Case No. 0LS79020

to remain as ER’s [Employer’s Requirements]. This issue is not negotiable.”22. On 14th November a Pre-Contract Meeting took place between representatives of the Trust, TTPM and Kier. Part 4.1 of the minutes of that meeting records that modifications had been agreed to the letter of intent; these reflected a basic programme for the works and an agreement that liquidated damages would be waived for a period of two weeks following the agreed date for practical completion.23. Pursuant to that agreement, on 17th November 2003 the Trust issued the First Letter of Intent to Kier. As with all the subsequent letters of intent, the contents and the drafting of the First Letter of Intent were attended to by TTPM and the role of the Trust was simply to issue it. In his witness statement Mr Bryan stated that the Trust “acted on instructions from” TTPM; although strictly that reverses the relationship, it gives expression to the reality of the Trust’s dependence on TTPM. The First Letter of Intent and the letters of intent subsequently issued were not mere expressions of intention to contract in the future; they were in the nature of offers to contract on strictly limited terms and on a short-term basis, coupled with an expression of intention to enter in due course into a full and formal building contract, the terms of which would not however bind the parties until it was executed. Because the letters of intent are central to these proceedings, I shall set out much of the text of the First Letter of Intent. “We confirm that it is our intent to enter into a contract with you for the above project. The form of contract will be the JCT Standard Form of Building Contract With Contractor’s Design 1998 Edition with Amendments 1, 2 and TC/94/WCD as modified by Article 8 (sectional completion). The programme dates are as follows:•Site Possession Date — 1st December 2003•Start on Site Date — 15th December 2003•Practical Completion Date — 26th November 2004. The following matters remain outstanding:1. Finalisation of the Contract Sum. The current tender sum of £4,747,112 to be amended to reflect the latest version of the VE savings menu as discussed at the meeting of 24/10/2003.2. Finalisation of Drawings and Specifications.3. Agreement of documentation forming contract documents. It is our intention that[,] once these matters are agreed, they will be reflected in a written contract document. Neither of us will be bound by the intended contract unless and until the written document is executed by each of us.In the meantime, please proceed from Monday 10 November with the following works:- [a list of works was set out].In the event that the intended contract is not concluded between us, we will reimburse you your reasonably incurred expenditure upon the project up to a limit of £75,000.00 excluding VAT, or such other amount as we may agree in writing, and you will not be entitled to any further payment whether by way of quantum meruit or otherwise. The timescale covered by this letter of intent is from 10 November 2003 to 15 December 2003.In consideration for the Works carried out by you pursuant to this letter of instruction, payment shall be in accordance with the payment conditions within the JCT Standard Form of Building Contract With Contractor’s Design 1998 Edition with Amendments 1, 2 and TC/94/WCD as modified by Article 8 (sectional completion).Each of us shall have the right to refer any dispute arising under these arrangements to adjudication in accordance with the Royal Institute of British Architects adjudication rules.In the event that the intended contract is concluded, then such contract shall apply retrospectively in place of these arrangements, and payments made under these arrangements shall be treated as on account of our payment obligations thereunder.”24. Pursuant to the letter of intent, Kier commenced works on site in early December 2003. At this stage, although the VE exercise was substantially complete, the costs of the works provided for had not been finalised in all respects, because the Trust had not accepted all aspects of Kier’s re-tender but had asked Kier to continue to review the design.25. It was at about this time that Mr Bullen cut down significantly on his residual role with the H5 works, having already handed over day to day management of the project to another of TTPM’s project managers, Mr James Mell. Mr Mell was recently qualified, having graduated in 2001. In early December 2003 Mr Bullen sent an email to one of his colleagues, in which he expressed reservations about Mr Mell: “Have been thinking about Ampleforth … I don’t think the replacement PM is up to the job!!! Have not decided how to play this with Jim Fletcher as yet because I do not want to prolong my involvement with the project—I’ll let you know how it goes.” At the trial, Mr Bullen said that those remarks should be attributed to his own arrogance and his very positive experiences of working with the Trust and Mr Bryan. He insisted that Mr Mell was sufficiently experienced to deal with the project and that there were no issues concerning his technical competence; such concerns as he had related more to the fact that Mr Mell was a quieter character than he and, consequently, to Mr Mell’s ability to maintain the good relationship with the Trust.26. On 4th December 2003 Mr Mell sent an email to the design team, identifying the design information required by Kier before it could finalise the price and the contract and emphasising the importance of providing the information without delay and thereby avoiding slippage of the programme. On the same day, Mr Talabani sent an email to Mr Colin McNeil, a director of Kier, in which he said that, if the contract were not in place by mid December, he would prefer to proceed by a further letter of intent than to enter into a contract with a large number of provisional items outstanding. Mr McNiel was in agreement with that course. On 15th December Mr Talabani sent an email to Mr Bryan: “As Kier are not yet in a position to confirm fixed costs for all of the VE items, we [are] not yet in a position to conclude the formal contract documents for H5. We therefore need to issue a revised Letter of Intent as the previous one expired today.”27. Accordingly on 19th December the Trust issued Letter of Intent (Revision A); it was dated 15th December 2003. This was in the same terms as the First Letter of Intent, save for a number of specific revisions: the list of works was expanded; the reimbursement figure of £75,000 was replaced with a figure of £382,500; and the timescale covered by the letter of intent extended until 19th January 2004.28. When it tendered for the H5 works, Kier was not aware that the Trust was proposing to fund the project by means of borrowing from a bank. In December 2003 the matter was discussed between Mr McNeil and Mr Talabani, and Kier requested a letter from the lender. At Mr Bryan’s request, on 22nd December AIB wrote to Kier to confirm that it and the Trust were close to finalising a loan facility to finance the cost of developing the proposed new accommodation block, with only a small number of procedural issues outstanding; it was anticipated that those would be resolved within a couple of days. On 5th January 2004 Kier replied that it required to know as soon as funding was formally in place and asked that it be advised as soon as matters were concluded.29. The period covered by Letter of Intent (Revision A) expired on 19th January 2004. Kier’s Progress Report No. 2, dated 21st January 2004, stated: “FURTHER LETTER OF INTENT REQUIRED IMMEDIATELY.” Issues regarding the VE position were delaying the finalisation of the contractual documentation, but on 28th January Kier informed Mr Mell that it was confident that the remaining issues could be concluded within an anticipated timescale, and on 30th January Mr Talabani informed Mr Mell that Kier’s fixed costs for the VE items, which would enable the contract sum to be calculated, would be issued on 2nd February; meanwhile, he would prepare a further letter of intent for Mr Bryan to issue to Kier.30. Accordingly, the Trust issued the third letter of intent, Revision B, which was dated 30th January 2004. The reimbursement limit was stated to be £1,200,000 and the period covered by the letter of intent was from 19th January to 27th February 2004.31. TTPM received Kier’s consolidated and final VE Schedule on 3rd February 2004. Its response was given by Mr Talabani’s letter of 26th February, which indicated that the revised contract sum appeared to be £4,951,365, raised a number of specific queries in respect of the VE Schedule, and said: “Please respond to these items at your earliest convenience so that the outputs can be incorporated in the Contract documents. If not, they will not form post contract variations as the execution of the Contract Documents 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.