CFW Architects (A Firm) v Cowlin Construction Ltd

A professional services contract may impose enforceable obligations as to time in addition to the duty to exercise reasonable skill and care. The obligation is construed from the contract and its commercial background, and may be implied where necessary to give the agreement business efficacy. A designer engaged on a design-and-build project may therefore be required to produce coordinated, approved design information in time to enable the contractor to comply with its construction programme. Such an obligation remains subject to prevention by matters outside the designer’s control.

A failure to pay sums that are not contractually due, or a proposal made during negotiations to reschedule payment, will not ordinarily amount to repudiation. A party that affirms the contract cannot later rely on the earlier conduct as a repudiatory breach.

The claimant architects were engaged by the defendant contractor as lead designers for a housing project. The parties’ written appointment was never executed, but they had agreed its essential terms, including standard RIBA design-and-build conditions and a milestone payment schedule.

The claimant sought repayment of sums paid following earlier adjudications. The defendant counterclaimed for losses arising from delayed design information, the claimant’s termination of the appointment, completion costs, delay-related losses and negligent design errors. The court determined the contractual obligations, responsibility for delay, repudiation, causation, mitigation, recoverable loss and quantum.

1. Contract and timing obligations. A binding contract arose when the parties agreed its essential terms, despite the absence of an executed formal document. The appointment incorporated the SFA/99 and DB2/99 conditions and the milestone payment schedule. The schedule described both payment dates and the design work required for each milestone. Read with the construction programme, it required the claimant to produce substantially complete and coordinated design information in time for peer review, consents and construction to proceed in accordance with that programme. Completion of the relevant work was a condition precedent to payment.
2. The obligation as to time was additional to the implied duty to exercise reasonable skill and care. It was not rendered invalid because performance depended partly on other consultants, the contractor or the peer review process. Acts of prevention outside the claimant’s control would negative the time obligation or place time at large, but no such prevention was established.
3. Delay. The claimant failed to provide an acceptable design package. The evidence did not establish unreasonable review, variations, late information from others or other preventing conduct. The claimant was liable for the 10.5-week delay in commencing work at the North and South Avon sites and for the resulting losses.
4. Repudiation. The defendant did not repudiate the contract. The unpaid sums were not due, the alleged set-off was raised only as part of settlement negotiations, and the proposed revised payment schedule was not imposed. A breakdown in professional relations did not, on the evidence, amount to repudiation. In any event, the claimant had affirmed the contract by continuing to perform and negotiating revised payment arrangements. Its later refusal to resume work was repudiatory and was accepted by the defendant.
5. Loss and quantum. The repudiation caused delay because the defendant reasonably engaged replacement architects, completed the unfinished designs and proceeded with the works as quickly as resources permitted. The defendant’s settlement with the employer and its liquidated damages liability were reasonably incurred and recoverable. The liquidated damages provisions were enforceable because no substantial discrepancy between the stipulated sum and likely loss was shown. Recoverable losses included mobilisation, winter working, liquidated damages, prolongation costs, overheads, replacement professional fees, price increases and costs caused by negligent drawing errors.
6. Judgment was entered for the defendant in the sum of £834,252.42, subject to deduction for previous payments made following adjudication decisions.

This was a first-instance trial in the Technology and Construction Court. The judgment itself records earlier adjudications and an enforcement judgment, but the parties accepted that those decisions were not final and did not determine the issues before the court.