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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Sykes & Anor v Packham (t/a Bathroom Specialist) [2011] EWCA Civ 608 (18 May 2011) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2011/608.html Cite as: [2011] EWCA Civ 608, [2011] TCLR 6

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IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
His Honour Roger Connor DL
7 MK 00900

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/05/2011

LORD JUSTICE GROSS:

INTRODUCTION

1. By his order dated 21^st January, 2010 ("the judgment" or "the order", as appropriate), HH Roger Connor gave judgment for the then Claimant (now "the Respondent") in the amount of £25,910.72 plus £8,282.80 by way of interest, a total of £34,183.52, to be paid within 28 days. The Judge further ordered that the then Defendants (now "the Appellants") pay the Respondent 85% of his costs of the claim and counterclaim on the bases set out in the order. The Judge refused the Appellants' applications for permission to appeal and for a stay of execution.
2. As explained in the Judgment, the Respondent is a plumber and heating engineer, trading, at the material time, as a bathroom specialist. He claimed in respect of work done by him at a substantial house called Midsummer Moon at Wavendon, Milton Keynes ("the house"). The dispute relates to the period immediately before and after purchase of the house by the Appellants, in the latter part of 2005. By the claim, the Respondent sought payment for what he alleged was the balance due to him in respect of works done by him, his employees and sub-contractors at the house ("the works") and for materials supplied. The Appellants denied that they were liable to pay any further money to the Respondent and counterclaimed, alleging overpayment and that some of the work done by the Respondent (or his employees or sub-contractors) was defective. As already recorded, the Judge found in favour of the Respondent in the amounts set out in the order.
3. The Appellants sought permission to appeal from the judgment, on the following three grounds:

i) The Judge erred in rejecting the Appellants' case that this was a fixed price contract (plus extras).

ii) Having rejected the Respondent's case that this was a "cost plus" contract, the Judge erred in finding that the Respondent was entitled to recover on a quantum meruit; instead, the Judge should either have dismissed the claim or given the Appellants an opportunity to call evidence as regards the "reasonable price" and to make submissions in this regard before judgment.

iii) There was insufficient evidence to support the Judge's findings as regards what was in fact a reasonable price for the works.

4. The single Lord Justice granted permission to appeal on all these grounds, together with a stay of execution (by reason of the Respondent's financial difficulties). There had been a further ground of appeal as to matters arising from the draft judgment; the single Lord Justice refused permission to appeal in this regard and the Appellants did not pursue it before us. Nothing more need be said of it.
5. There is also before this Court a Respondent's Notice ("the cross-appeal"), advanced on two grounds::

i) Essentially, a suggested arithmetical error in the judgment; if this ground is well-founded, the Respondent should have been awarded the principal sum of £30,506.70 (instead of £25,910.72) plus interest in the amount of £9,746.12 (rather than £8,282.80).

ii) A submission that if the Judge was wrong to hold that this was a contract for a reasonable price, he should have held that it was a cost plus contract, as originally alleged by the Respondent.

6. There are, accordingly, four principal issues for decision by this Court:

i) The true nature of the agreement ("Issue (I)")?

ii) What should the Judge have done ("Issue (II)")?

iii) A reasonable price ("Issue (III)")?

iv) An arithmetical error ("Issue (IV")?

7. Pausing here, this litigation prompts a number of reflections. It concerns a domestic building contract which, on any view, went badly awry. The resolution of the disputes which have arisen matters greatly to both parties. On the facts found by the Judge, the Respondent is (or was) a small builder, honest but unsophisticated; as we understand it, he is now bankrupt with liabilities to Her Majesty's Revenue and Customs. So far as concerns the Appellants, there can be no minimising the severity of various findings made by the Judge as to their credibility (in particular, that of the first Appellant), findings which have not been appealed – leading to the Judge's conclusion (at [52] of the judgment) that where there were conflicts in the evidence between the parties "in most matters I prefer the evidence of the Claimant". That said, it only fair to record that the Appellants were always on what might be termed a hiding to nothing – given the Respondent's impecuniosity, there has never been a realistic prospect (whatever the merits of the Appellants' case) of recovery from him.
8. Against this background, I confess to some sympathy with both parties, not to mention the Judge holding the ring. A case of this nature, where the costs of protracted litigation may so readily exceed the sums in issue, necessarily gives rise to acute concerns. In such circumstances, giving effect to the "overriding objective" (CPR, Part 1.1) presents a formidable challenge. There is a need to strike the right balance between saving expense, proportionality, expedition and fairness – all components of dealing with a case justly (CPR, ibid). As will be seen, this is indeed what the Judge, to his credit, has sought to do. The underlying question on the appeal is whether he was right in what he did.

THE JUDGMENT

9. Before proceeding further, it will be convenient to outline the Judge's principal findings.
10. As is not in dispute, the key document was an "estimate" dated 25^th May, 2005 ("the estimate"), of which more below. The Judge's central conclusions with regard to the estimate and, in consequence, the approach he thought it right to adopt, were as follows:

" 54. ….having regard to the round figures given and the terminology used in the estimate, no reasonable person reading the estimate could…have thought that the Claimant was offering to supply the goods in question for a fixed price, notwithstanding the passage referring to changes in manufacturers' list prices……

55. As to whether the decision of the Defendants to instruct the Claimant to do the work gave rise to an agreement to provide the necessary labour for a fixed price, or a contract upon some other basis I, again, conclude that no reasonable person, reading the oft repeated phrase, 'Approximate labour and expenses costs' would have concluded that the Claimant was offering to provide the labour required for a fixed price. I am reinforced in that view by the evidence of the Claimant that the Defendants had asked him to provide a quotation and he told them that he was unable to do so…..If, as I accept, the Defendants asked the Claimant for a quotation and were told that he could only provide an estimate, it is simply not credible that they believed that, by his estimate, he was offering to carry out the works for a fixed price.

56. On the other hand, I cannot read into the words used in the estimate or, indeed, any other part of the evidence, any basis for concluding….that the Defendants agreed to pay for the works upon …..a form of costs plus contract. There is simply no evidence that that is what was agreed and there is no basis upon which I could conclude that such an agreement is to be inferred. Conspicuously, there is no evidence as to what the 'plus' would be. In the absence of an express agreement as to how the price of the works was to be ascertained, I conclude that there was an implied agreement that the price to be paid would be a reasonable price for the work to be done and the materials to be supplied, as would also be the case in respect of the additional works, no other means of ascertaining the price having been agreed…

………

58. Evidence to assist me in determining the amount of a reasonable price in this case is by no means abundant. I do, of course, have the experts' report giving me figures in respect of their valuation of the additional works. However……that evidence is of limited value because the experts had no means of assessing the amount of time wasted due to the presence of other trades or the amount of additional work resulting from changes in instructions given by the Defendants. I perceive that my duty, in those circumstances, is to seek to assess what would have been a reasonable price, doing the best I can. There must, inevitably, be an element of rough justice in this process. (I could, of course, decline to make this finding and adjourn the case for further enquiry. However, this would, in my view, be incompatible with the requirements of the overriding objective set out in part 1.1 of the Civil Procedure Rules, particularly having regard to the lack of proportionality between the costs involved and the sums remaining in issue and the further delay that would result.) "

11. Thereafter the Judge proceeded to consider the reasonable price payable under the contract, with reference to amounts paid by the Respondent (1) by way of wages, (2) to sub-contractors and (3) for materials, tools, equipment and items supplied; further, the Judge concluded that the Respondent must be entitled (whether by way of addition to the above items or separately) to (4) appropriate sums in respect of his own labour and an element of profit.
12. In very broad terms, the Judge's conclusions with regard to these items were as follows:

i) Wages: Having regard to (a) the submission of the Appellants that some of the time of the Respondent's employees had been wasted and (b) the burden of proof resting on the Respondent, the Judge awarded the Respondent 80% of the sum claimed; a reasonable charge thus amounted to £17,200.

ii) A notional wage for the Respondent: Here the Judge awarded the Respondent a daily rate of £177, a figure which included an allowance for the Respondent's own tax liability. Utilising this daily rate and allowing the Respondent 100% of his hours, the total sum under this heading was £14,867.

iii) Sub-contractors: The sums claimed by the Respondent under this heading were recorded by the Judge as amounting to £10,646.87 plus some £2,956.97 in respect of "CIS Tax" – according to the Judgment, tax payable under HMRC's "Construction Industry Scheme". The Judge held that the Respondent had either paid or accepted liability for the sums in question and awarded £13,603.86 as a reasonable price.

iv) Materials, tools and equipment, items supplied: The Judge rejected the Appellants' submission that the Respondent was restricted to the amounts he had paid for the items in question. Instead, the Judge treated the amount paid by the Respondent for such items as the "base figure" for the assessment of a reasonable price. The difference between the price thus paid and the price charged by the contractor to the customer would be part of his profit. Doing the best he could, the Judge ruled that the base figure was £28,255.45.

v) Profit margin: The Judge next turned to decide upon an "appropriate profit margin". There was, as he observed, a "paucity of evidence"; again, the Judge rejected the option of adjourning for further evidence or an inquiry - such a course would "involve disproportionate cost and undue (and, in the circumstances of this case, particularly unfortunate) delay". The Judge held as follows (at [68] of the judgment):

" I propose to apply what seem to me to be modest profit margins to these items, with the exception of the figure for the Claimant's own labour [which of course already contained a profit element]. In respect of the remaining items, I will add a margin of 25% to the wages paid to the Claimant's employees, 15% to the sums paid ……for items purchased and 20% to the sums paid to sub-contractors…….this produces a figure somewhat lower than the amount that was claimed. The inference to be drawn is not that the amount claimed was excessive but that, in the absence of evidence in this respect, I have felt compelled to allow smaller margins of profit than might have been appropriate. "

13. As recorded in the judgment, the Judge's decisions produced the following overall figures ("the schedule"):

"Wages	£21,500.00
80% of wages	£17,200.00
Claimant's 'wages'	£14,867.00
Sub-contractors	£13,603.86
Purchases	£28,255.45
Sub-total	£73,926.31
Profit
25% on wages	£ 4,300.00
15% on purchases	£ 4,238.32
20% on sub-contractors	£ 2,720.77
Total	£85,185.40
Add VAT @ 17.5%	£14,907.44
Total	£100,092.84
Less paid by Defendants	£ 68,280.88
Amount allowed on the claim	£31,811.96
Sum allowed on counterclaim	£ 6,207.25
Balance	£25,604.71 "

14. As will be apparent, there is a small discrepancy between the balance found by the Judge (£25,604.71) and the amount contained in the order (£25,910.72). It was suggested during the hearing that this discrepancy could be resolved if the amount recorded in the schedule for purchases was corrected to read £28,481.91 (thus also producing a slightly different VAT figure). I am not minded to take up more time over this tiny difference. I propose to follow the figure contained in the order and to make the necessary correction to the figure for purchases in the schedule in order to do so.

ISSUE (I): THE TRUE NATURE OF THE AGREEMENT?

15. (1) The estimate: The key document is the estimate, to which reference has already been made, submitted by the Respondent to the Appellants. The opening lines described it as a:

"…revised estimate of cost to partially refurnish the interior of your future home as your specification and choice of equipment."

The estimate went on to describe, at least in general terms, the substantial works to be done; bathroom equipment was to be supplied and fitted "as individual room design and final specification". When dealing with bathrooms, the estimate gave a "general specification". When giving a room by room breakdown, the estimate spoke throughout of "approximate materials and equipment costs" and "approximate labour and expenses costs". For each room, an "estimated total" was given.

16. On the final page, the estimate set out various proposed terms as follows:

" Request payment of VAT (£13,230.00) as deposit at Approval.

Payment of materials (£34,420.00) at commencement.

Balance (£41,180.00) on completion

……..

Any extra works requested, may be subject to extra costs.

Proposed start date during week commencing: 4^th July 2005

This Estimate is calculated on current retail prices for all materials and equipment, all fixing materials and sundry items.

Materials cost will be subject to any manufacturers price increases at time of installation.

Labour and expenses costs are for approximately 8 weeks working time…….

…..

If this estimate is acceptable, please sign and return one copy so that we may finalise equipment to use and arrange a suitable start date. "

The total price of the works described in the estimate came to £88,830, including VAT.

17. (2) The Judgment – further findings: The Judge's central findings as to the estimate have already been set out. Matters do not quite end there. The Judge noted that the Appellants had supplied the Respondent with various plans; however and importantly, he went on to hold (at [53] of the judgment) that he was satisfied that, prior to preparing the estimate, the Respondent had not been supplied with the version of the specifications containing details of the bathroom equipment eventually ordered. The Judge commented in various places (see, for example, at [11] and [54] of the judgment) as to the "conspicuously round figures" given for the bathroom equipment. As recorded by the Judge (at [13] of the judgment), it was common ground that the parties had not followed the payment terms set out in the estimate.
18. The Respondent began work in the week commencing 4^th July, 2005. It was further common ground (judgment, [16] and following) that the Appellants asked the Respondent to carry out works additional to those described in the estimate and that other works (re-roofing and electrical) were carried out on the instructions of the Appellants by other workmen, separate from but concurrent with the Respondent's works. In the event, the works carried out by the Respondent took a great deal longer than 8 weeks to complete (judgment, at [19]):

" Clearly, that additional time must have been, at least in part, the result of the fact that the works to be done had become more extensive, the changes of instructions from the Defendants and the problems of access being restricted by the work of other trades."

In the event, the Respondent's work at the house came to an abrupt and acrimonious end on the 17^th /18^th November, 2005, for reasons rehearsed in detail in the judgment but which need not be recounted here.

19. (3) The rival cases: Turning to the rival cases, the Appellants focussed on the pleadings. The Respondent had simply claimed for payment pursuant to an invoice. At no stage had it been pleaded – or, for that matter, averred in evidence – that the parties agreed that a reasonable price would be payable for the works. There was no call for the Appellants to address at trial issues otherwise than those covered by the pleaded case, a fortiori, given the Respondent's parlous financial position. The Judge had been right to reject the Respondent's case that the parties had agreed on a "cost plus" contract; that case was unsupported by the evidence. The Judge had, however, erred in rejecting the Appellants' contention that this was a fixed price contract. That the contractual document was described as an "estimate" was neither here nor there. The fact that the estimate referred specifically to the cost of materials being subject to manufacturers' price increases and made express provision for charges for extra work led to the inference that, such matters apart, the estimate was a fixed price contract. The Respondent, who had obtained the work by competitive tender, was not entitled to charge more simply because he had under-estimated. In the Appellants' submission, the Judge's conclusion ignored the fact that the Respondent in his own evidence said that he had a fixed price contract in mind at the time the estimate was presented. The language of the estimate did not support the conclusion to which the Judge had come.
20. On the appeal, the Respondent relied on the shifts in the Appellants' case (for instance as to the extent of additional works required) and on the Appellants' choice of not engaging with issues as to the reasonableness of wages and invoices. The Judge had been entitled and right to conclude that there was an implied term that the contract price would be a reasonable price for the work done (not simply the extras). The estimate plainly did not disclose a fixed price contract; it was labelled an "estimate" and had "other elements which suggest uncertainty". In the alternative (pursuant to the cross-appeal), the Respondent renewed the contention that this was a costs plus contract.
21. (4) Discussion: For my part, I agree with the Judge that the contract between the Respondent and the Appellants provided for a reasonable price to be paid for the works done. My reasons follow.
22. First, I agree entirely with the Judge that, contrary to the Respondent's case at trial, this was not a cost plus contract. Quite simply, the evidence did not support it; moreover, as the Judge tellingly remarked: "Conspicuously, there is no evidence as to what the 'plus' would be". It follows that I would dismiss the cross-appeal in this regard.
23. Secondly, I am amply persuaded that the estimate did not give rise to a fixed price contract. In this connection, I do not think that there is any "magic" in the label "estimate"; certainly in the present case, I do not regard that label as a term of art. However, I do regard both the context and language of the estimate as pointing decisively against this being a fixed price contract. By way of elaboration:

i) As to context, the Judge found as a fact (judgment, at [53]) that, at the time of presenting the estimate, the Respondent did not have the final specification containing details of the bathroom equipment eventually ordered. While in theory it is not impossible that the Respondent contracted on the basis that he took the risk as to pricing of whatever specification the Appellants should ultimately decide upon, it is manifestly implausible that he should have done so.

ii) As to language, the Judge emphasised both the round figures contained in the estimate and the use of the wording "approximate materials and equipment costs" and "approximate labour and expenses costs". In my judgment, he was right to do so; objectively, no reasonable person reading the estimate could have thought, in the light of such wording, that it constituted a fixed price contract.

iii) There was, at least at first blush, some force in the Appellants' contention that the wording in the estimate, expressly dealing with a possible increase in the price of materials attributable to a rise in manufacturers' prices, conveyed the suggestion that in other respects this was a fixed price contract. Much the same point was made by reference to the wording in the estimate that extra works might be subject to extra costs. But, upon reflection, the submission as to a price increase carries very limited weight. These were not sophisticated parties entering into a complex agreement – circumstances in which the maxim expressio unius exclusio alterius might well signify a great deal. So far as extra works are concerned, it is difficult to see how they could fail to give rise to extra charges. In any event, even if and to the extent that this language pointed to a fixed price contract, it was comprehensively outweighed by the contrary indications from the context and language to which I have already referred.

iv) For completeness, the Judge observed (judgment, at [55]) that he was reinforced in his view by the Respondent's evidence that the Appellants had asked him to provide a quotation and that he had told them he was unable to do so. While I would not wish to say that the Judge – who heard the evidence – was wrong to draw comfort from these exchanges in the Respondent's oral evidence, I would be reluctant to base my conclusion on these passages and have not done so. The reason is that upon reading (and re-reading) the transcript of the Respondent's evidence on this topic, it remains unclear to me whether there indeed was a conversation to this effect between the Respondent and the Appellants; the relevant extracts of the transcript are capable of being confined to the Respondent's own view as to the distinction between an "estimate" and a "quotation", rather than reflecting a conversation between him and the Appellants; see, transcript for 18^th and 19^th September, 2009, at pp. 18-19 and 75-76. That said, my hesitation in this particular regard does not deter me from the conclusion to which I am otherwise attracted, namely, that this was not a fixed price contract.

v) As noted, the Appellants made some play with what the Respondent appears to have thought at the time of the presentation of the estimate, having regard to his witness statements. I shall assume (without deciding) in favour of the Appellants that what the Respondent subjectively thought would be relevant to determining the true nature of the estimate. But even on this assumption, it seems to me, with respect, that the Appellants have read far too much into the Respondent's witness statements. In agreement with the Judge, I do not think that the Respondent, either in his witness statements or his oral evidence, was saying anything more than that (as the Judge put it) "…he believed that he had accurately estimated the amount of labour required to do the job, if it went as expected". If that is right, as I think it is, then nothing said by the Respondent either assists the Appellants or undermines the conclusion arrived at by the Judge.

vi) This last point leads naturally to a conclusion as to the true nature of the estimate. In my judgment, the estimate here was intended as a reliable basis for the Respondent's calculations – see Keating on Construction Contracts (8^th ed., 2006), at para. 2-008. As such, however, the estimate did not constitute a fixed price contract.

24. Having concluded that the estimate neither disclosed a cost plus nor a fixed price contract, the question remained as to how the works were to be priced. Here, suffice to say that I find myself unable to improve on the Judge's conclusion, already recorded but meriting repetition:

" In the absence of express agreement as to how the price of the works as to be ascertained, I conclude that there was an implied agreement that the price to be paid would be a reasonable price for the work to be done and the materials to be supplied, as would also be the case in respect of the additional works, no other means of ascertaining the price having been agreed."

I agree.

ISSUE (II): WHAT SHOULD THE JUDGE HAVE DONE?

25. (1) Introduction: As carefully explained in his judgment (at [58], set out above), this conclusion as to the nature of the estimate now posed a case management dilemma for the Judge. He could either proceed to assess what would be a reasonable price, acknowledging that in doing so there would be an element of rough justice; or he could adjourn the case, a course which, as the Judge saw it, would give rise to disproportionate cost and delay. The Judge opted for the former course. The question on this appeal is whether he was right to do so.
26. (2) The rival cases: For the Appellants, Mr. Hill vigorously contended that the Judge should have either dismissed the claim or required the Respondent to amend his pleadings, on terms as to costs. At the very least, the Judge should have granted the Appellants a sufficient adjournment, giving them the opportunity of adducing evidence as to the reasonableness of the manner in which labourers were deployed, the time taken and the hourly rate charged. As already foreshadowed, it was the Appellants' contention that they had confined the case at trial to matters covered by the pleadings, so as to keep the trial short and contain costs accordingly. The case for payment of a reasonable price had only arisen late, in the course of closing submissions.
27. For the Respondent, Mr. Christie submitted that the CPR requirement was to plead facts not law: see, CPR, Part 16.4.1. That, said Mr. Christie, was what the Respondent had done. The question of reasonableness had been canvassed in the Reply and Defence to Counterclaim, subject only to the slight difference between contending for a cost plus contract and the case for payment of a reasonable price. When pressed for Further Information, the Respondent's Response had in terms claimed payment of a reasonable rate for his own work. The Appellants' assertions as to what they would have done, given an adjournment, lacked credibility, as illustrated by the claim for "extras". That claim had always been advanced in terms of a quantum meruit; yet the Appellants had called no evidence: see, the judgment, at [18]. In short, the Appellants had not suffered any prejudice; it was not clear what additional evidence would have been forthcoming had there been an adjournment.
28. (3) Discussion: At least an important function of pleading is to identify the issues and the extent of the dispute between the parties: CPR, Part 16.0.2. Viewed in this light, the Respondent's exiguous pleadings left a good deal to be desired. Thus far, there is merit in the Appellants' case. But, to my mind, the difficulties arising from the Respondent's pleaded case serve to introduce the dilemma confronting the Judge; they do not, at least without more, resolve it in the Appellants' favour.
29. The Judge had the very considerable benefit of trying the case and was plainly apprised of the issues. He had formed a view as to the credibility of the parties. He had the relevant considerations well in mind – referring expressly both to an element of rough justice if he persevered with a view to determining a reasonable price for the works and to the consequences in terms of cost and delay if he did not and chose to adjourn. For my part, I can readily appreciate why he chose to proceed. Moreover, as it seems to me, this was a paradigm case management decision, where this Court should, if at all possible, uphold a robust, decisive approach on the part of the trial Judge unless – for present purposes – persuaded that the course taken was unfair to the Appellants. It must not be forgotten that the aim, every bit as much in more modest cases as in larger ones, is to bring the trial to a conclusion; adjournments may be tempting but come at a considerable cost.
30. In my judgment, the decision taken by the Judge was substantially fair to both parties and avoided the disastrous consequences of adjournment. At all events, it was a decision that the Judge was entitled to take and I do not think that it would be right for this Court to interfere. Working through the matter:

i) In a dispute of this nature, it would have been wholly disproportionate to have dismissed the claim by reason of the frailty of the Respondent's pleadings. Further, it would have been a pointless, though costly, exercise to require time to be taken while the Respondent amended its pleadings and the Appellants made consequential amendments.

ii) I am not persuaded as to the evidence which the Appellants would have called had the Judge taken the decision to adjourn. There is force in the Respondent's point as to the Appellants' failure to call evidence to deal with the claim for a reasonable price in respect of extras.

iii) More generally, as a matter of substance if not of strict pleadings, an element of reasonableness was necessarily part of the case or always likely to become such. By the close of pleadings, the case was not that far removed from a claim for a reasonable price.

iv) As it seems to me, the underlying object of the Appellants' submission in favour of an adjournment was not so much that it would enable evidence to be called but rather that it would result in the Respondent being put on terms with which he could not comply, so effectively bringing the claim to an end. As a matter of tactics, that is understandable – but it does not give rise to a claim of unfairness in the event of the Judge ruling against an adjournment.

v) Further, insofar as the Appellants contended that an adjournment would have been of no or little consequence to them, the contention is not necessarily well-founded. It assumes that all costs orders would necessarily have been adverse to the Respondent. However, had the case adjourned, thereafter resumed and had the Respondent then been successful, it can by no means be assumed that the Appellants would not have been on the receiving end of a substantial order for costs. While an initial order for costs thrown away would almost certainly have been made against the Respondent, subsequent costs orders may well have reflected success (and failure) on the resumed hearing.

vi) Satisfied as I am that the course followed by the Judge was not substantially unfair to the Appellants, I think the Judge was entitled to take the course he did. That another Judge may have reached a different decision is neither here nor there. This Court should support the decision taken by this Judge, in the exercise of his case management powers and doing practical justice. The downside of the alternative course of adjourning was manifest.

ISSUE (III): A REASONABLE PRICE?

31. (1) The judgment and the rival cases: I have already outlined the approach adopted by the Judge in assessing a reasonable price for the Respondent's works.
32. The Appellants subjected this approach to sustained criticism. No expert evidence had been relied upon; the Respondent's actual expenditure did not or not necessarily furnish a sound basis for assessing a reasonable price. There had been no evidence as to the appropriate rates of pay for either the Respondent or his workmen. Similarly, evidence had been lacking as to whether the time taken on the works was reasonable or not. As to the amount paid to sub-contractors, the Judge had been wrong to allow a sum for CIS tax; there was no evidence that the Respondent had paid this tax or was liable to account for it. Much the same criticisms applied to the amount allowed by the Judge for materials. There was, moreover, no evidence supporting the Judge's conclusion as to the uplift applied to the cost of wages and materials; in that regard, the Judge had gone beyond the amounts claimed by the Respondent himself. The upshot was that the Respondent had been awarded a profit element of something over £30,000 in respect of a contract which the Judge had found to be worth £85,000 odd (excluding VAT). These conclusions of the Judge, cumulatively at least, could have had a material impact on whether there was a judgment in favour of the Respondent at all.
33. The Respondent supported the approach adopted by the Judge. As explained by the Judge, it was too late for an expert to have made a useful contribution and an expert would not have been in a position to unravel the difficulties caused by the work of unrelated tradesmen and changes in the Appellants' instructions: see, judgment, at [34] and [58]. In the circumstances the Judge was right to use a measure of rough justice. Insofar as the Appellants complained of the profit margins, Mr. Christie pointed out that Mr. Hill had himself suggested (in the course of cross-examining the Respondent at the trial):

" What one would normally expect in a contract of this sort is that any extra work would be charged at materials plus 20% plus labour….."

With this observation in mind, the uplift percentages which the Judge had awarded were hardly unreasonable.

34. (2) Discussion: To a considerable extent the debate on this issue represented a continuation of the hostilities in which the parties were engaged under Issue (II). Plainly, if the Judge lacked the material to assess a reasonable price, then it would be necessary to revisit his refusal to adjourn. But, consistently with my view on Issue (II), I do not think that the Judge was precluded from fairly determining a reasonable price for the works.
35. Faced, as already discussed, with a choice between an expensive adjournment, coupled with uncertain prospects of any further evidence of substance on the one hand and proceeding with the material he had on the other, the Judge, in adopting the latter course, essentially used the Respondent's actual expenses as his starting point. Broadly speaking, I find little with which to quibble - not least as the Judge took a generally conservative view of the Respondent's claim (see the judgment, at [68]) – and would only part company with the Judge on a very few matters, with decidedly limited financial consequences.
36. In a little more detail and following the order of the schedule:

i) I am not persuaded that the Judge erred as to the amount attributed to wages or as to the 80% figure adopted (to allow for some time being wasted, for which the Respondent was responsible).

ii) As to the Respondent's own "wages", i.e., the profit attributable to his own work, I can see no error whatever in taking his hours worked as the starting point or the daily rate which the Judge accepted. I am, however, troubled by the fact that 100% of the Respondent's hours have been allowed, in contradistinction to those of his labourers. Doing the best I can, I would reduce the sum awarded under this head, so as to allow 80% rather than 100% of those hours. The relevant figure to be awarded thus comes to £11,893.60 (rather than £14,867.00).

iii) I am not at all persuaded by the criticism levelled by the Appellants at the Judge's award for sub-contractors, with regard to CIS tax. The figure contained in the schedule therefore stands – but subject to Issue (IV) (see below).

iv) Subject only to the typographical error in the schedule (already discussed), I reject the Appellants' criticisms of the Judge's approach to the materials and the like purchased by the Respondent. To recap, the correct figure in the schedule for "Purchases" should be £28,481.91 (rather than £28,255.45).

v) Turning to the uplift (or profit margin) awarded on wages, purchases and sub-contractors, I am unable to accept the Appellants' complaints with regard to the margin in respect of purchases. The Respondent must have been entitled to an element of profit and, not least in the light of the suggestion in cross-examination already recorded (and wholly understandably aired by Mr. Hill), I do not think that 15% could realistically be categorised as an unreasonable margin. That figure should therefore remain unaltered. Indeed, with a view to dispelling any sense of injustice, it seems to me right, as a matter of rough justice, to adopt a 15% margin in respect of wages and sub-contractors as well – so, to such extent, reducing the 25% uplift on wages and the 20% uplift on sub-contractors. It may be that the Respondent could have justified higher percentage uplifts had he produced evidence directly addressing these matters; but he did not. In consequence of these reductions, the correct figure in the schedule for the uplift on wages should be £2,580.00 (rather than £4,300.00). I defer the re-calculation of the correct uplift figure for sub-contractors until I have dealt with Issue (IV).

37. Accordingly and to the limited extent of reducing the sums awarded for the Respondent's own "wages", together with the profit percentages on wages (paid to labourers) and sub-contractors, I would be minded to differ from the Judge and, to such extent only, to allow the appeal. That apart, I would dismiss the appeal on this Issue. Accordingly, the schedule, taken from the judgment and set out above, should continue to serve as a guide to the outcome of the case, subject only to the following amendments: (1) the typographical error in respect of purchases should be corrected; (2) the schedule should reflect the individual matters where, as indicated, I would allow the appeal; (3) the cross-appeal (if allowed under Issue (IV)) will need to be reflected; (4) necessarily the VAT amount and arithmetic will need adjustment.
38. It is to be noted that no specific argument was addressed to this Court to the effect that even if the Judge was otherwise right, then his order that the Appellants pay 85% of the Respondent's costs was nonetheless wrong. Given the view to which I have come with regard to the appeal, I can see no basis for interfering with the order, made by the Judge, as to the costs below.

ISSUE (IV): AN ARITHMETICAL ERROR?

39. This issue concerns the remaining ground of the cross-appeal. I can take it almost summarily. The point relates solely to an arithmetical (or, possibly, clerical) error which the Respondent sought to have corrected under the slip rule – but which the Judge declined to do (understandably, perhaps, in the context of this litigation). In fairness to Mr. Hill, while not conceding the cross-appeal in this regard, he (rightly) did not advance positive submissions by way of opposition. I can see no good reason for not acceding to this ground of the cross-appeal.
40. In a nutshell, as is plain from the judgment, the Judge intended to award the Respondent the sum claimed in respect of sub-contractors, including CIS tax but not VAT. However, in giving effect to the relevant schedule, the Judge erred by overlooking an amount of £3,259.57 – an error easily made, having regard to the unhappy layout of the document in question. The figure for sub-contractors in the schedule should therefore be amended to read £16,863.43 (rather than £13,603.86).
41. Reverting to the unfinished business under Issue (III) above, I should now record the correct figure for the 15% profit margin in respect of sub-contractors. That figure comes to £16,863.43 x 0.15 = £2,529.51 (rather than £2,720.77).
42. I would be grateful for the assistance of counsel in drawing up a revised schedule, reflecting the conclusions contained in this judgment and making all necessary consequential re-calculations. The revised schedule should be annexed to the order of this Court.

LORD JUSTICE STANLEY BURNTON:

43. I agree.

LORD JUSTICE KAY:

44. I also agree.