Pickard Finlason Partnership Ltd v Lock & Anor

A bespoke professional-services agreement may make payment conditional upon completion of further work beyond the grant of planning permission. Where the contract required the cost to become firm and the contract sum to be known, the condition required such stage-three services as were reasonably necessary to obtain an acceptable tender.

A professional design practice must give its client clear feasibility advice about the preferred scheme, including its complexity, risks, likely cost and appropriate contingency. It must also take proper steps to obtain material investigations, such as a ground investigation report. Failure to do so may causally expose the client to a payment liability which would have been avoided by proper advice.

The claimant, a multidisciplinary building design consultancy, was retained to design and assist with the development of a listed property into apartments. Its bespoke fee arrangements provided for staged payments, including a balance of the fee after planning permission and further cost refinement. Planning permission was obtained for a complex revised scheme involving substantial excavation and temporary and permanent support beneath the existing building.

The claimant invoiced the defendants after planning permission was granted. The defendants disputed liability, alleging failures in cost advice, feasibility reporting, ground investigation, buildability advice and contractual performance. They counterclaimed for losses said to arise from those breaches. The principal issues were the construction of the payment condition, the standard of professional advice, causation, and the recoverability of the counterclaim.

1. Invoice claim. The claimant was not entitled to present its invoice when it did. Construing the agreement as a whole, the words requiring the cost to become firm, the cost estimates to be refined and the contract sum to be known required completion of such stage-three services as were reasonably necessary to procure a tender which the defendants were ready, willing and able to accept. The claimant had not reached that point. Its refusal to continue work unless paid was a repudiatory breach.
2. Feasibility and cost advice. The claimant failed to provide the promised bound feasibility report identifying the preferred option, its risks and an indication of cost. It also failed to give adequate advice about the increased complexity and cost risks of the revised scheme, or to take proper steps to procure a ground investigation report. These were material contractual breaches. A competent practice should have provided a substantial contingency or a significant range of possible costs and explained the importance of obtaining the investigation before proceeding.
3. Causation and payment. Proper advice would have led to an earlier examination of funding feasibility. The defendants would probably have delayed the planning application until continued funding had been secured. Funding would not have been obtained, and the claimant would not have obtained planning permission for its revised scheme. The defendants therefore had a substantive defence based on circuity of action: any liability for the invoice would have been recoverable from the claimant as damages for its breach.
4. Buildability. Practical buildability required consideration not only of technical possibility but also of practical risk, cost and timing, together with compliance with planning permission and listed building consent. Applying that approach, the court found the revised scheme capable of being implemented by a carefully designed piling and grouting solution, but the defendants had not proved that the claimant negligently proposed an unbuildable or financially unviable scheme.
5. The claimant substantially performed stages one and two, so the defendants could not recover repayment of the £25,000 already paid. The incentive, stage-three, loss-of-profits and contractual costs claims failed. The counterclaim succeeded only for the £1,675 cost of the planning application. Judgment was entered for the defendants on the claim and on the counterclaim in that sum, with interest and costs to be agreed or assessed.

First-instance decision. No appellate history is stated in the judgment.