Case No. 0LS79020

should not be delayed further. A draft copy of the Contract documents will be dropped off at your offices this evening. Please forward any comments you may have on these to Alan Talabani at the above address.” The contract documents were delivered by TTPM to Kier either on 26th February or very shortly afterwards. After the end of February 2004, no further changes were made to the VE schedule or to the contract price.32. On 2nd March 2004 Mr McNeil sent to Mr Talabani an email in the following terms: “Thanks for the contract docs which have been the subject of discussions S Phillips/yourself. Their checking, the receipt of warranties and finalising consultants appointments incl the issue of the extra fees they seek for VE work, will all take more time and it is to be noted that the current Letter of intent expired Friday 27th Feb. I will have for you in short timescale a request for further cover to take us to 26th March, the date by which realistically we should have all these outstanding matters resolved. I have again to record disappointment that despite conversations with Allied Irish, with Peter Bryan including letters, and direct contact from our Regional Financial director, no letter in the reqd form has been received re Loan facility being in place for Ampleforth and the building works which relate to the subject Contract. I am having serious problems in appeasing our masters in HQ that our position is secure bearing in mind that various unfulfilled promises via P Bryan and the bank direct, have been given.” The reference to “warranties” was to the terms of the warranties that would be given to the Trust by sub-contractors and consultants whose contractual relationship was to be with Kier. (A distinct issue concerning warranties subsequently arose when AIB required, as a precondition of its agreement to advance funding for the project, a warranty from Kier.) The reference to “extra fees” for VE work related in particular to the demand of Shire that either Kier or the Trust pay them additional fees for the time they had spent on the VE exercise; I shall say more of that below. For the present it may be noted that Mr McNeil expected that all outstanding matters would be resolved by the end of March 2004.33. On 8th March and again on 11th March Mr McNeil spoke to Mr Mell by telephone and repeated his request that AIB provide written confirmation of the loan facility. In the second conversation he stated that Kier would issue a seven-day notice to walk off site if the confirmation were not produced. Mr Bryan’s evidence was to the effect that the Trust considered Kier’s request impertinent and insulting; the Trust was well-endowed, its financial position was beyond question and the particular manner of funding for the project was none of Kier’s business. That stance was reflected in Mr Mell’s email to Mr Talabani on 12th March, which was written after discussions with Mr Bryan. Mr Bryan also stated that Kier’s request gave rise to a Catch-22 situation, because AIB was unwilling to provide confirmation of funding before a signed construction contract was in place. As a matter of practicality, it might be thought that the situation required no more than communication and co-ordination and was hardly a Catch-22.34. Nonetheless, on 11th March 2004 the Trust issued Letter of Intent (Revision D). (There does not appear to have been a Revision C.) The reimbursement limit was stated to be £1,885,000 and the timescale covered by the letter of intent was from 10th November 2003 to 31st March 2004. The matters recorded as still outstanding were only “Finalisation of Drawings and Specifications” and “Agreement of documentation forming contract documents”; the first outstanding item mentioned in the First Letter of Intent, namely “Finalisation of the Contract Sum”, had by now been resolved.35. In mid March 2004 TTPM sought to address the outstanding matters with Kier. The impasse regarding confirmation of funding from AIB was the subject of a conversation between one of TTPM’s directors, Mr Nick Townsend, and a director of Kier. Mr Townsend asked Kier to be pragmatic about the situation and received the assurance that Kier would not leave site over the issue, although the letter of confirmation would be required eventually. On 16th March Mr Talabani met with a representative of Kier in order to discuss the contract documents. His email of that date to Mr Mell and Mr Bryan concluded: “We are still aiming for signed and executed contracts in place by the end of March. This should then enable AIB to issue formal confirmation of funding.”36. The position as between Kier and the Trust, except with regard to the confirmation from AIB, was summarised by Mr Talabani in his letter of 22nd March 2004 to Mr Simon Phillips of Kier.“1. Warranties —Warranties will be required between the Employer and the following key sub-contractors and consultants. Standard Form of Wording to follow shortly.- All sub-consultants- Piling sub-contractor- Steelwork sub-contractor- Green Roof sub-contractor- Mechanical & Electrical sub-contractor- Lift sub-contractor- Floor planks sub-contractor Warranties will also be required between Kier Northern and the Abbey’s funder. Once I receive exact requirements, I will forward to yourselves. It is unlikely that the Warranties will be in place by the end of this month, however I suggest that we proceed with the signing and execution of the Contract Documents and insert the warranties retrospectively.2. Consultants Fees — As promised we will speak to Shires regarding their claim for additional fees and let you know accordingly. Can you please forward copies of your consultants appointment documents, when completed.3. LAD’s — I attach for your comment the wording regarding the 2 week project float period. Please let me know your comments asap.4. VE Items/Revised Contracts Proposals — Please forward all design information to reflect the chosen VE items. This can be incorporated into your revised Contractors Proposals and Contract Sum Analysis.5. Contract Documents — I will incorporate all the amendments we made to these and bring 2 sets with me to our meeting [on 25th March].”37. On 23rd March 2004 the solicitor who was acting for the Trust in its dealings with AIB sent Mr Bryan an email concerning AIB’s requirements before it executed a funding agreement. On 25th March Mr Bryan forwarded the email to Mr Talabani and asked: “Please can we get all these bits and pieces sorted? It would be especially nice to have a contract.” On 1st April Mr Talabani responded in respect of AIB’s requirements. He said that he had issued to Kier a proposed form of warranty that it should give to AIB and he asked for confirmation whether AIB wanted warranties from the architect or from TTPM and how AIB wanted to progress the matter of taking a Parent Company Guarantee in lieu of a performance bond under the building contract.38. On 2nd April Mr McNeil wrote by email to Mr Talabani:“The outstanding contractual issues include:-1. Warranties in approved wordings not received.2. Consultant appointment issues not yet resolved.3. Consultant fee supplements not yet agreed.We regret that we cannot park these matters to post contract signing stage. …Following W Kay’s [a Kier director] meeting with Peter Bryan yesterday, it appears a letter from AI is closer, so progress is being made.Can you arrange to let us have the revised letter of intent by return.”39. Mr Talabani replied on 16th April 2004, having in the meantime informed AIB that Kier would prefer to use the JCT standard form of funder warranty than that proposed by AIB. His email said:“Apologies for not getting back to you earlier. I respond to your notes below as follows:1. Warranties—Agreed, these have not been forwarded to yourselves yet. I have been waiting for a response from AIB which has not come yet. I will issue all warranties during next week (except for the funder one—which requires AIB comments).2. Consultant appointment /. Fee supplements—I must say that I am a little disappointed that these have not been resolved yet. The consultant appointment details were included in the tender documents that were issued to you back in August last year, and have not really changed since then. Around December last year you told me that some of the designers were not playing ball and asked T&T to have a word with them, which we did, and my understanding was that it had then been resolved.Consultant appointments aside, I was under the impression that Kier were happy that the contract could be executed with the warranties inserted retrospectively. That appears to not be the case now. Whilst it is obviously preferable to have everything in place prior, it is not unheard of to insert warranties at a later date and therefore I do not see this as a reason to hold up the executing of the contract.What is clear is that at the moment, the letter of intent which you are working to has expired and the contracts are not in place. We will therefore issue a revised letter of intent to you early next week. I know I said this last time, but can we please make sure this really is the last one that we have to issue. If there is anything else you need from us to make this happen, please let me know.My understanding re the AIB letter following the meeting between Peter / William is that the Abbey had given the AIB authority to discuss the matter directly with Kier and that you would contact them directly to seek confirmation of funding, assurances etc.”40. Mr McNeill replied on 19th April:“I am sorry you appear to have been under the impression that we could fully sign up without warranties seen and agreed. Our rule book prevents this Alan and I cannot think how an alternative resolve could have got into your mind, or who could have put it there.That said therefore we need to agree on these before the contract is concluded—let’s hope that can be before the expiry of the next LoI commitment.Whilst W Kay was given to expect a letter from AI in the sentiment discussed that is not with us yet.The agreement of Appointments with Consultants has been a protracted one and correspondence exchange continues between us. AA and Shires have still some issues to resolve with us, Halcrows too but less so.” The reference to Kier’s “rule book” is a reference to Kier’s “Standing Orders and Guidelines”, issued in July 2001 and remaining in force until a revised version was issued in September 2004.41. On or about 16th April 2004, the Trust issued Letter of Intent (Revision E), which bears that date. The reimbursement limit was stated to be £2,542,500 and the timescale covered by the letter of intent was from 10th November 2003 to 30th April 2004. The matters recorded as still outstanding were unchanged from Revision D.42. On 20th April Mr Talabani informed Mr McNeil that AIB did not require any form of warranty or performance bond from Kier and that he would provide drafts of the warranties required by the Trust from the key subcontractors and the “subconsultants”. Those draft warranties were sent to Mr McNeil on 22nd April. By a letter dated 29th April Kier requested “some minor amendments” to the drafts and awaited the Trust’s response. On 6th May Mr McNeil wrote to Mr Talabani by email: “You will by now have received Jonathan Holt’s letter commenting on a number of issues emerging from the warranty wordings previously received from you. This will require to be agreed. The good news is that the above now remains the only issue to resolve, matters of payment security, dealing with consultants’ applic[ations] for additional fees etc now resolved. A further letter of intent to formalise the current position will therefore be required, and JH is currently working on a revised value. I shall contact you as soon as this figure is known.” On 7th May Mr Talabani gave a response to Kier’s proposed amendments to the warranties, agreeing to some of the proposed amendments but not to others, and wrote to Mr McNeil by email: “As we are nearly there now, can I suggest we just execute the Contract Docs asap rather than re-issue a letter of intent. As we are so close, I would really rather not have to go back to Peter [Bryan] to issue yet another letter.” Mr McNeil replied: “We are exposed at this time [i.e. because the latest letter of intent had expired]. I have asked Jonathan [Holt] to elicit a very quick response to your counter-views on warranties. I agree that executing the docs is desirable, but that would depend on speed of resolution on warranty wordings.”43. The subcontractors and sub-consultants were also making observations on the terms of the warranties being sought from them. For example, by a letter dated 9th May 2004 Associated Architects informed Kier that they were prepared to give standard-form industry warranties but not bespoke warranties. The outstanding issues regarding the warranties had not been resolved by the middle of May.44. A further outstanding issue was the question of Shire’s demand for additional payment. That demand had been made in a letter to Kier, copied to Mr Bullen, on 24th February 2004. However, both Mr Bullen’s witness statement and the terms of his email to Mr Mell on 23rd March 2004 show that it did not come to his attention for some time. Mr Talabani was aware that a request had been made for further payment; see Mr McNeil’s email to him on 2nd March (paragraph 32 above). At all events, on 2nd April Mr Mell asked, “what [is] this about Shire additional fee?” and Mr Bullen replied: “Apparently Shire want an uplift to 0.6% [of the tender sum] (from 0.5%) on their fees due to the virtual complete re-design they’ve had to do on H5. Talabani’s standard response is ‘no f**king way’!!!” (It is unclear whether Mr Bullen was repeating Mr Talabani’s specific response or was making his own response in the terms that Mr Talabani was accustomed to use.) On 8th April Mr Mell informed Shire by email that the request for additional fees was refused. Shire immediately replied that the refusal was unreasonable and made it clear they would pursue the matter. On 14th May Mr Mell asked for a breakdown of Shire’s claim, while making it clear that he did not think it likely that the Trust would approve the payment of additional fees.45. On 20th May Shire informed TTPM and Kier that they would provide the required information in the first week of June. An internal email at Kier commented: “Until this matter is resolved we cannot formalise the appointment.” Mr McNeil emailed Mr Talabani: “The trail remains hot Alan. No imminent sign of this contract being signed so I have to ask again for an extension to the letter of intent to the value advised w/c 03/05. Can you pl advise as quickly as poss.” Mr Talabani forwarded that message to Mr Mell with the comment: “They’re blaming this issue on not sorting the cont docs. [In context, this sentence must mean: They are using this as a reason why they cannot execute the contract documents.] Not on really as I have told them go proceed without and if it has to be paid post contract, we’ll raise as a variation.”46. On 25th May Mr Talabani wrote to Mr Phillips of Kier: “If the contract docs are within spitting distance, I’d rather push to get them executed rather than issue revised l of i’s etc.” Mr Phillips replied: “Given that the L of I is limited not only by value but also date this does need to be revised. We would given the current level of cost exposure accept an amended L of I extending the date to the end of July 04. Is there any reason now why a L of I for the full contract value (unlimited by time) cannot be issued.”47. On 27th May 2004 Mr Talabani and Mr Kimber had meetings with their counterparts at Kier and voiced their concerns over the delay in executing the contract. A further meeting was arranged for 10th June because, as Mr Talabani recorded in an email to Mr Mell, Kier could not meet any earlier. In an email on 7th June 2004 Mr Talabani summarised how the position stood as at that date.“The latest situation re contract docs is as follows (items with an * are still to be resolved):-•Warranty wording—this has now been agreed between T&T and Kier.•* Shires—are not signing their agreement until the £5k issue has been resolved. Can you please let me know how these discussions go.•Halcrow final fee level—this has now been agreed between T&T and Kier.•AA landscaping fee—this has now been agreed between T&T and Kier. Can you please let me now what element of the £5.1k has been paid by [The Trust].•* VE changes schedule—Kier were going to forward this full document by Friday 4/6/2004. This has not arrived as of this morning. I have chased this already.•LAD wording—this has now been agreed between T&T and Kier.•* AA appointment—terms/wording still not resolved [that is, between the architects and Kier]. Can you please let me know how these discussions go.I know the above is not great but short of threatening them with violence, I don’t know what to do. The ‘final’ contract docs have been with Kier for 3 months now. I am leaning hard on Kier, but of the outstanding items the VE background info schedule is down to Kier. The other 2 issues relate to AA and Shires. I suggest a strong call from TTPM to urge them on.As the current letter of intent expired at the end of April, I would suggest for completeness we re-issue one taking us up to the end of June 04. If you are in agreement, I will issue the revised letter to the Abbey for processing.” (So far as concerned Shire, the breakdown of the claim for additional fees in the sum of £21,090 had been provided under cover of a letter dated 3rd June 2004 and remained under consideration by TTPM and the Trust.)48. On 8th June 2004 Mr Mell replied to Mr Talabani: “I agree to the extended Letter of Intent, but we must endeavour to resolve the outstanding issues below with some urgency.”49. Accordingly the Trust issued Letter of Intent (Revision F), which was dated 9th June 2004. The reimbursement limit was stated to be £2,542,500 (unchanged from Revision E) and the timescale covered by the letter of intent was from 10th November 2003 to 2nd July 2004. The matters recorded as still outstanding were unchanged from Revisions D and E.50. On 5th July 2004 Kier requested a further letter of intent, as its “cost commitment/exposure [was] grow[ing] throughout the project”. The main problem at this date remained Shire’s claim for additional fees as set out in its letter of 3rd June. By a letter dated 6th July, Shire told TTPM that it was unwilling to sign the contract for its appointment by Kier until such time as that claim was agreed. On 12th July Mr Talabani assured Kier that the requested letter of intent would be issued “in the light of the Shire issue”. Letter of Intent (Revision G) was dated 12th July 2004. The reimbursement limit was stated to be £4,250,000 and the timescale covered by the letter of intent was from 10th November 2003 to 31st August 2004. The matters recorded as still outstanding were unchanged.51. On 16th July 2004 Mr Talabani, who was about to take a fortnight’s paternity leave, sent an email to colleagues at TTPM, noting points for action on projects with which he was dealing. The relevant part of his email was in the following terms: “Ampleforth H5—Craig—Meeting with Craig to sort variation costs, then we’ll all get together after I’m back to mop up. Rev’d let of intent issued so don’t worry about cont docs.” The Trust refers to this email as an illustration of what it says is Mr Talabani’s complacency: so far as he was concerned (says the Trust) the absence of an executed contract was a matter of little importance, for he was happy simply to issue letter of intent after letter of intent without any awareness of or concern for the potential consequences for the Trust. I shall return to this point in the context of a consideration of the case on breach of duty.52. On 23rd July Kier wrote to TTPM regarding the execution of the contract documents. Again, the Trust refers to this letter as evidence contradicting any assertion that Kier was unwilling to sign the contract and was looking for reasons to avoid doing so. “Whilst we note that a revised Letter of Intent has been issued to cover the amended value of £4,248,488.00 up to the end of August 2004, it is disappointing that matters outwith the control of Kier Northern are preventing not only the execution of the Contract but also the Consultant Appointment Documents. Contract Documents T&T / AA&C to confirm that documentation provided by ourselves in respect of the VE exercise … are acceptable for inclusion with the contract documents. Whilst we have exchanged correspondence and discussed the proposed wording of the two week LAD free period, this has yet to be formalised for inclusion within the Contract.