This month I am looking at scope again but in the context of professional retainer rather than a scope of works. (Please see last month’s article on Clancy Docwra -v- E.On). Back in September, the TCC sitting in Manchester handed down judgment in the case of Williams Tarr Construction Limited -v- (1) Anthony Roylance Limited and (2) Anthony Roylance. In this case two key issues arose:
*Identity of the contracting parties
*Scope of responsibility
I will touch only briefly on the first part, the subject having been covered previously by Katie Pickering. However, it is an important reminder to professionals not to let tradition and perception get in the way of legal protection.
I will then go on to examine in more detail the importance of clearly agreeing and recording the scope of a professional retainer and the risks of conflating what “should” be done and what has been agreed to be done. Although the case relates to a civil engineer, the lessons learnt apply to anyone engaging a consultant.
The majority of this article is dedicated to providing our top tips on how to avoid making the same mistakes as the parties in this case.
Background and summary of the dispute
The case surrounds a chartered civil engineer and an eponymous limited company owned and controlled by him and the engagement of one or both of them in the design of a retaining wall which was constructed in 2010/2011 in Congleton, Cheshire as part of the re-development of Albany Mill. The site sloped considerably and was lower than the adjoining land to the north. The nature of the site meant that the project included the design and construction of various retaining walls including the ill-fated Retaining Wall.
Various parties were involved in the project and it is a fair summary to say that the contractual nexus was not clearly understood by any of them, let alone all of them.
What is clear is that in Autumn 2010 there were serious issues with the installation of the Retaining Wall and further solutions were required. Although not expressly set out in the Judgment it seems to be the case that Williams Tarr incurred additional costs in excess of £100,000 in respect of piling, concrete reinforcement and preliminaries as a result of the problems with the Retaining Wall. This must have been Williams Tarr’s responsibility under the main contract as they sought to recover the losses from their supply chain.
In the interests of brevity, this article does not deal with the responsibilities of CSS (the sub-contractor who constructed the wall) or Hy-Ten (who was responsible for at least the gabion wall solution, possibly more) although the Court reviewed both in the Judgment. It is, however, possible to consider the liability of Mr Roylance (AR) and/or Anthony Roylance Limited (ARL) in relative isolation.
This case then, concerned the extent of AR and/or ARL’s liability for the design of the Retaining Wall and whether either of them had warranted that the Retaining Wall, once complete, would be fit for purpose.
Williams Tarr’s position was that AR/ARL had overall responsibility for the design of the wall, notwithstanding Hy-Ten’s involvement in the design of the gabion solution.
AR/ARL’s position was that their engagement was limited to designing a drain “which would address the problems with water inflow so as to enable access to be effected to the rear of the Retaining Wall” but that this did not extend to any requirement to “bring forward a solution to the problems with the Retaining Wall let alone warrant that the wall would be fit for purpose”. It is important to note that Williams Tarr did not allege any defect in the design of the drain.
Identity of the contracting parties – what went wrong and how not to make the same mistakes
Mr Anthony Roylance incorporated his business in 2005 to form Anthony Roylance Limited. In evidence he said that “since then I have always contracted through my company”. Unfortunately for him, however, he was not always clear with his contracting counterparts that that was the case, with no reference made to the limited company on letter head, email address, postal address (being different from the registered office of the company), insurance certificate, fee proposal or invoices.
It seems that some of the reason for down playing the existence of the limited company was historical: Mr Roylance stated in evidence that previously chartered civil engineers were not permitted to operate through limited companies and that he felt that the practice was still “frowned upon” by the Institute of Chartered Engineers.
In mitigation, the Court accepted that Mr Roylance did sometimes refer to “we” and to “Anthony Roylance Structural” and indeed noted that some time after the relevant contract was formed the claimant issued a collateral warranty for Mr Roylance to sign in the name of “Anthony Roylance company number 05477424”.
Ultimately, the Court decided that the contracting party was Mr Roylance personally, meaning that the outcome of the case had the potential to have a huge financial impact on Mr Roylance with the prospect of a judgment against him for in excess of £100,000 at stake.
The scope of the retainer: a reminder of what “assume” makes and how to avoid being made one
Having established that Mr Roylance was personally liable, the Court had to determine what, if any, liability existed and whether or not Mr Roylance had fallen short of any contractual duty.
As is so often the case in projects which end up before the Courts, various designers were involved in this part of the works, numerous assumptions were made, and formal contracts were overlooked, perhaps as an unnecessary expense. The engagement of Mr Roylance was recorded via a series of emails. There was suggestion of some oral part of the contract but that was not particularised by the claimant and the Judge centred on any exchange of emails in November 2010, classifying Mr Roylance’s email of 18 November as an offer, accepted by Williams Tarr on 25 November 2010.
In light of the lack of formal contract terms, the Claimant sought to rely on implied terms to “exercise reasonable care and skill and a term that the design would be fit for purpose together with a term that such parts of the initial design of the Retaining Wall as were retained would be fit for purpose.”
The defence focussed on the scope of works and referred to the email which stated that Mr Roylance was “to design a high level land drain to go behind [the Retaining Wall]". The Court found that that email was accepted by the Claimant, thus limiting the scope of Mr Roylance’s engagement to the design of the drain rather than the wall.
Mr Roylance had accepted that there was an implied term of reasonable skill and care but had maintained that that related to the design of the drain. The Court agreed. As there had been no allegation that Mr Roylance’s service had fallen short in respect of the drainage design, he was not found to be liable.
As an important aside, it is worth looking at assumptions made by the Claimant. In oral evidence, a representative of Williams Tarr said that “you would have expected an engineer to consider other aspects of the whole system and not just look at the drainage in isolation.” The Judge also noted that the same witness placed emphasis “on what he believed to be normal practice and on the role he felt a civil engineer should take rather than on the details of the Second Defendant’s actual involvement”.
The Court therefore found that any liability that there was rested with Mr Roylance personally, but that his liability only extended so far as his scope of engagement which was limited to dealing with the drain rather than the wall itself or the retaining wall system in its entirety. One could be forgiven for concluding that he got off on a technicality but let’s remember that ensuring clarity of contract is the responsibility of both parties.
How to avoid making the same mistakes
This case came about because of, amongst other things, two significant assumptions: firstly, Mr Roylance assumed it was obvious that he intended to contract through his limited company, and secondly Williams Tarr assumed that Mr Roylance was taking on a wider and more general role rather than looking at what scope had actually been agreed in writing. Both parties were wrong.
So how should you avoid making the same mistakes as Mr Roylance? The following tips refer to a “limited company” but apply equally to limited liability partnership:
- Ensure that your headed paper and website all make clear reference to your limited company.
- Use a professional domain name for your emails – e.g., @bpe.co.uk not @gmail.com. Make sure you have a standard sign off on all emails that refers to the limited company.
- Ensure your standard T&Cs refer to limited company and quote the company number.
- When issuing quotes/fee proposals, refer to the limited company throughout.
- Make sure that your insurance certificates etc all refer to the limited company.
- For sole traders/eponymous companies, remember that you can take other steps to ensure that your clients understand that they will get the benefit of your personal expertise and experience. This can be done without diluting the value of having incorporated.
And how can you avoid making the same mistakes as William’s Tarr when engaging a consultant?
- Do not rely on an exchange of emails to record your agreement
- Depending on the project you could use the consultant’s own standard T&Cs, and industry standard form of engagement or a bespoke form of engagement prepared by the employer or main contractor. The latter is more likely to be appropriate on largescale projects and/or where a third-party funder or landlord is involved.
- Remember that even using a “proper” contract will not solve all your problems unless it is completed properly and the scope of services is clearly set out.
- If your agreement refers to other documents, it is good practice to append those documents to the contract (whether in hard copy or using a CD).
- Where various documents are referenced, make sure it is clear how those documents are ranked so that any issues of interpretation can be more quickly resolved.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.