned for housing in the Local Plan.
[6] The
defender did not reply to that letter.
What occurred next was that Mr Lippe and the defender met on or
about 22 February 2000
at a garden centre in Huntly.
Mr Lippe, in his evidence, said that at that meeting the "project"
was discussed between the parties, and there was only "a very brief reference"
to the letter of 18 January. Other
projects were also discussed at the meeting.
The defender said that he did not wish to incur expense, but that
Mr Lippe's firm was to proceed with work on the proposal in relation to
the farm and that "we were just to take it on as best we could". Mr Lippe said that, in light of those
remarks, he considered that the defender was acknowledging that his firm was
taking all the risk and therefore was accepting that fees would be incentive
based. There was, he said, however, no
discussion between himself and the defender, at that meeting, about fees. Mr Lippe said that he did not, at that
stage, have any particular concerns about being remunerated for any work done
for the defender. His aim initially had
been that, in lieu of any fee, he would obtain one of the plots of land forming
any proposed residential development at the site, which failing a percentage of
the sale price of the land once sold by the defender. Mr Lippe said, that basically he understood
the defender at the meeting was telling him to get on with the work required to
obtain zoning of the land for residential development stating, however, that he
did not want to pay any fees if that object was not achieved. The witness said that it was his assumption
that the defender was agreeing to pay fees on the incentive basis described in
the witness's letter of 18 January, though he accepted that the defender never
expressly agreed to that. The meeting
lasted for about 40 minutes in total.
Thereafter Mr Lippe and his firm set to, to carry out the work to
have the land zoned for residential development, by attending meetings and
engaging in correspondence with the Planning Authorities. After approximately 18 months of such
activity, the land was zoned for residential development. In addition to seeking to have the land zoned
for residential purposes in the Local Plan, Mr Lippe and his firm made a
planning application in relation to the land which was in accordance with the
previous Local Plan. By doing so Mr Lippe
said they were attempting to have a precedent set in obtaining permission for
residential development on the site. A
significant amount of work, the witness said, was done in relation to that
planning application. In due course, the
Planning Authority, in about October 2003, indicated that consent could be
granted subject to planning gain issues being resolved and a section 75
agreement being concluded. Mr Lippe
and his firm kept the defender informed throughout as to the work they were
doing on his behalf and copied relevant correspondence to him. They requested cheques from him for payment
of Planning Authority fees.
[7] Mr Lippe
said that he and his firm did an appraisal for the defender for the cost of
developing the site and the value of serviced plots on a plan produced relating
to that appraisal. The witness said the
sixteenth plot on that plan was the one he had identified as the plot he wanted
to obtain in lieu of fees for the work carried out on behalf of the defender. The witness had already accepted, in
evidence, that the development as envisaged in the plan accompanying the letter
of 18 January was not proceeded with.
[8] Mr Lippe
and the defender had a meeting in mid-2003, which was attended by a
Mr Moir, a local builder who it was envisaged, at that time, might carry
out the building work required for constructing the housing on the land on
behalf of the defender. Mr Lippe,
in evidence, said that at that meeting his interest in acquiring plot 16
was raised and the defender said that because of the way in which land prices
had increased, there would require to be paid to him a "top-up sum" by
Mr Lippe to acquire that plot.
Mr Lippe said that he did not dispute this, but that there was no
agreement at the meeting as to the amount of any top-up payment. He explained that, at the date of his letter
of 18 January 2000,
3.8% of the sale price of the land as a whole and the value of plot No.45
referred to in that letter, would have been equivalent. At the time of the meeting, however, 3.8% of
the sale price of the land, as a whole, would have been less than the value of
plot 16.
[9] In
the event, the defender decided against developing the land himself, but
instead sold it, in 2003, to a company known as Bancon Homes, who were existing
clients of Mr Lippe's firm. Bancon
Homes asked Mr Lippe to quote for the provision of architectural services
regarding the design of actual houses to be built on the site, together with
associated services, such as acquiring building warrants. The land, by that time had been zoned for
residential purposes, but no actual planning permission had yet been granted in
respect of the site. Mr Lippe's
evidence was that at the time of the sale of the land he invoiced the defender
for payment of 3.8% of the price the defender had received on the sale of the
land.
[10] The planning application required to be modified. Mr Lippe's firm provided Bancon Homes
with a quotation for the services they would provide them with. It is to be found as No.14 of the joint
bundle of documents and is dated 15
June 2004. The total charges
proposed to be made amounted to approximately £30,000. Mr Lippe, in evidence, stressed that
nothing itemised in No.14 covered work already done regarding the development
project, on behalf of the defender.
Ultimately Mr Lippe and Bancon Homes agreed that the fees and
charges to be paid to Mr Lippe's firm for services to be provided to
Bancon Homes would be capped at £33,660.
On 10 March 2005
(No.22 of the joint bundle) Mr Lippe wrote to the defender seeking payment
of the sums he was claiming in respect of services rendered to the
defender. Mr Lippe, in evidence,
said that the defender expressed the opinion that Bancon Homes were now
responsible for any such fees and charges, but gave him no explanation as to
why he thought this could be so. The
witness accepted that had he charged the defender for the work carried out on
the defender's behalf on an hourly rate basis, the total sum due by the
defender would have been in the region of £16,000.
[11] When the defender had sold the land to Bancon Homes, he had
retained for himself the eighteenth plot on the site. Although Mr Beattie, a director of
Bancon Homes, who gave evidence at the proof, had tried to compensate
Mr Lippe's firm, to some extent, for the work carried out prior to
purchase of the land by Bancon Homes, Mr Lippe emphasised that he never
agreed that any payment made by Bancon Homes was, to any extent, in substitution
for payment due by the defender.
Mr Lippe advised the court that the defender had paid the invoice
of the engineers employed on the project for work done prior to the sale of the
land by the defender. Those engineers
were engaged by Bancon Homes to continue work on the project. In their case Bancon Homes did, in due
course, pay the sums due to the engineers, in question, by the defender, and a
credit note was issued by the engineers to the defender for those sums (No.25
of the joint bundle). That position was
to be contrasted with the position obtaining as between the defender and
Mr Lippe, where the defender had never paid Mr Lippe's firm anything
and there was no agreement that Bancon Homes should take over his liability to
pay the firm. Mr Lippe informed the
court that, with the passage of time, he acquired a plot of land in Inverurie
upon which to build a house. He was,
accordingly, no longer primarily interested in obtaining a plot on the site at
Upperboat Farm. This was why he was now
suing for payment of money.
[12] In cross-examination, Mr Lippe said that the plot 45
referred to in the letter of 18 January was the largest plot on the whole
site as it was then designed. He agreed
that if there were changes in the design of the scheme in respect of which the
planning permission would be granted, then there would be require to be a
further provision about what plot on the new scheme was to be provided. The witness accepted that what was set out in
his letter of 18 January was different in detail from what was averred, on
his behalf, in Article 4 of condescendence as to what agreed between him
and the defender at their meeting in Huntly on 22 February 2000.
What is more, he confirmed that nothing was discussed at all about what
fees would be payable to his firm by the defender, for work carried out on his
behalf, or the basis upon which any fees would be calculated. He agreed, in cross-examination, that there
was no verbal agreement at the meeting about the matters specified in
Article 4 of condescendence.
[13] Mr Lippe accepted that the invoice he had sent to the
defender (No.29 of the joint bundle) did not relate to the proposals set out in
his letter of 18 January, which had envisaged that plot 45 in the
development, as then designed, would be available, while the invoice was
dealing with a redesigned development where the land had been sold by the
defender but one plot had been retained by him.
Mr Lippe accepted that his firm never had any legal right to have
any plot. The witness's attention was
drawn to page 1 of production 11 of the joint bundle, which is an internal
memo written by him and dated 12 September
2001. It states:
"JI to sell one
site to WL. JI wants full service. Will build and sell development - completed
houses. WL to obtain costings for all
services."
JI is a reference to the defender
and WL is a reference to Mr Lippe.
Mr Lippe explained that the reference to one site was a reference
to one plot, and that the word "sell" was a recognition that, in exchange for
the plot, the witness's firm or himself would require to make a financial
contribution to the defender. The
proposal described in the original drawing prepared by Mr Lippe was, he
accepted, never made the subject of a planning application. Mr Lippe said that Mr Beattie of
Bancon Homes had offered to pay Mr Lippe's firm £13,000 to cover the cost
of their work done up until the time of Bancon Homes instructing them. In due course, Mr Lippe and
Mr Beattie agreed that Bancon would pay a maximum of £33,660 to Mr Lippe's
firm for work carried out in respect of the development. That figure, Mr Lippe contended, did not
include any part of the fees and costs due to him and his firm in respect of
work done up until the time when Bancon Homes took over the development.
[14] Mr Alan Ross, a director of Cameron Ross, Engineers, gave
evidence. He informed the court that he
provided engineering services to the defender in respect of the proposed
development of the site. He was
instructed to do so by William Lippe Architects. His firm billed the defender for work
done. When Bancon Homes became involved
they asked his firm to continue working on the development. He agreed that they would do so provided that
Bancon Homes paid the fees which had already been charged to the defender. Mr Beattie had agreed to this. As a result Mr Ross cancelled the
charges made on the defender by issuing a credit note to him. Mr George Moir, gave evidence to the
effect that the defender, who he had known for some years, initially proposed that
he, Mr Moir, should be the builder for the houses to be constructed at
Upperboat Farm, but that the project appeared to Mr Moir to be too big for
him to undertake. He understood that
Mr Lippe intended to build a house for himself on one of the plots. At a meeting he attended with the defender
and Mr Lippe, Mr Lippe indicated, on a layout drawing, the plot upon
which he said he intended to build his own house. Mr Moir guessed that this was to form
part of the defender's payment Mr Lippe for any work which his firm
carried out on behalf of the defender, but Mr Moir said that there was no
actual discussion between Mr Lippe and the defender about payment in
respect of work done by Mr Lippe's firm.
Mr Innes had not responded, or reacted, in any way when Mr Lippe
pointed out the plot upon which he said he planned to build a house.
[15] The defender chose not to give evidence. Mr Robert Beattie of Bancon Homes was
the sole witness led on behalf of the defender.
He explained that after discussing the matter with Mr Lippe in
mid-2003, he spoke to the defender about the possibility of buying the land at
Upperboat Farm. He also spoke with the
defender about the possibility of retaining the professional team which the
defender had put in place in relation to the proposed development. He told the defender that his company would
be willing to pay the costs of the members of the team incurred up until that
time provided these costs were reasonable.
Mr Lippe provided Mr Beattie with a note of his costs to date,
but Mr Lippe made it clear that he had a particular agreement with the defender
about the fees to be paid to him and made mention of a plot of land being
involved. Mr Beattie, however, said
that the defender denied to him the existence of any such agreement. Mr Beattie said that he informed
Mr Lippe that if he could absorb Mr Lippe's firm's costs, incurred to
date, within any fee arrangement for the future, Mr Lippe's firm could be
appointed to work for Bancon Homes in relation to the completion of the development. In due course, a maximum figure of £33,660
was agreed between himself and Mr Lippe as to what Mr Lippe's firm
could charge Bancon Homes for work carried out for them. That figure, Mr Beattie said, in his
understanding, included Mr Lippe's firm's costs incurred before Bancon
Homes became involved in the matter. The
witness expressly said that by referring to costs he was referring to something
different from professional fees. He
meant this was like wages of employees, rent and other costs of the
business. He had understood that these
amounted to £13,040.79 as set out in an email from Mr Lippe to himself
dated 1 September 2004
(No.15 of the joint bundle).
[16] In cross-examination Mr Beattie said that he made it clear
to both Mr Lippe and the defender that whatever agreement there may have
been between themselves regarding the defender providing Mr Lippe with a
plot, that was nothing to do with Bancon Homes.
Mr Beattie thought that a figure of £27,130 was a reasonable sum
for Mr Lippe's firm to be paid for work actually carried out for Bancon
Homes and that the balance of £33,660 was a reasonable estimate of what the
firm may have incurred on behalf of the defender for work done to date for him.
The pursuers' submissions
[17] In opening his submissions,
counsel for the pursuers referred me, in the first place, to the joint minute
for the parties, No.27 of process, in which in paragraph 1 it is stated as
follows:
"In the period
from March 2000 to June 2004, the firm William Lippe Architects, which had a
place of business at 4 St James' Place, Inverurie, Aberdeeenshire AB51 3UB,
carried out architectural and associated services for the defender, in relation
to the development of part of the defender's property known as Upperboat Farm,
Inverurie."
The question for determination by
the court was how much the pursuers as successors of Mr Lippe's firm were
entitled to recover from the defender in payment for those services. In particular, counsel suggested, the crucial
question was whether the parties had reached a binding agreement regarding
payment in terms of the second alternative in the letter of
18 January. At the time of writing
the letter the two alternative methods of payment, i.e. an hourly rate basis or
an incentive basis were open, but when the defender indicated to Mr Lippe
that he did not want to incur expense, the first option was "discarded". Counsel contended that it was not necessary
for the parties to have agreed, as he put it, "at the outset" which of the two
alternative incentive based methods of payment, set out in the second option in
the letter, would provide the mechanism for arriving at the payment to be
made. He invited the court to regard the
letter, in this respect, as containing "an agreement to agree" on one of these
two possibilities. Counsel for the
pursuers accepted that the evidence, as it came out at proof, was that there
was no discussion, at the meeting of 22 February at Huntly as to the
nature of the payment to be made to Mr Lippe's firm for any services
rendered to the defender. The evidence
of Mr Innes having said, in effect, "get on with it" and that he did not
want to incur expense established, it was contended, that the first option,
namely, an hourly rate basis of payment was being rejected. What was left to be determined, between the
parties, was whether payment was to be made in accordance with proposal (a) or
(b) in the second option. Counsel for
the pursuers did not, it seemed to me, ever inform the court precisely when
that determination took place and how it took place. He referred to the evidence of the meeting attended
by Mr Lippe, the defender and Mr Moir when Mr Lippe had
indicated, in the presence of Mr Moir, that he was planning to build a
house on one of the plots. There was
reference also to the evidence that Mr Lippe recognised that he would
require to pay "a top-up" to the defender if he was to be provided with a
plot. I am bound to say that I do not
consider that either of these pieces of evidence go any way to establishing
that there was a concluded contractual agreement between Mr Lippe and the
defender that Mr Lippe's firm should be paid for their efforts by the
provision of a plot of land.
Mr Moir, who attended the meeting, made it clear in his evidence
that the defender did not indicate any such agreement at that meeting. The evidence about a "top-up payment",
unspecified in amount, being required if a plot was to be conveyed, on the
other hand, in my view, is contradictory of any concluded agreement about this
method of payment. Moreover,
Mr Lippe, as I have noted, in his evidence, expressly accepted that
neither he nor his firm had any right to receive any plot.
[18] Counsel for the pursuers, however, went on to say that the
pursuers' position was that it was for the defender to elect under which of the
two alternatives in the incentive based approach to payment he would pay. Because of the fact that the defender
contended that the conveyance of a plot could not be followed without a top-up
payment being made by Mr Lippe, meant that the defender had, in effect,
agreed to pay Mr Lippe's firm 3.8% of the sale price of the land.
[19] Approaching the matter in a somewhat different way, counsel for
the pursuers submitted that if there had been agreement for payment by the
defender, on the basis just argued for, the evidence was that payment by the
second method, i.e. provision of the plot, had become impossible having regard
to the fact that plot 45, referred to in the letter of 18 January, did
not, in the event, form part of the development as it came to be. That being so, counsel said that the law was
that, in such a situation, the defender was entitled to perform his obligations
in the least onerous way available. That
submission was made under reference to certain authorities, namely Chitty on Contracts (29th
ed.) Vol.1, paras.21-006 to 21-007, Deverill
v Burnell (LR) 8 C.P. 478 (in
particular the dissenting opinion of Bovill C.J. at page 480, Abrahams v Herbert Reiach (1922) 1 K.B. 478 at 482 and Paula Lee Ltd v Robert Zehil
& Co Ltd (1982) 2 W.L.R. 390.
[20] Counsel for the pursuers concluded by submitting that the
defender had failed to establish the alternative basis of the defence by any
relevant evidence, namely an alleged novation of the agreement between
Mr Lippe's firm and the defender, by an agreement between Bancon Homes and
the firm. The court was invited to
sustain the pursuers' first plea-in-law and to grant decree as concluded for.
Submissions for the defender
[21] In reply, counsel for
the defender moved for decree of absolvitor.
He said that he accepted that there had been an agreement between
Mr Lippe's firm and the defender regarding the provision of services by
the firm to the defender and that, in such a case, where no agreement was
concluded as to the amount, or rate of, remuneration for such services,
professional persons, like the said firm, providing such services were entitled
to be paid reasonable remuneration for their services. In the present case, however, the pursuers
were suing for a precise amount of remuneration which they averred was due as a
result of an express agreement between the parties as to the basis upon which
remuneration to Mr Lippe's firm would be made. He referred to the pursuers' averments in
Articles 3 and 4 of condescendence in that respect. The key averment, in particular, was the
following one:
"Accordingly the
parties verbally agreed on or about 22 February 2000 that the pursuer
would be remunerated, in the event of planning permission allowing development
of the land for residential housing being obtained, or by the firm having done
all that was necessary for the defender or any successor in title to obtain
such planning permission, or for the defender or any successor in title to be
in a position to enter into an agreement with the local planning authority in
terms of section 75 of the Town and County Planning (Scotland) Act 1997
allowing such development, by 3.8 percent of the monies received for the new
residential properties sold following the development of the land, or of the
monies paid to the defender by a third party developer for the sale of the
relevant land, plus the Value Added Tax, or alternatively by the firm receiving
title to the plot mentioned in the said letter of 18 January 2000."
Counsel for the defender pointed to
the apparent inconsistencies between those averments about an express agreement
regarding remuneration and the averments appearing later on in Article 4
of condescendence to the effect that -
"it was an
implied term of the contract between the parties that the defender would pay
said 3.8% relative to any of the land retained by him which was covered by such
planning permission".
[22] Counsel for the defender submitted that the pursuers had simply
failed to prove their case as set out in Articles 3 and 4 of
condescendence. There was no evidence of
any instructions on the lines set out in those averments being given by the
defender to Mr Lippe at the meeting on 22 February 2000, or that
there was any verbal agreement of the sort averred being concluded at that
meeting. Mr Lippe's own evidence
was that the rate of remuneration was never discussed at that meeting. Accordingly, there being no evidence to
establish the factual or legal basis for the agreement averred by the pursuers
and, to the contrary, there being evidence that there was no such agreement
concluded, as averred, decree of absolvitor should be pronounced. It was not open now for the pursuers to argue
that a different agreement on different terms, entered into in a different
manner on a different occasion existed between Mr Lippe's firm and the
defender. Counsel pointed out the
specific differences which existed between what was stated in the letter of
18 January and what was averred as to the terms of the agreement upon
which the pursuers sued. First, there
was no mention in the letter that planning permission for allowing development
of the land for residential housing had to be obtained. Secondly, there was no proposal in the letter
that the firm would be paid if it had done all that was necessary for planning
permission to be obtained. Thirdly,
there was no mention in the letter of a section 75 agreement. Lastly, there was no mention in the letter
that one of the alternatives for payment was 3.8% of the monies received for
new residential properties following the development of the land. The terms of the letter, it was pointed out,
related to a particular proposed development shown in a plan, which is
production No.2 in the joint bundle. It
was for a particular size of site and number of units (71). The agreement pled, did not relate to any
particular development or to a development of a particular size or number of
units. The addition of an implied term
case, as averred, failed because apart from the express agreement relied upon, no
separate agreement had been averred or proved into which any such term fell to
be applied and, in any event, there simply was no warrant for implying such a
term, having regard to the law relating to implied terms.
[23] Counsel for the defender went on to submit, however, that if,
contrary to his primary submissions, the pursuers were held to be entitled to relate
their claim to the letter of 18 January, there was no evidence that the
parties ever reached consensus in idem
based on the terms set out in that letter.
The letter, it was submitted, was cast in terms which clearly indicated
that it was not to form part of a binding contract. It referred to suggestions and alternatives. That was recognised by the pursuers in their
own averments in Article 4 of condescendence by their use of the
expression "suggested possible financial arrangements". It was a proposal with a range of alternative
possibilities as to how the project might be taken forward. What the pursuers sought to take from it was
an agreement to pay a substantial sum of money - (on the figures given, very
much more than the amount of the normal professional fees chargeable for the
work in question) or, in the second alternative, the right to a conveyance of a
heritable property. The evidence of what
was said at the meeting on 22 February, it was submitted, came nowhere
near establishing that the defender had agreed to such terms. The proposal in the letter was without limit
of time and if it were to be regarded as having been translated into binding
obligations on the part of the defender, would result in the pursuers getting
the benefit of the increase in land values over time. The proposal in the letter was not capable of
being identified as an offer which could be accepted without further ado. Even as regards the services to be provided,
these were expressed in the alternative, namely simply promoting the site for
zoning in the Local Plan or alternatively, in addition, preparing a planning
application over and above this. As
regards the basis for feeing, there were three possibilities canvassed. The first was that the services would be
carried out on an hourly basis over a one or two year period. There was then proposed a further two
possibilities for feeing under the heading "Incentive Basis". Both of these two proposals depended on
satisfactory zoning of the land and sale of the land under reference to a
specific drawing. The first of the
possibilities provided for a fee of 3.8% of the sale price of the land, as
shown on the plan, referred to in the letter.
The second was the granting of title to feu No.45, a one acre plot. In the event of the layout accompanying the
letter not being ultimately the subject of a successful planning application,
an alternative site of similar size and nature was to be agreed. Counsel for the defender observed that the
evidence was that the planning application, which was in fact granted, was not
applicable to the layout referred to in the letter. There was, however, no evidence that the
parties entered into an agreement regarding an alternative site of similar size
or nature. Counsel for the defender drew
attention to the fact that all the foregoing alternatives were not presented in
any hierarchy, nor was it said that they were options exercisable at the behest
of Mr Lippe's firm.
[24] The evidence of what was said at the meeting held on
22 February 2000 did not come up to what was required to establish that
matters had been advanced beyond the terms of those suggestions, or proposals,
to a clear and concluded agreement between the parties. It was to be noted, that Mr Lippe's own
evidence was inconsistent with the letter of 18 January, or anything said
thereafter, having resulted in a concluded agreement about the method of feeing
upon which the pursuers were now relying.
He made it clear, in evidence, that neither he, nor the firm, had any
right to a plot of land. In addition the
evidence of the defender requiring to sell him a plot of land, was
inconsistent with what was said in that letter.
As previously noted, counsel for the defender, accepted that the
separate line of defence pled by the defender to the effect that, in any event,
Bancon Homes had taken over any liability of the defender to pay
Mr Lippe's firm, had not been established.
He renewed his motion for absolvitor.
Decision
[25] I have reached the
conclusion, without any real hesitation, that the defender falls to be
assoilzied from this action. The
pursuers, have, in my judgment, simply failed to prove the case that they sought
to establish in relation to the sum they say they are entitled to be paid by
the defender. They did not seek to amend
that case. It is to be found
substantially in Articles 3 and 4 of condescendence. It relies, in particular, on a verbal
agreement being concluded on 22 February
2000, in the terms averred in Article 4 of
condescendence. It was clear, on the
evidence, that no such verbal agreement was ever arrived at on that date
between the relevant parties. For that
simple but fundamental reason, the pursuers' action must fail. Our rules of pleading still require, as a
minimum, that the pursuer sets out, in written pleadings, the essential aspects
of the case he seeks to prove and which, if proved, would entitle him to the
remedy he seeks. If he fails to do so,
his action must fail.
[26] As has been seen, what counsel for the pursuers sought to
persuade the court was that, notwithstanding the differences between the
matters averred as agreed at the meeting on 22 February, and the content
of the letter of 18 January, the defender's instruction to Mr Lippe
just to get on with the work, at that meeting, taken together with his alleged
statement that he did not want to incur expenditure, amounted to a concluded
agreement by the defender to pay to the firm on one or other of the bases as
proposed under the description of "incentive based" in the letter of
18 January. I agree entirely with
counsel for the defender that even if such a basis of a case can now be
legitimately made out standing the pursuers' pleadings, (which I do not accept
can legitimately be done), any such case is fatally flawed. The content of the letter of 18 January
cannot, in my judgment, be read as containing an unconditional offer which
could be accepted, without any further negotiation being required. It simply sets out a series of proposals, or
suggestions, (as recognised in the averments in Article 4 of
condescendence) as to possible bases upon which Mr Lippe's firm might be
remunerated in certain eventualities. It
was incapable of being turned into an unconditional agreement by means of the
brief remarks alleged by Mr Lippe to have been made by the defender. In other words, there was nothing in the
evidence to establish that the parties had ever reached consensus in idem as regards the method by which Mr Lippe's
firm would be paid by the defender and, in particular, which of any of the
suggestions contained in the letter of 18 January would be employed for
that purpose. I should add that counsel
for the pursuers spent some time, in his submissions, seeking to persuade the
court that the pursuers were suing for payment by reference to 3.8% of the sale
price of the land because the other method of payment, namely the transfer of a
plot of land had become impossible. I am
not satisfied that that really was the case, as a matter of fact, based on the
evidence led. The position was that
through passage of time Mr Lippe had found a plot of land at another
location upon which to build his house.
I consider that it was his preference therefore that his firm should be
reimbursed by a percentage of the sale price.
But in any event, as counsel for the defender pointed out, the evidence
showed that the defender had retained one plot of land and so it might not be
correct to say that it would have been impossible for the defender to provide
the pursuers with a plot of land. All of
that, of course, is beside the point, having regard to the position being as I
have found it to be, namely that there was never any concluded agreement that
either of these methods of payment was enforceable against the defender. Moreover, I should add, for completeness,
that for similar reasons the authorities relied upon by the pursuers, and which
I have cited above, were nothing to the point.
Those authorities were concerned with the situation where, it having
been established that there was a concluded agreement, that agreement provides
for performance of obligations in alternative ways. In such a situation the obligant may choose
which way he wishes to perform his obligations, and if he fails to perform his
obligations, at all, damages may be quantifiable by reference to the less
burdensome of the ways in which the obligations might have been performed. As counsel for the defender submitted, those
authorities are concerned with a different point in contractual relationships,
from the position of the present case, where there never has been consensus in idem regarding alternative
performance.
[27] In conclusion, I should simply stress that while it is clear that
Mr Lippe's firm did carry out substantial work for the defender for which,
as counsel for the defender accepted, they would have been entitled to be paid
reasonable remuneration, that is not the basis upon which they sue in this
action. The pursuers' own evidence
established that the sum sued for is greatly in excess of any sum which would
have been payable as normal remuneration for such services. For the foregoing reasons I shall grant the
defender's motion by assoilzing the defender from the conclusion of the
Summons.
