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	English and Welsh Courts - Miscellaneous
You are here: BAILII >> Databases >> English and Welsh Courts - Miscellaneous >> Sweett (UK) Ltd v Michael Wight Homes Ltd [2012] EW Misc 3 (CC) (23 February 2012) URL: http://www.bailii.org/ew/cases/Misc/2012/3.html Cite as: [2012] EW Misc 3 (CC)

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IN THE EXETER COUNTY COURT
(Sitting in Plymouth)

		23rd February 2012

1. Introduction - This is a hearing that was listed to determine a wide range of issues of liability. The issues have narrowed to a much more precise focus than was originally provided. That focus is now upon whether the Claimant, when acting as the Defendant's quantity surveyor and employer's agent in relation to a site at Kingsbury Episcopi, Martock, Somerset, acted in breach of duty to the Defendant in relation to the provision of a performance bond by the contractor Diamond Property Construction Limited ('Diamond'). The project at Kingsbury Episcopi involved the demolition of an existing factory building, the construction of six houses and the refurbishment of a cottage. It was funded by venture capitalists (Moody Venture Capital) and the Natwest bank.
2. The Claimant used to be called Cyril Sweett Limited but is now called Sweett (UK) Limited. It is referred to by the name of Cyril Sweett Limited in this judgment and in most of the documents. Much of the Claimant's initial work was done by Nisbet LLP, which was then taken over by Cyril Sweett Limited.
3. The Defendant company, Michael Wight Homes Limited, was set up specifically for the development of that site (p295). It was struck off the register on 21^st September 2010 but was subsequently restored to it. The principal witness on behalf of the Defendant was Mr Michael Wight, who is now an undischarged bankrupt and therefore is no longer a director of it. I am told that he remains employed by the company, however.
4. The contractor for the development, Diamond, is not involved as a party to this litigation; it went into liquidation on 17^th June 2009. The contract between Diamond and Michael Wight Homes Limited was in the standard form JCT 2005 Design and Build Revision 1 2007. Following the insolvency of Diamond, the Defendant company terminated that contract.
5. People involved - The following is a list of the names of the main people involved in this litigation:

Name	Role	Statements / reports – pages
Peter Acers (sometimes spelt as Acres)	Director of Diamond	Not a witness or a party.
Cliff Barnes	Claimant's regional director.	285
Myles Clough	Claimant's project director.	262 and 272.
Stephen Hart (of Hart-Ireson).	Defendant's expert building surveyor.	235
Tim Hartley	Surveyor who assisted Mr Clough on behalf of the Claimant.	No statement. He was not a witness.
Charles Haywood (of MacConvilles)	Claimant's expert surveyor.	218
Moody Venture Capital.	Funder of project (for whom a Susan Firby worked).	No statement and not a witness
Natwest Bank	Funder of project.	No witness from the bank gave evidence.
Michael Wight	Defendant's former director (but now through bankruptcy, an employee).	295
David Young	Representative of Diamond (he had apparently been contracted in by them and is not a director of Diamond).	No statement and not a witness or party.

6. The work involved - Diamond started work before a contract was executed. The work by Diamond on the development started on 25^th March 2008 by arrangement between Mr Wight and Diamond (who had previously worked together on at least one other project). A letter of intent between the Defendant and Diamond was sent about a month after the work started (it is dated 22^nd April 2008 and is at p752A). The works contract was signed on 23^rd May 2008 (p17).
7. The contract sum was £943,447.90 (p25); the commencement (i.e. 'base') date was stated to be 11^th March 2008 (p28) with completion due on 30^th January 2009 (p28). Liquidated damages were payable at the rate of £3,450 each week and the Claimants were named as the employer's agents (p29). Diamond was contractually obliged to provide a performance bond of 10% of the contract sum (paragraph 3.4 of the employer's requirements at p138). With the contract documentation was a draft of the bond that the Claimant prepared (p729). Thus, it was a term of the contract that Diamond would provide a bond. Both parties accepted that the terms of the bond were expressly incorporated into the contract between Michael Wight Homes Limited and Diamond – meaning that Diamond were contractually obliged to enter into a bond in the terms of the draft at p729.
8. The Claimants' work arose through their engagement by the Defendant on 4^th February 2008. It ended on 10^th September 2008 as a result of their fees having been unpaid since, and including, April 2008. One of the express terms of the Claimant's engagement arising from an exchange of emails on 4^th February 2008 was that it would 'prepare contract documentation and arrange for such documents to be executed by the parties thereto'.
9. How the issue developed before me - There was an initial lack of clarity about the scope of this hearing. This created difficulty in defining the boundaries between breach, causation and damage. The Defendant did not come armed with evidence of causation of damage in relation to some of its complaints of breach. Thus the hearing began with a debate about the terms of my involvement. I required that those terms should be debated between the parties and that a written schedule should be drawn up at the outset of the hearing so that every one knew what it was that they were litigating over.
10. The result was a schedule at page 0 of the bundle (i.e. at the front of the bundle) which recorded an agreed list of issues. By the end of the evidence in the case, issues one and two had been settled. Further, issue 5 (relating to the sequence of building the houses and the access road) were also abandoned by the Defendant after its expert gave evidence that was not supportive of the Defendant's case. Thus the focus fell on the issue of the performance bond (paragraph 4 below). Paragraph 3 is, in reality, now subsumed by paragraph 4. The agreed schedule had provided as follows:

1. Is the Claimant entitled to further payment in respect of the services provided to the Defendant? [Agreed answer: Yes].

2. If so, to what sum is the Claimant entitled? [Agreed answer: £10,000 inclusive of VAT and interest].

3. What is the scope of the Claimant's duties under its retainer with the Defendant?

4. In relation to the performance bond:

a) Did the Claimant owe an absolute duty to ensure a bond was provided, or was its duty limited to exercising reasonable skill and care?

b) Was the Claimant in breach of duty in relation to the provision of a performance bond?

c) If the Claimant had complied with its duty as identified in a) above, would a performance bond have been provided by the contractor?

5. In relation to the sequence of the works, was the Claimant in breach of duty in relation to advising thereon? [Withdrawn by Defendant].

11. The relevant pleadings - The claim began as a debt collection exercise five days after the Claimant ceased its engagement (i.e. by the claim form at p1, dated 15th September 2008). It remained a fully contested claim until the second day of this hearing. On that day, the claim was settled on the basis that judgment should be entered in the sum of £10,000, inclusive of VAT (subject to any amounts that might be set off under the counterclaim). The sum originally claimed at the outset of the hearing was £9,793.65 (inclusive of VAT) plus interest. Thus the focus of this judgment is now entirely on the counterclaim.
12. By its amended defence and counterclaim, Michael Wight Homes Limited alleged that the Claimant failed in its duty of service to the Defendant. Its contentions included the following:

i) The services included a requirement on the Claimant to prepare the works contract and associated contract documents and arrange for such documents to be executed. The Claimant was therefore responsible to ensure that Diamond executed a performance bond equal to 10% of the contract sum.

ii) The Claimant drafted a performance bond but it failed to arrange for it to be executed by Diamond or the surety.

iii) The requirement for the Claimant to arrange for the performance bond to be executed was an absolute obligation. The failure by the Claimant to arrange for the performance bond to be executed was a breach of contract.

iv) Alternatively, if the requirement to arrange for the performance bond to be executed was not an absolute obligation then it was an implied term of the contract that the Claimant would use reasonable skill and care to arrange for the performance bond to be executed. It is submitted that the failure by the Claimant to arrange for the performance bond to be executed was a breach of that implied term.

v) The services included a requirement for the Claimant to review the work and advise the Defendant on any risks and the potential consequences.

vi) Notwithstanding the fact that the Claimant was under a duty to arrange for the performance bond to be executed, the Claimant was also under a duty to advise the Defendant of the risk and consequence of Diamond starting work and continuing work without a performance bond in place. The Claimant failed to advise the Defendant of that risk.

13. By its reply and defence to counterclaim the Claimant pleaded the following (amongst other things) in relation to the performance bond:

i. As Employer's Agent and Quantity Surveyor, the Claimant was contractually obliged only to review and identify risks between the parties to the Works Contract, that is, the Defendant and Diamond. The Claimant was not responsible for identifying any other risks and consequences.

ii. The Claimant advised the Defendant of the need to have a performance bond in place on several occasions, including at meetings on the 28^th January and 5^th February 2008.

iii. …it is admitted that it was an implied term of the contract that the Claimant would perform its contractual duties with the reasonable skill and care to be expected of reasonably competent Employer's agents and Quantity Surveyors.

iv. …the Defendant has failed to particularise the basis upon which a tortious duty of care is generated and owed. In so far as such a duty of care is owed, it is averred that it mirrors the contractual duty set out at paragraph 22 of this Defence to Counterclaim.

v. …It is denied that the Claimant was responsible for ensuring that Diamond executed a performance bond, either as set out at paragraph 25 of the Counterclaim or at all. While it is admitted that the Claimant had a duty to assist with compiling the draft contractual documentation, it is denied that this included a duty to ensure that any other party executed either a performance bond or any other documentation.

vi. …it is admitted that the performance bond was not executed by Diamond or the surety, but it is denied that the Claimant had any duty to arrange this.

vii. …The Defendant has not pleaded the factual or legal basis upon which it can be said that this alleged absolute obligation was an express or implied part of the Claimant's contract, and it is averred that no such basis exists.

viii. …the Defendant is required to prove that it was a contractual term that the Claimant should use reasonable skill and care to arrange for the Performance Bond to be executed. Further and in any event, it is averred that the Claimant did use reasonable skill and care to arrange for the Performance Bond to be executed. In particular:

(i) In a meeting with Diamond on the 5^th February 2008, the Claimants advised them that a performance bond was required.

(ii) The wording of the bond was sent to Diamond on the 22^nd February 2008.

(iii) In an e-mail dated 26^th February 2008 to the Defendant and Diamond, the Claimant recommended a performance bond in the form provided.

(iv) On the 5^th March 2008, the Claimant left a voicemail message with Diamond asking for an update on the performance bond.

(v) On the 6^th March 2008, the Claimant sent an e-mail to Diamond asking for an update on the bond.

(vi) On the 14^th March 2008, the Claimant sent an e-mail to Diamond asking for an update on the bond.

(vii) On the 16^th April 2008, the Claimant sent an e-mail to Diamond and the Defendant asking for comments on the bond's wording.

(viii) On the 21^st April 2008, the Claimant sent an e-mail to Diamond asking for confirmation that the wording of the bond was acceptable.

(ix) On the 23^rd April 2008, Diamond e-mailed the Claimant stating that the bond was with a bank for it to comment on it.

(x) On the 25^th April 2008, the Claimant met with Diamond and the Defendant, and it was agreed that Diamond's secretary would chase up the issue of the bond.

(xi) On the 7^th May 2008, the Claimant e-mailed Diamond asking for an update on the bond.

(xii) On the 30^th May 2008, the Claimant met with Diamond and the Defendant and the bond was discussed. The minutes record that it was agreed that the bond was still outstanding.

(xiii) On the 24^th June 2008, the Claimant met with Diamond and the Defendant and the bond was discussed. The minutes record that it was agreed that the bond was still outstanding.

(xiv) On the 26^th June 2008, the Claimant e-mailed Diamond asking for an update on the bond.

(xv) On or around the 2^nd July 2008, the Claimant spoke to Peter Acres, director of Diamond, about the bond. Mr Acres stated that the cost was £2500, not £1000 as he had thought.

(xvi) On the 24^th July 2008, the Claimant met with Diamond and the Defendant and the bond was discussed. The minutes record that the bond had been signed and was with the insurance company for processing.

(xvii) On the 28^th August 2008, the Claimant met with Diamond and the Defendant and the bond was discussed. The minutes record that it was agreed that Peter Acres would contact the Claimant regarding the bond.

(xviii) On the 28^th August 2008, Diamond e-mailed the Claimant stating that the fee for the bond was in excess of £4500, that they had not allowed for this in their quotation, and that they were not prepared to provide this.

(xix) Between the 2^nd and the 4^th September 2008, the Claimant attempted to contact Peter Acres three times.

(xx) On the 10^th September 2008, the Claimant contacted the Defendant and confirmed that it had spoken to Peter Acres about the bond a number of times previously.

ix. With regard to paragraph 30 of the Counterclaim, the Claimant did advise the Defendant as to the need for a performance bond and the risk of continuing work without one, including on the 28^th January 2008, the 5^th February 2008 and subsequently.

14. Claimant's skeleton argument in relation to the bond - Mr Winser argued as follows in his skeleton argument:

i) The performance bond was discussed in the initial meeting held at Nisbet's offices on 28 January 2008: see Myles Clough 1st w/s para 4 at [2/1/263] and Michael Wight w/s para 10 at [2/4/297]. Myles Clough explained the reasons for having a bond, but MWH wanted to start the works without the bond being in place: Myles Clough 1st w/s para 10 at [2/1/266].

ii) The Employer's Requirements drafted by Cyril Sweett on 4 February 2008 included the provision of a Performance Bond equal to 10% of the Contract Sum (clause 3.4 at [1/3/138]).

iii) Contrary to MWH's assertion, there was plainly no absolute obligation on Cyril Sweett to ensure that Diamond obtained a performance bond. Cyril Sweett's obligation was to take reasonable care to ensure it was obtained: see Jackson & Powell at 9-239 (it should be noted that the architect found to be negligent in Convent Hospital v Eberlin (1989) 23 Con LR 112 had completely forgotten about the requirement for a performance bond, a situation far removed from the present).

iv) The steps taken by Cyril Sweett in relation to the performance bond are summarised at paragraph 28 of the Reply and Defence to Counterclaim [1/4/172]. These steps were sufficient and appropriate in the circumstances. Mr Hart is of the opinion that Cyril Sweett could have withheld the full value of the bond (£93,300) from Diamond's first payment application: report at para 2.1.14 at [1/9/242]. The first payment application was made on 29 May 2008 and certified on 30 May 2008 [3/761]. Given that the contract was only executed on 23 May 2008 this position is untenable.

v) Further, the funders (whose money was at risk and who engaged their own QS in the form of William Martin) do not appear to have had any concerns in relation to proceeding without the bond in place or to have suggested that sums should be withheld on this basis. There is no suggestion that MWH made any attempt to persuade Diamond to obtain a performance bond between Cyril Sweett terminating its contract in September 2008 and Diamond's insolvency in June 2009: either MWH was not concerned about it or it too was unable to successfully persuade Diamond.

15. Defendant's skeleton argument in relation to the performance bond. Mr Horne submitted as follows in his skeleton argument:

i) By the time of the Claimant's involvement the Defendant and Diamond had already completed substantial negotiations in relation to the project and the price. There had however been no discussion of the provision by Diamond of a performance bond. This was something that the Claimant suggested once it became involved (see [263]).

ii) It is not in dispute that among the Claimant's duties was to 'prepare contract documentation and arrange for such documents to be executed by the parties thereto'. The performance bond was part of the contract documentation, and the Claimant provided draft wording for the bond: see [729]. Execution of the bond was a contractual obligation on the part of Diamond, but in fact it was never executed.

iii) The purpose of a bond is to provide a guarantee to the employer (here, the Defendant) of the contractor's liability under the contract, subject to a maximum fixed in the contract. The contract provided (conventionally) for this maximum to be 10% of the contract sum, which in this case would be £94,344.76. Matters of quantum are for another day, but (given the delays to the work and Diamond's insolvency) had the bond been provided by Diamond as it should have been, and had it been called in, the surety would undoubtedly have been liable for the full amount.

iv) The Defendant's primary position is that the wording of the Claimant's engagement made it the Claimant's strict duty to see that the bond was executed. Put shortly it was to 'arrange for the bond to be executed', as the wording above states, not merely to take reasonable care to arrange for the bond to be executed. In the Defendant's submission this is the sort of 'clear language' which can denote the undertaking of an obligation stricter than that to take reasonable care: see Platform Funding v Bank of Scotland [2008] EWCA Civ 930. And since the bond was not executed, the Claimant is in breach of that obligation.

v) Even if the obligation was merely to take reasonable care to see that the bond was executed by Diamond, however, the Claimant failed to do so. The Claimant's own expert surveyor (Charles Haywood of MacConvilles) states (at [224]) that: 'Negotiation and placing the bond does take time and contractors often need chasing as they are reluctant to tie up business capital any longer than they need to. ... In my experience an Employer's Agent often has to push a contractor to execute a bond. He cannot be forced to but the Employer's Agent should use reasonable endeavours to cajole the contractor into complying with his contractual obligations, keeping the employer informed of progress'.

vi) With due respect to Mr Haywood's conclusion that that was what the Claimant did, the Defendant submits that the Claimant's efforts in this regard fell well short of the sort of 'cajoling' that would have been possible and should have been undertaken. The precise facts are of course a matter of evidence but in truth all the Claimant can show that it did was to raise the matter of the bond with Diamond on a number of occasions – and that despite the fact that this 'strategy' had, over time, clearly not proved to be effective.

vii) As to what the Claimant ought to have done, the Defendant relies on the evidence of Stephen Hart (see report at [235&ff]), chartered building surveyor.

viii) Primarily, the Claimant ought to have withheld (or advised the Defendant to withhold) sums from interim payments otherwise due to Diamond, in order to apply pressure to get it to comply with its contractual obligation. Even if it was not realistic to expect Diamond to execute the bond until after the contract was signed (and there is some suggestion in the Claimant's correspondence that it did not necessarily take that view at the time: see for example [742], [757]), the Claimant certified four separate (and substantial) interim payments (see [760], [786], [796] and [816]) to Diamond after the contract had been signed. The appropriate step to take would have been (see Hart at [242]) to serve a withholding notice in relation to one of those payments: 'to withhold from the payment due to the Contractor the full amount of the proposed bond... until such time as the Contractor provided the bond. This would have given the Employer the same level of protection, by way of retention, as the bond would have provided. It is likely that the Contractor then would very quickly have provided the bond... following which the Employer would have paid the withheld sum to the Contractor'.

ix) The withholding of sums from interim certificates is specifically envisaged by the JCT contract: see clause 4.10.4 at [68]. Not only that, but the whole process of withholding sums by way of notice such as this is enshrined in statute (s 111 of the Housing Grants, Construction and Regeneration Act 1996). Withholding notices are extremely common in practice, and where (as here) a contractor is in breach of an explicit and unambiguous contractual obligation, such a notice would be entirely appropriate.

x) Mr Haywood suggests [247] that such withholding might have been outside the Claimant's powers. This suggestion is not understood – not least since as the Employer's Agent the Claimant explicitly had the power to issue notices on the Defendant's behalf: see [25]. If it is intended to mean that, notwithstanding s 111 and clause 4.10.4, the Defendant did not have the power to issue such a notice, the Defendant must respectfully disagree with Mr Haywood.

xi) Mr Haywood's other contention [248] is that withholding such a substantial sum would have 'undoubtedly hastened the Contractor's demise". This misses the point. As Mr Hart explains (see above), once the bond had been obtained (at very much less expense than the amount withheld), the withheld amount would have been released.

xii) The reality therefore is that there was a clear mechanism for applying pressure to Diamond to make it comply with its contractual obligation to provide the bond. Despite this, the Claimant never took that step, and never suggested or advised that the Defendant could or should take that step. This is all the more unacceptable when one considers that:

xiii) Mr Clough of the Claimant apparently knew [266] from early July 2008 that Diamond appeared to be in financial difficulties, so that the bond assumed even greater significance, being something on which the Defendant might genuinely need to rely in due course; and

xiv) by late August 2008 Diamond had explicitly [806] indicated its refusal to execute the bond, complaining that the cost of it was too expensive at some £4,500. Even after that point blank refusal, the Claimant happily recommended [816] that the Defendant pay further substantial sums to Diamond, without making any suggestion as to how it might be 'pushed' or 'cajoled' into reconsidering its clearly stated position.

xv) Mr Hart also suggests an alternative approach. Recognising that the cost of the bond might not have been accounted for in the contract sum (something about which Diamond did ultimately complain: [806]) he says (see [242]) that it might have been appropriate to increase the contract sum to reflect the cost of the bond. The Claimant "could have advised that such an amendment was appropriate and that may have avoided the dispute that subsequently arose".

xvi) In fact, by August 2008 when Diamond indicated its firm refusal to execute the bond, citing the cost (which the Claimant apparently regarded as reasonable at about £4,500: see [805]), the key thing was to ensure that the bond was in fact purchased, to give the Defendant some protection – and all the more so if there were concerns about Diamond's financial position. It would have been far better even at this stage for the Claimant to suggest that the Defendant met the cost of the bond (or perhaps negotiated with Diamond to meet at least part of the cost) so that that protection could be obtained.

xvii) Instead the Claimant did nothing more than attempt to chase one representative of Diamond with several phone calls. Given the lapse of significant time since the contract had been signed, Diamond's expressed refusal to execute the bond, and the abject failure of the Claimant's passive approach to the issue throughout, this fell well short of the sort of measures necessary to see that the bond was properly executed.

xviii) The Defendant also complains of the Claimant's failure to make clear to it the significance of the bond. It is accepted that the Claimant originally suggested, and then later 'recommended', that a bond be obtained, and that the Defendant understood the purpose of the bond and to some extent its importance. But Diamond's failure to execute the bond posed a significant risk to the Defendant, and it was part of the Claimant's duty to identify development risks and their potential consequences. The Claimant did not make this risk clear enough to the Defendant.

xix) And in particular, Mr Clough accepts [266] that by early July 2008 he was 'worried' about Diamond's financial status and credit worthiness. If so, the bond (an issue which Diamond was consistently ducking at this point) assumed even greater significance. Although Mr Clough claims to have expressed these concerns to Mr Wight of the Defendant, there is no evidence that he did so and certainly no evidence that he highlighted the increased significance of the bond should his concerns prove correct. This failure was also a breach of the Claimant's obligations.

16. Structure of the rest of this judgment – During the course of this hearing I heard evidence from Mr Barnes, Mr Clough, Mr Wight and the two experts. It seems to me that the only way to make sense of this case is to place the facts into chronological order, rather than to record the evidence witness by witness. Regrettably I was not provided with a chronology at the outset of the hearing and so, during the hearing, I have placed the evidence (both oral and documentary) within the chronology in so far as I am able to do so. Following the chronology I set out the evidence of the experts. I write a discrete passage in relation to the legal principles after the entry relating to the 4^th February 2008 since that seems the most communicative order to deal with it. I then state my conclusions. My conclusions on the issue of breach are clear (and stated), however, I have set out my analysis of the facts within the chronology and so I express those conclusions briefly.
17. October 2007 – The first meeting took place between the Claimant (in the guise of Nisbet LLP) and the Defendant. In addition to discussion about the project at Kingsbury Episcopi, there was also discussion about other projects that the Defendant was considering in a number of Mr Wight's corporate personae.
18. Although I took a full typed note of the evidence that Mr Wight gave about his background I do not intend to set it out in this judgment. Mr Wight sought to assert that he was inexperienced in this type of development project (he said this at p296, paragraph 5 and also in oral evidence). Thus, it was being contended, he was particularly dependant on the skill and care of the Claimant and did not understand in full the implications and importance of a performance bond. Mr Barnes, the director of the Claimant, said that Mr Wight never told him that he was inexperienced and did not give any demonstration of inexperience. Mr Barnes said that Mr Wight had felt sufficiently experienced to progress this development at Kingston Episcopi between November 2007 and January 2008 on his own (prior to the involvement of the Claimant). Mr Clough said that the bond was explained to Mr Wight when it was first raised in January.
19. I do not accept Mr Wight's evidence that he was anything like as inexperienced as he suggested. He said, for instance that, in 2004 his business was to acquire sites and make a planning gain – therefore he would acquire sites and then develop their planning potential. He would either sell the land then with potential or develop it, he said. He has been involved in smaller developments in Bristol (where Diamond were the contractors for the development by one of Mr Wight's companies of two bungalows), Portishead and in the proposed development in Westward Ho! (for which, again, Diamond were to be the contractors). He has held something like 20 directorships in 10 years. I accept Mr Barnes's evidence that Mr Wight gave every appearance of being experienced in this type of work. Further, I do not consider that the concept of a 'performance bond' is particularly complex.
20. As events show, now that they are in chronological order, there were regular exchanges about the performance bond once the Claimant became involved. Indeed the performance bond was discussed from the 28^th January 2008 (see below). The draft bond was seen by Mr Wight. I have no doubt at all that the importance and purpose of the bond was known to Mr Wight at very least from 28^th January 2008 (and I make a finding to that effect to the criminal standard of proof – that is way beyond a mere balance of probabilities). I therefore reject Mr Wight's evidence on this point.
21. Later in October 2007 - At some point after this meeting there was a telephone conversation which led to Mr Barnes sending proposals for acting on behalf of the Defendant in relation to the development of the site at Kingsbury Episcopi (p289).
22. 1^st November 2007 – Mr Barnes sent a schedule of proposals for acting for the Defendant in relation to the site. His letter to Mr Wight is at p293. The proposed schedule of duties is at p294. The proposed cost was £26,500 including expenses but excluding VAT. However, that proposal was not accepted and the negotiations seem to have gone into abeyance until they were resurrected in January 2008. As I set out later, the initial proposal of 1^st November 2007 did not form the basis of the contractual engagement between the parties and was superseded by documentation exchanged on 4^th February 2008. However, I note that the document that was sent at p294 contained much of the same wording as the February 2008 document, including, at p284 the passage that the Defendant argues created an absolute duty in relation to the bond – i.e. that the Claimant was to 'prepare contract documentation and arrange for such documents to be executed by the parties thereto'.
23. 23rd January 2008 - Mr Barnes said in evidence that the document at p679A records the first meeting that took place between himself and Mr Wight in relation to this contract, save to the extent of the discussions in October. The document states: 'Michael Wight 23/1/08. Kingsbury 'Aposcopy'. Planning permission conditions. 6 detached houses. Build costs £900,000 with Diamond – includes fees (except Nisbet). Moody – equity. Nat West: Essex. Start 4^th Feb – complete end Jan' 09. Monday a.m. 10 o'clock. Exeter office'. This was a brief initial meeting and has no more relevance than that.
24. 28^th January 2008 – Mr Wight sent an email to Cliff Barnes. It is at p679B and reads: 'Thank you for the time that we managed to spend, be it brief last week. I am sorry to have moved on so far without your involvement but the exchange and security of the site literally only took place last Friday 18^th January. We are to complete the purchase on Friday 4^th February and as explained want to move immediately. I do accept that we might need to conduct the demolition stage under a letter of intent but am aware that there is a little work to do on the JCT contract. This is the original doc from Diamond [the document is attached as a spreadsheet]. We do need to check the sizes of the houses and make some improvements to bring the overall cost down to below £900k. This is important. There have been some improvements to certain areas and David is aware of this and confident that he will be able to do this. i.e. demolition is now improved [sic] as is architects fees. A discussion point for today's meeting'. Thus this email was the forerunner of the meeting that took place later that day. The email records that Mr Wight had made progress with the development prior to the involvement of the Claimant.
25. The meeting then took place later that day. During his oral evidence Mr Barnes produced the document at p679D, which is his note of it. Present at the meeting were Mr Wight, Mr Barnes, Mr Clough and David Young of Diamond. Mr Clough said that this was his first involvement in this project. The note of the meeting refers to a performance bond of 10% being obtained ('performance bond 10%').
26. Unsurprisingly, the Defendant complains that at p194 the Defendants were told 'the Claimant did not take minutes or other contemporaneous notes of either meeting referred to' (that relates to the meeting on 28^th January 2008 and 5^th February 2008). Further, Mr Clough said that he did take notes of the meeting but has been unable to find them. However, I do not consider that any significance attaches to that reply within the forensic exercise that I have now to perform.
27. Mr Barnes said that he could not remember whether it was he or Mr Clough who suggested that such a bond should be required from the contractor and he could not remember the extent of the discussion about the bond. However, he said that he was pretty confident that it was agreed that such a bond would be put in place.
28. At p264 Mr Clough said in his statement: 'we discussed requesting the main contractor taking out a performance bond for 10% of the contract sum and the reasons for doing so'. Mr Clough said that he got the impression that there had not been any prior discussion between Michael Wight Homes Limited and Diamond in relation to the performance bond. Mr Clough said that he would have explained the importance of the bond to the Defendant. Mr Clough said that they might have discussed other ways of providing the Defendant with protection (as alternatives to a bond).
29. I found Mr Clough to be an entirely reliable witness who gave evidence carefully and with a considerable of amount of thought. I have no doubt at all that there was a discussion about requesting the contractor to take out a performance bond. Mr Wight, who was of course present at the meeting which was being held to identify his requirements, participated in that discussion (as did Mr Young for Diamond) and, I find, understood clearly what was being debated.
30. Mr Wight said that he accepts that Cyril Sweett Limited brought up with him, either at this meeting or on 23^rd January 2008, the recommendation of a performance bond. He said that he did not 'potentially understand the magnitude of this'. He had not heard about a performance bond before. He said that his only recollection is that Cyril Sweett Limited recommended that the bond should be in place and Mr Young agreed to this. He said that, only as the problem evolved, did he realise how important the bond was. He accepted that Mr Barnes and Mr Clough had said that they had advised him what a bond was; he had no basis for saying they were not being truthful but he does not recollect what they may have said. Mr Wight accepted that he understood that a bond was there to offer him some protection and therefore understood its importance.
31. I find that the importance of the bond was clearly explained to Mr Wight at this meeting and, even if he did not have prior experience of such a bond before the meeting, he understood full well what it was by the end of it. I accept that Mr Clough has told the truth in this statement at p266 where he says: 'I have no particulars again to respond to this allegation but generally am able to state that the Defendants were made aware of the benefit of a performance bond at the very first meeting with Cliff Barnes and myself. The Defendants decided that they wished to start on the site without the performance bond being in place. Considerable time was spent nevertheless in seeking to push the contractor to take out the bond as some of the correspondence in the trial bundle will reveal'.
32. 4^th February 2008 – there was a telephone conversation between Mr Wight and Mr Barnes. Following that a revised fee proposal and Schedule of Duties was sent by email (p681) in which the fee for services was reduced to £20,000 (+ VAT) and certain duties that had previously been proposed were removed (i.e. items 3, 8, 9, 10, 15 and 19 from the original Schedule of Duties at p294). These proposed terms were accepted by Michael Wight by an email that was sent on the same day (p684). The exchange of emails was as follows:

i) At page 681 (Cliff Barnes to Michael Wight, dated 4^th February 2008): 'I attach a revised fee proposal and schedule of duties which I trust reflects your requirements. I would be grateful if you could confirm your agreement of these proposals to allow us to make a start on the contract documents in readiness for our meeting tomorrow'.

ii) At page 684 (Michael Wight to Cliff Barnes, dated 4^th February 2008): 'Further to your email please accept this reply as confirmation of acceptance of the terms as discussed and agreed. Please could you confirm to me the payment schedule as I would wish to be clear on this. I would be happy to agree to pay an equal amount if that was acceptable to you'.

iii) At page 684A (Mr Barnes to Mr Wight, dated 4^th February 2008). 'Many thanks Michael; I would be happy with a monthly amount if that suits you. Could I suggest 12 equal payments from Feb 08 to Jan 09 inclusive. This would give a sum of £1667 per month. I understand that you will not be requiring CDM co-ordinator services (sorry I left this in the fee proposal by mistake). See you tomorrow' In evidence Mr Barnes explained that 'CDM stands for the Construction (Design and Management) Regulations'.

33. When the case started I was told by Mr Horne that it was not accepted by the Defendant that the email at p681 was sent by Mr Barnes with its attachment. In his statement Mr Wight had positively denied that there was such an attachment when he said: 'In fact there was no attachment. I responded by email [p.4] confirming that I accepted the revised fee proposal that I had agreed with Cliff earlier that day'. In evidence he said that he does not remember the attachment and, during the currency of these proceedings, had not been able to check his email system to see whether it had an attachment.
34. However, Mr Barnes came to court with his laptop and was able to produce the email that he had sent showing that it had contained the attachment. Further, of course, Mr Wight had confirmed receipt of the email (and also stated as above that he gave 'confirmation of acceptance of the terms as discussed and agreed'). It is plain that Mr Wight did receive the email and the attachment, although it was not suggested that, for the purposes of this hearing, there were any material differences between the terms of the schedule in the November 2007 document at p294 and the document that was attached to the email of 4^th February 2008 (the contract price did not form part of that schedule and was mentioned separately in the emails of those two dates).
35. That document, I find, forms the basis of the engagement of the Claimant by the Defendant. The covering letter at p682 (which was also an attachment to the email of 4^th February 2008) is dated 1^st November 2007 in error (since, plainly the original letter of that date was used as the template for the February letter). The letter at p682 states that the Claimant's would charge a fee of £20,000 rather than £26,500. I therefore turn to terms of the February schedule at p683.
36. The attachment at p683 was headed 'schedule of duties – employer's agent, quantity surveying and CDM co-coordinator services' and lists the following:

1. Meet with Diamond Construction and the design team to agree the employer's requirements, contractor's proposals and health and safety plan.

2. Review the scheme content, identifying development risks, their potential consequences and allocation to the parties to the contract.

3. Agree contractor's cash flow, stage payments, programme and contract sum analysis.

4. Prepare contract documentation and arrange for such documents to be executed by the parties thereto.

5. Convene and chair a pre-contract meeting.

6. Agree valuation payments to the contractor based on the contract sum analysis, or such other basis of valuation as may e agreed under the terms of the contract and report thereon.

7. Advise on values in respect of insurance.

8. Agree the final account with the contractor and issue a final statement.

9. Issue all necessary statements, etc, relating to the final account that may be required by the Employer.

10. Visit the site, as appropriate to

Attend site meetings including chairing meetings, issuing agendas and minutes.

Periodically monitor the progress and quality of the works.

Ascertain, generally, that the terms and content of the contract are being completed.

11. Discharge the responsibilities of the CDM coordinator as set down in the CDM regulations and advise the employer of his responsibilities.

12. Co-ordinate and monitor any of the following that may be required:

Pre-handover inspection;

Handover inspections;

Notices of practical completion;

Schedule of defects;

Notices of making good defects.

13. Determine any extensions of time due and comply with requirements regarding notices etc.

Exclusions

1. The preparation of documents for and liaison with funders.

2. The preparation and issue of financial statements.

3. The issue of any change or Employer's agent instruction to the contract and assessment of time and cost implications.

4. Agreement of any partial possession to the contract.

5. Monitoring of defects rectification during the defects liability period. The fee allows for sign-off at practical completion and a further inspection at the end of the defects liability period.

37. Mr Barnes said that his involvement in the project ended following this exchange save that he would have spoken to Mr Clough to hand the project over to him. Mr Clough gave evidence that he was, in effect, the employer's agent for this project from then on. He is qualified as a Member of the Royal Institute of Chartered Surveyors and is a chartered quantity surveyor. He had been working for Nisbet for about a year before he began on this project. He said that he was aware that the JCT contract specifically permits an employer to serve a notice on the contractor stating that some of an interim payment would be withheld, following a recommendation from the employer's agent (the contract states at p368 that the agent has full authority to receive and issue applications, consents, instructions, notices, requests or statements and otherwise to act for the employer under any of the conditions).
38. Mr Clough said that, prior to this, he had not given a recommendation for withholding payment. He did not accept that a withholding notice is a common practice within the building trade; he said that he started in the business in 1992 and he had never seen such a notice being given.
39. 'Absolute duty' I now wish to deal with the arguments of the Defendant that, as matter of construction of the contract between the Defendant and the Claimant, the Claimant was under an absolute duty to ensure that Diamond executed a performance bond.
40. This issue arises as a result of the argument that is pleaded by the Defendant and is expressed in Mr Horne's skeleton argument in terms that I have already set out ('the Defendant's primary position is that the wording of the Claimant's engagement made it the Claimant's strict duty to see that the bond was executed. Put shortly it was to 'arrange for the bond to be executed', as the wording above states, not merely to take reasonable care to arrange for the bond to be executed').
41. In fact the wording was 'Prepare contract documentation and arrange for such documents to be executed by the parties thereto'. As matters turned out the bond was annexed to the contract and became a contractual obligation. The parties 'thereto' in relation to the bond for these purposes were the Defendant and Diamond. Therefore it is acceptable shorthand to say 'arrange for the bond to be executed'.
42. Mr Horne referred me to the case of Platform Funding v Bank of Scotland Plc [2008] EWCA Civ 930. For these purposes the core passages are these:

i) Paragraph 48 where, after analyzing a number of cases, Rix LJ said: 'I see no reason to give any of these cases, all of them in this court, any prominence over any other. They all turn on their own particular facts. They nevertheless allow the following conclusions: (1) that the default obligation is one limited to the taking and exercise of reasonable care; (2) that it requires special facts or clear language to impose an obligation stricter than that of reasonable care; (3) that a professional man will not readily be supposed to undertake to achieve a guaranteed result; and (4) that if he is undertaking with care that which he was retained or instructed to do, he will not readily be found to have nevertheless warranted to be responsible for a misfortune caused by the fraud of another. It follows from the jurisprudence and from these conclusions to be derived from them, however, that it is not possible to support a blanket approach whereby, even in the absence of an express warranty, a professional's responsibility is nevertheless always limited to the taking of reasonable care.

ii) Paragraph 53, where Rix LJ said: 'the point before us is one of construction, of retainer and/or certificate, free of any merits or demerits so far as presence or want of care are concerned'.

iii) Paragraph 30, where Moore Bick said: 'A number of conclusions may be drawn from these decisions. Perhaps the most obvious is that although there is a presumption that those who provide professional services normally do no more than undertake to exercise the degree of care and skill to be expected of a competent professional in the relevant field, there is nothing to prevent them from assuming an unqualified obligation in relation to particular aspects of their work. Whether a professional person has undertaken an unqualified obligation of any kind in any given case will depend on the terms of the contract under which he has agreed to provide his services.

iv) Paragraph 68 where Sir Anthony Clarke MR (who dissented on the outcome) said: Since drafting the above I have seen a draft of the judgment of Rix LJ. I agree with him that the default position is as he has stated it at [48], namely that, while each case turns on its own particular facts, the decided cases allow these conclusions: i) that the default obligation is one limited to the taking and exercise of reasonable care; ii) that it requires special facts or clear language to impose an obligation stricter than that of reasonable care; iii) that a professional man will not readily be supposed to undertake to achieve a guaranteed result; and iv) that if he is undertaking with care that which he was retained or instructed to do, he will not readily be found to have nevertheless warranted to be responsible for a misfortune caused by the fraud of another. I also agree with Rix LJ that it follows from the jurisprudence and from these conclusions to be derived from them that it is not possible to support a blanket approach whereby, even in the absence of an express warranty, a professional's responsibility is nevertheless always limited to the taking of reasonable care. It may be necessary in a particular case to imply such a warranty.

43. Mr Winser submitted that a duty arises either as an absolute duty or as the default duty which requires the taking and exercise of reasonable care. He submitted that there is no middle ground. I do not accept that is so. Parties may commit themselves by contract to a very broad spectrum of obligations and it then becomes a matter of interpreting the specific agreement and applying it the facts of the case. Where there is an agreement between parties the agreement has to be construed in order to determine the nature of the obligations between the parties. One cannot simply ignore the agreement.
44. That said, and after thinking about this point frequently during the course of the four days in which I have been involved in this case, I am very firmly of the opinion that the wording of the engagement of the Claimant did not impose an absolute duty on them to ensure that Diamond entered into a performance bond.
45. I do not accept that the words that were used can be construed as imposing an obligation on Cyril Sweett Limited to ensure that Diamond executed the bond. Those are not the words that were used. It is not the meaning of the words that were used. The word 'arrange' does not bear the same meaning as 'ensure'. The contractual arrangement between the parties to this case did not leave the Claimant underwriting the contractual requirement between the Defendant and Diamond for Diamond to execute the bond.
46. I asked whether either of the advocates wished to place before me any dictionary or legal definitions that supported their respective arguments and they indicated that they did not. There is no analogous authority that was placed before me. The case of Convent Hospital Ltd v Eberlin and Partners 14 ConLR 1 was a case where a summary judgment under Order 14 was given where the architects had forgotten about the bond and so is not analogous.
47. As a straightforward matter of interpretation the words that were used are words of common English usage (and so it is dangerous to substitute other words in an attempt to define them). The nearest that I can get is to say that the obligation was to prepare contract documentation and put in place arrangements for such documents to be executed by the parties thereto.' The Oxford dictionary definition of the verb 'arrange' is given in 8 separate parts but includes 'to put into proper or requisite order' and, if one substitutes that definition for the word 'arrange' it still does not mean that the Claimant had an absolute duty to ensure that Diamond signed the bond. It means that it had a duty to put into proper order the execution by Diamond of the bond (just as my court clerk may arrange, or put in order, for me to approve an order without being taken to give an assurance that she will ensure that I will do so).
48. As events show, this is precisely what the Claimant did. It drafted the bond, ensured that it was a contractual term of the agreement between the Defendant and Diamond that the bond would be signed, advised the Defendant of the importance and meaning of the bond, put pressure (both in writing and in meetings) on the contractor to sign it and informed the Defendant of the steps that had been taken in this regard. Thus it put in place arrangements for the bond to be executed by the parties thereto and put into proper order the execution of the bond.
49. Therefore, although I come to it by a different route to that which Mr Winser adopted in dealing with this point, I accept his submission that this provision in the agreement of 4^th February 2008 does not add to the default duty as expressed in the Platform Funding decision (that case, of course was very different on its facts since it involved a commitment to value 1 Bakers Yard which was breached when the valuers were misled by Mr Hewes into valuing another property). I reach that opinion as a matter of construction. The application of the default duty to the facts of the case (i.e. under paragraph 4b of the schedule of issues) is, of course, unaffected by this decision on paragraph 4a of that schedule.
50. I make the following observations on this point (having stated my opinion already, based on construction):

i) At the time in issue there was no contract between the Defendant and Diamond. If I interpreted the agreement in the way Mr Horne suggests it would have meant that the Cyril Sweett Limited had given an absolute commitment to ensuring that Diamond entered into all contractual documentation (i.e. the contract itself), even before the terms of that documentation were finalised. Although parties may chose what they commit themselves to by contract (subject to illegality) that would have been a very unusual and onerous commitment for the Claimant to have made and can not have been remotely contemplated by either of the parties to this litigation;

ii) The wording of a contract needs to be interpreted on its face and at the time that the agreement was made. Mr Horne sought to suggest that the meaning of the wording changed once the contract was signed. Thus he suggested, as a secondary position, that once the contract was signed the obligation became absolute. I do not accept that. I do not accept that there should or could be a wavering construction of the term involved. I do not accept that the wording suggests any such changing definition. There is nothing to suggest that either party viewed the matter in this way (certainly the Claimant did not). Further the execution of the bond only became relevant at the time of the execution of the contract since there was no contractual obligation on the contractor to take out the bond until the contract was signed.

iii) As a tertiary position, Mr Horne argued that, even if the wording did not create an absolute obligation, it did impose a higher duty that the default duty of taking and exercising reasonable care. As will be plain, I do not accept that is so. The wording of the agreement, as correctly constructed in my opinion, did not create a higher duty than the default duty. The contractual duty was to prepare the documents and arrange for them to be executed (which was what the Claimant did). The default duty arose when the arrangements for the execution of the bond had failed and Diamond did not sign the bond. The Claimant then owed the default duty as quantity surveyor and employer's agent.

51. What was the duty of the Claimant? I am not sure that it helps to add much to the passages that I have already cited from the decision in Platform Funding. I think that the default duty is defined in that case in a way that does not require further definition. However, I was also referred to various passages from Jackson and Powell on Professional Liability and will deal with some of those now. They were:

i) Mr Winser referred me to paragraph 9-128 in which there is reference to a passage from the judgment of the late Bingham LJ (as he then was) in Eckersley v Binnie Properties [1988] 18 Con.LR 1 in which he said: 'a professional man…should be alert to the hazards and risks inherent in any professional task he undertakes to the extent that other ordinarily competent members of the profession would be alert….The law does not require of a professional man that he be a paragon combining the qualities of polymath and prophet'. To that, Mr Winser said must be added, a professional man should not ascribed foresight before the event;

ii) Paragraph 9-132 which states: 'Once it is established that a professional owes a duty to provide advice or services to his client, the fact that is client has special skill in the same area does not reduce the standard of care which is required in order to discharge that duty'. This is relevant to the submission that Mr Horne made that, even if Mr Wight did know about the importance of the bond that did not diminish the duties of the Claimant in relation to it. Mr Horne submitted in closing that 'the obligation was not on Mr Wight to stipulate how the Claimant should perform its duties', a point that I accept.

iii) Mr Winser referred me to Paragraph 9-140 where it is said that 'The standard of reasonable care and skill is usually established by reference to the general practice of the construction profession concerned. In Nye Saunders and Partners v Alan E Bristow [1987] 37 BLR 92 Stephen Brown LJ expressly applied the test in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 to decide whether an architect had fulfilled the required standard: 'where there is a conflict as to whether he has discharged that duty the courts approach the matter on the basis of considering where there was evidence that at the time a responsible boy of architects would have taken the view that the way in which the subject of enquiry had carried out his duties was an appropriate way of carrying out the duty, and would not hold him guilty of negligence merely because there was a body of competent professional opinion which held that he was at fault';

iv) Mr Horne referred me to the qualifications of the above passage at paragraph 9-142 which arise in 'i) cases in which the court considers that there is no logical basis for the body of opinion in accordance with which the defendant acted….ii) cases in which the expert evidence called by the defendant is in reality no more than the personal opinion of an expert witness as to what he would have done in the position of the defendant'. Mr Horne said that this was directly applicable to the facts of this case and, on the second point, to the evidence of Mr Haywood. Mr Horne submitted that Mr Haywood gave evidence that was confined to his own personal opinion and had no logic (points which I say immediately I do not accept, do not represent a correct analysis of Mr Haywood's report or evidence and, in relation to the second of those points, was not suggested to him in evidence);

v) Paragraph 9-149 where it is stated that 'care is required in the selection and presentation of expert evidence. In the first place, evidence will be admitted only from a member of the profession to which the defendant belongs'. The passage goes on to cite Slade LJ in Investors in Industry Commercial Properties v South Bedfordshire DC [1986] 1 All ER 787 where an expert had given evidence outside his field and Slade LJ said that 'little reliance can be placed on their answers to these particular questions, which related to a profession other than their own'. The passage goes on to cite Butler Sloss LJ in the case of Sansom v Metcalfe Humbleton and Co [1998] P.N.L.R 542 where she said: 'a court should be slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a client (or third party) without evidence from those within the same profession as to the standard expected on the facts of the case and the failure of the professionally qualified man to measure up to that standard'. This was raised by Mr Winser as a basis for an attack on the evidence of Mr Hart who is a building surveyor and has never acted as an employer's agent (whereas Mr Haywood has many years experience both as a quantity surveyor and as an employer's agent). I return to this later when I consider the expert evidence.

52. Conclusion on point 4a of the schedule of issues before me – By Point 4a, I am asked to decide: 'Did the Claimant owe an absolute duty to ensure a bond was provided, or was its duty limited to exercising reasonable skill and care?'. I answer that by saying that the Claimant did not owe an absolute duty. The contractual duty did not add to the default duty and therefore the duty was limited to exercising reasonable skill and care.
53. I now wish to return to the chronology, so that I can work though the facts of the case, making reference to the applicable duty where necessary.
54. 5^th February 2008 – A meeting took place between Mr Clough, Mr Wight and Mr Young. Following the meeting Mr Clough sent an email, dated 11^th February 2008, to Mr Young and to Mr Wight. The 11^th February email is at p685; there are no other notes of this meeting.
55. 11^th February 2008 – the email at p685 was sent by Mr Clough to Mr Wight and Mr Young. Attached were the draft employer's requirements. That email states that one of the 'matters that need resolving' is … 'NLLP [i.e. Nisbet LLP] to forward a performance bond'. Mr Clough said in evidence (as is plain) that this meant that Nisbet would send Mr Wight and Mr Young a draft for a performance bond. Therefore the bond was receiving the attention of the Claimant and Mr Wight knew what was being done.
56. The draft employer's requirements are at p686. Within them, at p696, there is paragraph 3.4 which provides that 'the contractor will be required to provide a performance bond equal to 10% of the contract'. Mr Clough said that this was deliberately included as a result of the discussions that had by then taken place. Again, it is plain that the Claimant was following up the issue of the bond and was keeping Mr Wight informed of what it was doing.
57. 18^th February 2008 - The first invoice was sent out by Nisbet LLP to the Defendant. It is at p723. This invoice was paid.
58. 22^nd February 2008 – Mr Clough sent an email to Mr Young, Mr Wight and Mr Barnes. It included the draft of the bond as an attachment (p724). It appears that the proposed wording had been provided by a Kevin Chisling who was the managing surveyor of Nisbet LLP (p724). The draft bond is at p729. The email makes it plain that Mr Clough had not heard from Mr Wight since 5^th February ('I have not received any information from you since our last meeting'). Mr Clough said that he was sending the draft bond for Mr Wight to consider the proposed wording of the bond. Thus by this stage Mr Wight exactly what the Claimant was proposing in relation to the bond and, I find, knew full well what it involved.
59. 25^th February 2008 – there was an email exchange between Mr Young and Mr Wight in which Mr Wight was saying that the project needed to get started as soon as possible (p738) and Mr Young said that he was 'pushing as much as possible for the start date on the above however we are being delayed by the following: Western Power – disconnection of overhead cables' (p737).
60. 26^th February 2008 – Mr Clough sent another email to Mr Wight and Mr Young. In it he stated to Mr Wight that 'we need David to confirm that all the matters we referred to at our last meeting are in place such that a letter of intent can be issued (date of commencement, additional cost of welfare for demolition contractor and contract sum). We would also recommend a performance bond in the form provided being in place and an agreed set of employer's requirements and contractors proposals'. The email also seeks an update from Mr Young. The email included another copy of the proposed letter of intent (P733).
61. In response to points put to him by Mr Horne, Mr Clough said that he did not accept that this meant that the performance bond should have been in place before the letter of intent was issued. Mr Clough was plainly right; further the professional evidence did not suggest that there was anything unusual in the bond being executed after the contract (and Mr Haywood gave very clear reasons for this). Indeed, in his responses to questions put on paper by the Defendant Mr Haywood said at p260: 'it is most unusual for a bond to be in place before the contract is executed. There is no obligation on either the Claimant or the contractor to provide this before executing the contract and no contractor will go to the expenditure of a bond and tying up capital without the comfort of a signed contract'. The Defendant's expert, Mr Hart, did not support the point that Mr Horne was putting.
62. 6^th March 2008 – Mr Clough sent an email to Mr Wight and Mr Young pressing for an answer to matters that had been raised in his earlier emails. In evidence Mr Clough said, in relation to this point in the chronology, that:

i) His experience is that contractors need a bit of pushing to issue the bonds and that the issue of the bond arises in the tender phase usually. However, he said that this project was unusual in that the employer came to the Claimant with a contractor already in place. It does often require a little cajoling to get the contractor to issue the bond even though it may be agreed in principle.

ii) Normally, the cost of the performance bond is part of the contract price (and thus, in effect, the employer pays for it). Here that had not occurred. Mr Clough said that he would have made it pretty clear to Mr Wight that the contractor would have to pay a premium for the bond and that Mr Wight, as the employer, would then bear that expense (since it would be incorporated into the contract sum). He said that David Young appeared not to have included the cost of this within the contract price.

iii) Normally the employer's agent will not get involved in the premium for a performance bond – it is essentially a matter for the contractor to sort out the cost himself. For the contractor to pass this on to the employer the cost would have to be identified before the contract sum was agreed; that did not happen here (which meant, of course, that it was to the advantage of the Defendant that the premium for the bond was left with the contractor).

iv) He did not give Mr Young the names of sureties but did tell him where he could get a bond from.

63. 14^th March 2008 - Mr Clough sent an email to Mr Young and Mr Wight which included at p 743: 'have you managed to obtain a performance bond'. By reference to the email at that page (what are the funder's requirements for LADs, warranties and a bond'), Mr Wight said that he thought that the funders (Moodys) did not have requirements in relation to a bond (this appears to be correct given the contents of the email from Susan Firby of Moodys at p749). Thus the people who were funding the project (and would suffer the loss if the contract failed), were not insisting that a bond should be obtained. That point (which was raised by Mr Winser), however does not have relevance to the duties of the Claimant in relation to the bond and so I ignore it.
64. 25^th March 2008 – work appears to have started on the site. Mr Wight said in evidence that he had bought the site in 'January 2008' and was keen to start the work. In his statement at p302, Mr Wight said: 'Had I realised the consequences of allowing Diamond to start on Site and/or of entering into the contract without a performance bond in place I would not have allowed work to start without it. Neither Myles Clough, Cliff Barnes nor anyone at Cyril Sweett advised me of this consequence. On the contrary they advised me to proceed with the letter of intent and subsequent completion of the contract even though they knew that the bond had not been provided'.
65. In evidence Mr Wight said that it was not explained to him how important the bond was by this stage. I have no difficulty at all in rejecting Mr Wight's evidence. I go so far as to say that this passage in his statement and evidence was patently untrue. He was fully informed in relation to the bond. He had a copy of the draft bond. The bond had been discussed with him and there had already been several emails referring to it. He was anxious for the work to start on the site (to which, by then, he had been committed for two months). The funding was in place (and no doubt the workforce would have been in place). Since the whole project was being funded on borrowing it is understandable why Mr Wight would wish the development to start. He had an existing working relationship with Diamond (having worked with them in Bristol). When Diamond did start on the project the work progressed well.
66. By this stage of the chronology it is already plain why I have decided that I have to approach the evidence of Mr Wight with extreme caution. It was at the opposite extreme of the pole of reliability to the evidence given by Mr Clough.
67. 28^th March 2008 – Mr Clough sent an email to Mr Wight stating: 'Good to speak to you this afternoon. I spoke to David and he is confident that he now has the necessary paperwork. I look forward to receiving and reviewing it when I am back from holiday after next week'. It is plain, for what it is worth, that the 'paperwork' in this email did not include the bond (as Mr Clough went on to say when dealing with a later date in the chronology).
68. 1^st April 2008 – A pre-start meeting was held. There is no contemporaneous documentation about this meeting but Mr Wight refers to it in his statement at p303 and 304. No one from Cyril Sweett attended the meeting and so it took place between Mr Wight and My Young. It was thus a discussion between site owner and contractor. At page 304, paragraph 59 Mr Wight says: 'At the pre-start meeting on 1^st April, the payment process was discussed. Payments were to be made in accordance with a pre-agreed schedule. The payment process involved Cyril Sweett having to agree with the bank's monitoring surveyor the stage the work had reached. Cyril Sweett would then prepare a valuation for payment to the contractor based on the pre-agreed schedule'.
69. 16^th April 2008 - There is an email from Mr Wight to Mr Clough and Mr Young saying: 'Excuse the bluntness. We need to sort out the paperwork…now….all of it…Never thought that it would be me saying that one. Can I suggest that we meet in Exeter at Myles office to finalise all outstanding matters on Tuesday afternoon' (p746). Thus he was well aware (and irritated by the fact) that the paperwork was not in place.
70. Mr Clough emailed back saying that he had introduced a new surveyor into the office called Tim Hartley. The email went on to state: 'A few questions ahead of Tuesday. Michael what are the LAD's we issued a performance bond and collateral warranty for in February to David. We have had no comments from David on the wording and its acceptance. See you both Tuesday' – p746. Thus Mr Hartley became involved.
71. 18^th April 2008 – there is an email from Susan Firby of Moody Venture Capital, the funders (p749). This email was forwarded on by Mr Wight to Mr Tim Hartley and, Mr Clough said, it would have been shown to him. The email shows that the funders were putting pressure on Mr Wight for the contractual and other documentation to be put in place 'urgently'. However, the funders were not pressing for a bond to be in place between the Defendant and Diamond.
72. 21^st April 2008 – Mr Hartley sent an email to Mr Wight relating to the contract. The email does not mention the bond being finalised. However, Mr Clough said that this email related to the construction contract, specifically. A similar email was sent by Mr Hartley to Mr Young however the email to Mr Young included as one of the matters that need finalising 'in order for us to finalise the contract': 'whether the wording of the proposed warranty and bond is agreeable'.
73. Mr Clough said that the construction contract will usually include the wording of the bond (as it did here) and so it is usual for the bond to be in place before the contract was signed. However, it is not the invariable position that the bond is executed before the contract. Indeed the experts agree at p247 (and I accept): 'that it is not unusual for bonds to be executed post commencement'.
74. 22^nd April 2008 - This is the date upon which the letter of intent at p752A was signed. Of course, by this stage, the work at the site had already begun. The letter of intent provides, amongst other things:

i) The intention is that a contract will be executed by the two parties based on JCT 2005 Design and Build, but incorporating agreed amendments;

ii) The work would be carried out in the terms of the draft contract documents. The work would start on 25^th March 2008 and would be completed on 30^th January 2009;

iii) If a contract was not entered into, Michael Wight Homes Limited would reimburse Diamond Property Construction Limited for their reasonable expenditure up to £50,000 'plus overheads and profit 5% and VAT';

iv) Stage payments would be made. Diamond were to take out 'all risks, employers / public liability insurance as required in accordance with the contract conditions (there is no mention of a bond in the letter)

75. 24^th April 2008 – the document at p752B records the agenda for a pre start meeting and was prepared by Mr Clough. Written on this document at p752B was: 'Performance bond to be chased by co secretary'.
76. 25^th April 2008 – the pre-start meeting took place. Present were Messrs Wight, Young, Clough and Hartley. There are minutes of it at p753. They included at p754: 'Acceptance of the performance bond is awaited. The secretary for Diamond Construction will chase this up'. This was a fuller note of the manuscript note on p752B, the manuscript note being Mr Clough's notes of the meeting which he wrote on his copy of the agenda.
77. 28^th April 2008 – an invoice was issued by the Claimant for £1,667 + VAT. That is the first invoice that was not paid (and, indeed, no further invoices were paid for the next six months). At a time when the claim was still contested (and after Mr Clough and Mr Wight had given evidence) Mr Wight said in evidence that this invoice and other invoices were not paid because: a) Cyril Sweett Limited had issued certificates for payment to the contractor based upon an incorrect schedule of payments and b) because there was delay by the Claimant in giving invoices. Neither of those points had been put to Mr Barnes or Mr Clough in evidence. Although not directly relevant to the issues relating to the bond, I do not accept that Mr Wight was being truthful in this part of his evidence either. Neither point bore any factual accuracy either (it was the funders who were working on an incorrect schedule of payments, not the Claimant).
78. 7^th May 2008 – Mr Clough wrote an email at p757 to Mr Wight and to Mr Young stating: 'we also need David to confirm his company secretary's agreement to providing a performance bond and warranties in the form provided previously...David please confirm the status on these items asap. Without the contract in place we are limited in any payments that we can recommend'. Mr Clough said that he wrote the letter because, until the main contract was signed, the most that the Claimant could release for payment was the £50,000 plus 5% as provided in the letter of intent. Thus this was applying pressure on the contractor to produce documents through financial means. Mr Clough said that he accepted that, by this email, he was conveying to Mr Young that, until the wording of the bond was agreed, the contract would not be executed.
79. Thus by this stage:

i) Mr Wight was very anxious for the work to progress;

ii) The funders were putting pressure for the completion of documentation (which did not separately include the bond);

iii) The contractors had been working on site for 43 days;

iv) The issue of the bond had been raised repeatedly by the Claimant and its importance was well known to Mr Wight.

80. Further, the draft bond had been prepared and sent to Diamond and were being pressurised to sign it. The Claimant had explained the bond to Mr Wight. In my opinion, the Claimant had arranged for the bond to be executed. That does not diminish the continuing default duty of the Claimant but does mean that the contractual duty to arrange for the execution of the bond, using the shorthand of the schedule dated 4^th February 2008 (paragraph 4 of p683), was met (and continued to be met).
81. 23^rd May 2008 - The contract was signed (p366). It is accepted that the wording of the draft bond prepared by Mr Clough is expressly incorporated into the contract.
82. Mr Clough said in evidence that he was fully aware that the contract was being signed on this date. Mr Clough said that, since the contract states that the performance bond is to be provided and incorporates the terms of the draft, it should be assumed that Diamond was happy with the proposed wording of the bond. That is entirely logical, in my opinion.
83. Mr Clough said that he was being told by Mr Young that they were chasing the bond. Mr Clough said that he was also chasing Diamond to get the bond signed. Therefore when it was signed he assumed that the bond would be executed and that the contractor would bear the cost of providing it. Therefore, if Diamond had come to him after the contract was signed and had said that it had omitted to include the cost of the bond, Mr Clough would have said 'tough'. Mr Clough emphasised that the contractors took a number of risks (such as the ground being contaminated) and the risk in relation to the bond was a small one in comparison with the other risks that they were assuming.
84. Mr Clough said, rightly in my opinion, that he did not need the name of the surety that would provide the bond, since that was for Diamond to resolve.
85. Mr Clough said that the Claimant did not advise Mr Wight to delay signing the contract until the bond was in place. He said that this was possibly because the work was already underway. He said that, 'possibly, we should have told Mr Wight not to enter the contract until the bond was in place'. However, I do not think that it was a breach of duty for Mr Clough not to have done so in the circumstances that then existed. Any suggestion that there was such a breach runs directly counter to the evidence of both experts.
86. Mr Horne submitted that the obligations in relation to the bond have to be viewed in context. Here the work had already started; therefore, he said, even if the bond should not have been in place, the cost of the bond should have been identified by that stage. I do not agree. The cost of the bond was a matter for the contractor since it was his obligation. To highlight or investigate the cost of the bond could not have been to the advantage of the Claimant's principal (Michael Wight Homes Limited).
87. 27 May 2008 – Cyril Sweett Limited issued an invoice for £1,667 + VAT, which was not paid by Michael Wight Homes Limited.
88. 30^th May 2008 – The first progress meeting took place. The notes are at p763. It records: 'performance bond not yet signed. DY to chase this up as a matter of urgency'. Present at the meeting were Michael Wight, David Young, Mr Clough and Mr Hartley. Mr Clough said that he put pressure on Mr Young to provide the bond. He said that, at this meeting and later meetings, Mr Young gave the impression that he knew that the bond had to be taken out and that he would arrange for this to be. This meeting took place with Mr Wight present; Mr Clough could not recall what Mr Wight said about this but did not recollect any particular arguments from him about the course of action that was being taken in relation to the bond. By putting pressure on Mr Young, Mr Clough said that he had regular meetings with Mr Young and raised the issue with him repeatedly. At this meeting Mr Clough said he sought assurances from Mr Young that the bond would be provided and received them.
89. Mr Clough said that he would have thought about using financial pressure to get the bond signed and realised that one form of this would be to withhold payments from the contractor. However, given the assurances that Mr Young was giving that he would take out a bond, financial pressures were not applied. On the same day the Claimant issued the first certificate for payment (£99,868.75 plus VAT - p760). In fact only about £68,000 was paid. Moody Venture Capitalists had their own surveyors and it appeared that the financier's payment schedule was different, leading to this lesser payment. On the evidence that I heard, this was not the fault of the Claimant (there was an exchange of emails which included this issue on 10^th September 2008). It meant, however, that Diamond was being underpaid by nearly £32,000. That is not without significance to the issue before me. Given that the contractor was being underpaid, was progressing well on the site and was giving assurances that the bond would be completed, was it a breach by the Claimant of its default duty to fail to advice the Defendant to withhold money in relation to the bond? I am very clearly of the opinion that it was not.
90. Mr Clough said that he felt sure that he would have discussed with Mr Wight what he would wish to be done about the absence of the bond. However, he could not remember what attitude Mr Wight took to the absence. He said that he had explained to Mr Wight in January and February that a bond should be obtained and the reasons for this. He said that there was no doubt in his mind whatsoever that he explained to Mr Wight that a bond should be obtained and the reasons for the bond. I believe Mr Clough's evidence.
91. 24^th June 2008 – The next progress meeting took place. The minutes are at p770. Present at that meeting were Mr Wight, Mr Young, Mr Acers (also of Diamond), Mr Clough and Mr Hartley. The minutes record that 'performance bond not yet signed. DY has paperwork necessary and will arrange for the bond to be signed. DY to update CS on progress'.
92. In evidence Mr Clough said that, by this stage the works were progressing well but, on reflection, maybe consideration should have been given to alternative methods being put in place of ensuring that the bond was completed and signed. On reflection, consideration should have been given to withholding some money. Mr Clough said this was not done because progress on site was good. There were later payment issues because what Cyril Sweett Limited was recommending for payment was not being paid to Diamond. Diamond was continually giving assurances that they would execute the bond. The strategy was putting verbal pressure on Diamond, which at that stage appeared to be having effect. This was a passage of evidence that received some focus in the closing speeches.
93. Mr Clough began his answers in this area by appearing to agree with an assertion by Mr Horne that more should have been done. However he then developed his evidence and I clarified it with him. I read out the above note of his evidence during closing speeches and, as I understand it, it is agreed that my note represents a correct distillation of what he said.
94. Mr Winser says that this passage of Mr Clough's evidence does not amount to a concession and I accept his submission. I do not consider that there was any failure by Mr Clough in his duties to the Defendant in relation to the bond at this stage. The position was:

i) The bond had been drafted and incorporated into the contract at the contractors expense;

ii) The Defendant was very well informed about the bond and of the lack of action by Diamond;

iii) The Defendant knew what action Mr Clough was taking and was not pressing for more action;

iv) The contractor was saying that that it was chasing up the bond;

v) Payments were being made than were less that those certified (which plainly would have financial implications for Diamond);

vi) Work was progressing well on the site.

95. I consider that a reasonably competent quantity surveyor and employer's agent, in these circumstances, would have done the same and I am fortified by the fact that Mr Haywood thought so too.
96. 26^th June 2008 – An email was sent by Mr Clough to Mr Young in response to the construction report and build programme (p776). In it Mr Clough said at p777: 'Lastly the report should give a status for the execution of the performance bond and for each of the sub contractor warranties'.
97. 30 June 2008 – Cyril Sweett Limited sent another invoice to Michael Wight Homes Limited seeking payment of £1,677 + VAT. The invoice was not paid.
98. Also on that day an email was sent by Diamond to Mr Wight complaining about payment of £36,000 that had not been received (p779B); Diamond stress the impact of this upon them given their overdraft limit of £75,000. Mr Wight then wrote to Moodys in the terms of the email at p779A, saying: '…progress is really good on the site and I am pleased with the approach to the project. Now I am causing them real problems by my inability to pay as agreed. It is no reflection at all but from their point of view I seem to be constantly giving excuse after excuse, we were initially not able to pay the full amount due to confusion…the week before last we delayed on the £36k because you were not available to sign off until last Tuesday'.
99. Mr Wight said that Diamond always pressed for payment quickly and there were delays in obtaining the money from Moodys to effect the payment. However, it must have been plain to everyone that withholding money would exacerbate the difficulties that Diamond said that they were facing and that a threat of withholding money at that stage would materially impact on the working relationship between the employer and contractor. In closing Mr Horne submitted that it would be wrong to think that a threat of withholding money would cause unreasonable disruption to the relationship between contractor and employer; it would be perceived as a business-like and efficient means of enforcing a contract right. I do not accept that submission. In circumstances where contractors were complaining, with apparent justification, about a significant underpayment at an early stage of a contract and were saying that they were addressing the matter in issue (the bond). I address the issues of causation later but make it plain now that I am very far from satisfied that a threat of withholding money would have produced the bond – I consider that, in the circumstances it might very well have led to two other responses from the contractor: i) where is the £36,000 you owe us? and ii) we are trying to resolve the issue of the bond as you know, give us more time.
100. 2^nd July 2008 – An email was sent by Mr Hartley to Mr Clough (p781). In it he stated: 'I've spoken to Peter Acers from Diamond concerning the performance bond. He is chasing the bank but says that the cost for getting this bond is around £2,500 and he thought that arranging this should be more around the £1,000 mark. He was wondering whether you have any recommendations as to where he might get this bond completed for a cheaper price. If you would call him his number is …'.
101. Mr Clough said that, as a result of this he would have called Diamond (although there is no note of this). Mr Clough had said in his statement at page 266 that he spoke to Diamond and was told that they had received a quote for £25,000 for the bond. Mr Clough said that he remembered exactly where he was when he made this call (and gave evidence to that effect). He was therefore confident that this is what he was told by Diamond. That seems surprising because £25,000 was far more than was envisaged for the bond (and would have been about 27% of the sum protected by the bond) but my surprise has no forensic bearing.
102. In his statement he went on to say at p266 that he passed on the information about the cost of the bond to Mr Wight. It states that: 'I also expressed my concern regarding the ability of Diamond Construction to obtain a performance bond and their financial status – at this stage there was plenty of news concerning the credit crunch and I was worried about their credit worthiness'. In evidence Mr Clough said that he told Mr Wight that he was concerned that Diamond might have difficulties with their credit worthiness. He said that without doubt he would have passed these concerns on to Mr Wight. Mr Clough said that he did give advice to Mr Acers about where he might be able to get the bond more cheaply.
103. Mr Clough said that, at that stage, progress was good at the site. He accepted that his concerns about the creditworthiness of Diamond made it all the more important to get the bond signed. He said that he was sure that he would have spoken to Mr Wight about this and that Mr Wight shared his concerns. Mr Clough said that the withholding of money would have been an option at that stage and he did not remember whether he had raised this with Mr Wight. However, assurances were being received from Mr Young that the bond was being pursued. I think that a reasonably competent quantity surveyor and employer's agent might well have thought that, taking financial steps to cut across the steps that were being taken to pressurise Diamond into taking a bond, would be wrong. I therefore do not think that there was any breach by the Claimant in failing to advise Mr Wight to withhold money from Diamond at this stage either.
104. 21^st July 2008 – An Interim Certificate was issued by Cyril Sweett Limited. It recommended payment of £82,372.60 plus VAT (p786). Mr Clough said that, knowing the progress was good and that Diamond had difficulties with their own finances, withholding money might have pushed them over the edge. Mr Horne made the point that this would have made Diamond all the more vulnerable to pressure that they should get the bond in place. I accept that the threat of withholding money at that stage would have been an option. However, that does not mean that a reasonably competent person in the position of Mr Clough would exercise that option or advise that it should be pursued. Mr Clough made a professional judgment to pursue the current line of pressure which fell well within the band of competency expected of a professional person in his position in the circumstances that existed (and which I have already outlined).
105. 23 July 2008 – Cyril Sweett Limited issued a further invoice to Michael Wight Homes Limited for £1,667 + VAT. This invoice was not paid.
106. 24^th July 2008 – Another Progress Meeting took place. The minutes are at p790. Messrs Wight, Young, Clough and Hartley were present. The minutes state: 'the performance bond has been signed and is with the insurance company for processing. Await approval and bond documents'. Shortly after that Mr Clough said that he went on holiday for three weeks and could not remember whether he had given instructions for the issue of the bond to be chased up. In fact the bond did not materialise. Thus, at that stage when Mr Clough left for his holiday (and, it appears Mr Hartley left for a holiday at about the same time), he was being told that the bond was in place. Thus it must have appeared to all concerned that the right strategy had been followed.
107. 12^th August 2008 - The third interim certificate was issued, recommending payment of £74,197.85 plus VAT (p796).
108. 18^th August 2008 – An email was sent by Mr Wight to Mr Hartley (p802). In it he said: 'It transpires that the bank monitor is working to a different set of numbers than we all are. This does go some way to explain why all of the figures that we are working with do not tally up and the payment amounts are lower than they should be. I am on to this now and will endeavour to correct the position asap. I will request that we reissue a new set of figures to the monitor and verify that all are singing off of the same hymn sheet'. There is no suggestion in this email that the fault lies with the Claimant for the errors in the payment schedule.
109. At p800 there is an email from Peter Acers of Diamond stating: 'I am sorry to email you but I know Peter has been trying to reach you on your mobile. We are now in a situation where it is absolutely imperative we have a payment in by Wednesday of this week. Unless we receive a payment from either Brentry [i.e. Bristol] or Kingsbury by Wednesday we will face a situation whereby the suppliers / materials are all on hold. Obviously there are some major implications on how we can continue at your Kingsbury site'.
110. Thus the position at this stage was that the Claimant and the Defendant both thought that a performance bond was in place and also were being told of the financial difficulties that were being faced by the contractor. The contractor was complaining about not being paid in elation to two sites. In his written closing submissions Mr Horne said: 'Even when Mr Clough returned from holiday he did not chase the bond. In fact this would have been another ideal time to apply pressure by way of withholding: the recommendation for payment had been made so that payment would be due towards the end of the month, and a withholding notice could have been served (or threatened) on Mr Clough's return – but the possibility was not even discussed with Mr Wight'. In fact at that stage Mr Clough considered that the bond had been signed because he was told that this was so before he went on holiday. That being so it would have been entirely unreasonable for him to contemplate advising that money should be withheld.
111. 20^th August 2008 – Cyril Sweett Limited issued another invoice for payment by Michael Wight Homes Limited for £1,667 + VAT. The invoice was not paid.
112. 28^th August 2008 – Mr Young sent an email to Mr Hartley stating that Diamond will not be providing a bond. Mr Hartley forwarded the email on to Mr Clough (p806). The email from Mr Young states: 'with reference to the performance bond, following our meeting and upon my return to the office we were in receipt of the documents for the bond, including the fee. This was in excess of £4.5k, this is far more than anticipated, this is also something that I had not allowed for in the original quotation. With this in mind and considering the progress on site to date, Peter is not prepared to provide this. Hopefully you can understand our reasons for this'.
113. Mr Clough sent an email to Mr Wight informing him that Diamond would not provide a bond (p805). Mr Wight sent an email to Mr Clough in response (p805); in it Mr Wight said that he was very disappointed that Diamond would not now provide a bond and said: ' If they are in financial difficulties this may be a reason why they are not able to provide a bond'. In evidence Mr Wight said that he was disappointed because, by that stage, he knew the importance of the bond. He as also very well aware of the complaints by Diamond about underpayment and the financial difficulty that this was causing them.
114. Mr Wight accepted in evidence therefore that he was aware of the steps that Cyril Sweett Limited had been taking to pressurise Diamond to take out the bond. By the terms of the email at p806 it is recorded that there are two reasons why Diamond did not want to obtain the bond – the cost and the progress on the site. Mr Wight accepted that the progress of Diamond at the site was, at the time, thought to be excellent.
115. 29^th August 2008 – A progress meeting took place (p809). The same four people were present (Messrs Wight, Young, Clough and Hartley). The minutes record at paragraph 2.1: 'Peter Acres to contact CS concerning performance bond'. Mr Horne suggested that this was an inadequate response to the absence of the bond and that more pressure should have been exerted. It seems to me entirely reasonable that Mr Clough wanted to speak to Mr Acers to see what was going on. To give an immediate response that money should be withheld from Diamond without investigating the issue would have been patently unreasonable, in opinion.
116. 2^nd September 2008 (Tuesday) – there is a note of a meeting between Mr Clough and Mr Wight on this day at p812. This records that Diamond had been underpaid by £16,288.20. Mr Wight accepted that this also records that there was a discussion between Mr Clough and Mr Wight about a performance bond. He also accepted that he and Mr Clough agreed upon the course of action that should be taken in relation to it: 'speak to Peter Acres. Performance Bond. Another co.'
117. Thus Mr Clough had spoken to his principal about the course of action to be followed and was following it. Mr Horne submitted that, Mr Clough failed to take the instructions of Mr Wight in relation to the appropriate course of action in relation to the bond. I do not accept that this is so and this event demonstrates that Mr Clough did continue to discuss the appropriate action with Mr Wight.
118. Mr Horne submitted in closing that 'Specifically:

there was no discussion of making good the underpayment conditional on the provision of the bond;

there was no discussion of withholding sums from future payments; and

even though at this time, as Mr Clough accepted, it was of utmost importance that the bond was obtained to give the Defendant protection against the possible default of a contractor thought to be in financial difficulties, there was not even any discussion of the possibility that the Defendant could pay for (or contribute towards) the cost of the bond. Doing so would have obtained significant protection for limited outlay'.

119. Mr Winser submitted in closing: 'We know that, by the time of the email of the 28^th August that Diamond is put off by the price and also the progress on the site. Mr Clough's evidence was that he did not see this as an end to the matter. He thought that the appropriate thing was to arrange for a meeting with Mr Acers and sort it out. It is very soon after that that the involvement of Cyril Sweett Limited came to an end. We have no idea what would have happened if the engagement of Cyril Sweett Limited had continued beyond the 10^th September. There was an ongoing process in relation to the bond that was fluid'.
120. I do not think that there was anything incompetent at all in reacting to the refusal of Diamond to pay £4,500 for a bond by suggesting that Mr Clough should speak to Peter Acers first. That was what was attempted and agreed. Within 8 days of this meeting the Claimant's engagement ceased because it had not been paid since April.
121. 4^th September 2008 (Thursday) - Mr Clough sent an email to Mr Wight stating: 'Since we met on Tuesday, I have left about 3 messages for Peter to phone me but he has not responded. I want to speak to him about the bond. Also I am penning you a proposal for Westward Ho this morning which you should get tomorrow' (p814).
122. 8^th September 2008 (Monday) – An interim certificate was issued by Cyril Sweett Limited recommending payment of £43,232.60 plus VAT (p816). Mr Clough accepted that he did not advise Mr Wight to withhold that payment, or part of it. Mr Clough said that progress at the site remained good at the time and he was leaving repeated messages for Peter Acers to contact him. Further the course of action to be followed had been discussed with Mr Wight on the previous Tuesday. I do not therefore consider that there was any incompetence in Mr Clough in not advising Mr Wight to withhold money.
123. Also on 8^th September 2008 Mr Clough sent an email to Mr Wight and Mr Young, which is at p820. In it he stated: 'I have tried to call Peter Acres 4 or 5 times since the meeting and he is not answering my calls. This does not provide confidence or comfort as it looks like there is an issue which he does not want to address. David, please ask him to contact me. I won't bite!'. Mr Wight accepted that this related to the bond and that he was being kept informed about what was happening on that issue.
124. 10^th September 2008 – This was the day when the Claimant ended its engagement with the Defendant, having not received any payment since March 2008.
125. An email was sent by Mr Wight to Mr Clough in which he states at p821: 'I have your message this morning. So sorry for not having got back to you before now. I totally accept your position that you are not prepared to work on the project any further due to payment issues. I will continue to chase this through and keep you informed as I make progress. I have explained to you my frustrations at the financiers. I am still not getting the payments through for fees promptly and this has now put our relationship on this project in jeopardy causing us both to review the position. Bearing n mind that we have had to review and looking at the big picture I do feel that I am not getting value from the relationship on this project, and although not all the fault of your company, everything seems to be just not working as it should be. I know you are aware of this, and have at times found the project frustrating. To give you a few examples of this:

1. Nisbets / Cyril Sweett (CS) were not involved in the contract negotiations so I gained none of your benefits at that point.

2. Every single recommendation for payment has not matched up with a practical payment made. None of the ongoing paperwork matches up with where we are so it is of no value.

3. One of the most important parts of a contract, the performance bond is still not in place'

4. Health and Safety induction?

5. Price scope of works to cottage still waiting…

…Diamond are progressing well with the project and I am pleased with them and their working ethos. I do feel that we too could work together in the future. For absolute clarity, in reflection this project is not giving us both an opportunity to work well together. Having said that, I do believe that you and Cyril Sweett Limited as a company could be able to bring value to future projects.

I would like to agree with you a fair and reasonable payment for the services that I have actually received from you. I will stand by what we finally agree. I do hope that this will not then affect our relationship going forward on other projects/….It is unfortunate that this has gone the way that it has. I do believe that if we are both aware of the reasons why we have had issues, that we can look forward to a good working relationship in the future. Please call me so that we can talk through the above and sorry to you Myles if this has caused you grief with the powers that be at CS'.

126. On the same day Mr Clough replied to Wight in an email at p822. Mr Clough stated that Cyril Sweett Limited would not spend any more time on the project without its fees being paid to date. Mr Clough went on to say:

'I agree with you and am sure that we could have offered a more valued service were we more involved at the outset.

We have made all of your recommendations in line with the payment schedule in the contract documents. It is now acknowledged that the bank and their monitor are entirely responsible for the paperwork not matching up. Even this most recent valuation has ended up with different values being recommended, though we arranged for the bank monitor to be present at site and confirmed the completed stages with him. As agreed last week, you were going to ask the bank for a breakdown of the bank's recommendations so we can make some sense of their payments.

I have called Peter Acres three / four times since we met on Tuesday. I have spoken to Peter Acres a number of times previously. From the outset, I have been chasing David Young and we have recorded at each project meeting the outstanding item.

…We believe that we are carrying out our duties agreed with you as Employer's agent and are disappointed that you are disappointed. We are fortunate on this project that Diamond have performed so well on site. However, they are poor at keeping up with the paperwork and we do spend much time chasing actions and recording this…

…We are of course not responsible for liaising with the bank at all, as this was a duty omitted from our fee agreement. It is just unfortunate that this is where all the payment issues have stemmed.

I believe that we can add immense value to projects and would agree that our involvement from the outset will demonstrate this. Even at Westward Ho! You appear to have wrapped up a contract sum and agreed payments schedules with the bank!! However, there is value that we can still bring and I have written to you on this project with a proposal. I will give you a call'.

127. Following the time when the Claimant ceased to act, the Defendant and Diamond continued in the development of the site until after 17^th June 2009 (some 10 months later) without a bond being in place. I was not told of any steps that Mr Wight had taken during this period to enforce the continuing contractual duty of Diamond to provide a bond and it was not suggested that sums were withheld from payments because of it. I do not make the assumption that Mr Wight was unaware that money could be withheld from the contractor if the contractor fails to meet his contractual obligations.
128. The ending of the Claimant's engagement came some 8 days after it was agreed between Mr Wight and Mr Clough that Mr Clough would speak to Mr Acers about the bond. Further, it was still being asserted by Mr Young that a bond was available but that the premium was £4,500. It seems to me that there was no incompetence in Mr Clough in wanting to discuss this with Mr Acers. It may well be that if Mr Acers had still not responded by the next date for payment and was still refusing to take out the bond more intense measures would have been taken.
129. 15^th September 2008 – The claim form was issued (p1). Thereafter the case progressed as I now set out. On 15^th October 2008 the original defence was filed (p3). On 29^th May 2009 the Defendant filed its response to the Claimant's Part 18 Request (p186 - it is undated, but appears from p274 to have been 29^th May 2009). On 9^th September 2009 Mr Clough's first witness statement was signed (p262). On 3^rd March 2010 an order was made for a preliminary trial of the issues of liability (p207). On 2^nd July 2010 the amended Defence and Counterclaim were filed (p5). On 4^th April 2011 – an order was made for the listing of the trial of liability (p214). On 23^rd May 2011 Mr Wight made his witness statement (p295). On 24^th May 2011 Mr Clough made his second witness statement (p272). On 19^th July 2011 Charles Haywood signed his report (p218). On 20^th July 2011 Stephen Hart signed his report (p235). On 25^th July 2011 Mr Barnes signed his statement (p285). On 4^th October 2011 an order was made for oral evidence to be given by the experts (p216). By 7^th October 2011 both experts had signed the joint statement at p246. On 6^th October 2011 the Claimants filed their response to the Defendant's Part 18 Request (p193).
130. Expert evidence – Joint statement. In relation to the bond the experts stated as follows in their joint schedule at p247:

2.01 The experts agreed that the bond was a contractual obligation contained within the employer's requirements, that its purpose had been explained to the defendant, and the original premium for the bond was not separately identified in the contract sum analysis.

2.02 Mr Hart maintains that Cyril Sweett Limited should have advised Michael Wight Homes Limited of the increased premium. Mr Haywood however is of the opinion that the claimant's duties appended to their appointment did not require them to keep the defendant abreast of variations or changes with a cost implication.

2.03 Notwithstanding this, Cyril Sweett Limited did notify the defendant in an email dated 28.08.08 that the bond quote was in excess of £4,500. This had increased from the £2,500 verbally conveyed to he defendant by Mr Clough following an internal email dated 02.07.08.

2.04 The experts agreed that it is not unusual for bonds to be executed post-commencement. Mr Hart considered the period Diamond had to take out the bond was more than reasonable and the contractor had filed to out the bond in place within a reasonable period of time. Mr Haywood noted that the defendant also had no success in obtaining the bond after the claimant terminated their service.

2.05 Mr Haywood stated that Mr Wight was commercially astute and therefore would have understood the implications of not having a bond in place.

2.06 Mr Hart's view is that Cyril Sweett could have done more to persuade the contractor to take out the bond by withholding the full value of the bond, i.e. £93,000. Mr Haywood's view was that this was likely to be outside the powers of the employer's agent under the contract terms and would undoubtedly hasten any contractor's demise. Mr Haywood's view is that the claimant had used reasonable endeavours to persuade the contactors to take out the bond.

131. Mr Haywood's evidence – In his report he had said as follows on the issue of a bond:

While I have not seen the numerous communications chasing Diamond for the bond there appears to be no argument that the performance bond was a contractual requirement, the wording was issued to the contractor at an appropriate time and the claimant chased Diamond repeatedly for its execution.

The defendant says the claimant had a duty to make him aware of the risks of commencing the works without a bond and the claimant had a duty to ensure that the bond was executed.

The claimant says that he did advise on the risk of continuing work without the bond in place and had no obligation to ensure that the bond was executed.

In my experience it is common practice for bonds to be executed post commencement because there is often limited lead in time between the contractor being instructed to start and physically commencing work. Negotiations and placing the bond does take time and contractors often need chasing as they are reluctant to tie up business capital any longer than they need to. I believe the defendant, having discussed the requirement for a bond, would have understood its purpose and benefits and would therefore have known there was an element of risk in commencing without it.

In my experience an employer's agent often has to push a contractor to execute a bond. He cannot be forced to but the employer's agent should use reasonable endeavours to cajole the contractor into complying with his contractual obligations, keeping the employer informed of progress. I believe that the claimant did exactly this up to the point he terminated his services'.

132. In evidence Mr Haywood said that in an ideal world the bond would be completed very shortly after the contract, if it was not done before. The contractor will often need cajoling to execute one. The contractor will usually go to his bank manager to ask for the bond. If the bank offers such a bond, it will usually look for some security (such as a reduction in the contractor's overdraft facility to make allowance for the amount of the bond). Most contractors want to wait until the contract is signed because they do not want to tie up the commitment to the bond until they know that the contract is in place.
133. He said that he did not think that it would have been sensible to withhold the signing of the contract until the bond was in place. At the time of the contract there was no reason to suppose that Diamond would fail to execute the bond. The longer the contact goes on the less risk there is that the contractor will default unless his credit rating falls during the contract.
134. He said that he would have expected the bond to be in place within two or three months of the contract. He thought that bonds costing £1,000 or £2,500 would be somewhat 'light' for a project for this. Thus if the contractor on this project had come to him saying that he was offered a bond for £2,500 his response would have been 'go and get it'. On 29^th July Diamond were claiming that the bond had been obtained. The fact that the bond was not obtained had to be balanced against the fact that the progress on the site was good; a slowdown on site is usually the signal of potential contractual failure.
135. When the contractor came back in August saying that he would not pay £4,500 for a bond, Mr Haywood's reaction would have been that £4,500 would have been a reasonable premium. Therefore, at that point, the employer's agent would have to become involved to try to resolve the problem. Mr Haywood said that Mr Clough did make attempts to resolve this by trying to contact Mr Acers on a number of occasions.
136. There were other possibilities to put pressure on Diamond, such as withholding payments or saying that an under payment would not be made good until the bond was in place. However, the withholding of money is not always the sensible solution. There are a number of ways to put pressure on a contractor. The first thing that should be done, said Mr Haywood, is that the employer's agent should discuss things with the contractor. Therefore, Mr Haywood would have done exactly what Mr Clough had done – try to speak to Diamond and try to persuade them to take out of the bond. If they then failed to do so, the withholding of money might be used. However, in 9 times out 10 the withholding of money is not necessary. As part of pressurising them you might threaten the withholding of money. However, the position is made more complicated by the fact that Diamond were alleging that Michael Wight Homes Limited had underpaid them – therefore would an employer threaten to withhold money when the contractor was already alleging serious underpayment by the employer?
137. Other examples of discussions that an employer's agent would have considered with the contractor might have been a suggestion that the bond should be for a lower percentage of the contract price (e.g. 5% rather than 10%); this could have led to a reduction in the cost of the bond.
138. Mr Haywood thought that withholding the whole of the amount of the bond (£93,300) might be outside the powers of the employer's agent. He said that it is quite rare for an employer's agent to withhold payments. The employer's agent has a duty to act in the best interests of the employer and withholding money may have wider implications on the relationship between employer and contractor.
139. By the end of August, that was the time to ramp things up by considering withholding payment. However, at that stage Cyril Sweett Limited were involved in seeking to secure the payments that were due to them and shortly after that their engagement ended.
140. I was extremely impressed by the evidence of Mr Haywood. I do not accept that he was advancing an opinion based on what he would have done in the position of Mr Clough. He was applying his considerable knowledge of the standards of expected practice within his profession. I found his evidence to be logical, careful and correct (save on the question of the potential legality of withholding the amount of the bond which, in any event would have been catastrophic for the contractor and the threat of which would have been unthinkable given the underpayments that had been made and the contractor's consequent financial difficulties).
141. Mr Hart – In his report at p238 – 242 he said as follows in relation to the bond:

[p238] 'In the issues that I have considered as instructed, there is documentation showing that Cyril Sweett Limited advised on the need for a performance bond, included this within the contract documentation, but allowed the contract documentation to go forward without a performance bond being obtained. In my opinion Cyril Sweett failed in their duty to act with reasonable skill and care by not advising the employer of the risk of proceedings without a bond in place. They also failed in their duty to act with reasonable skill and care by not advising the employer to withhold a sum from the first application for payment until such time as the performance bond was provided…

[p240]…In my opinion, Cyril Sweett Limited have recognised the importance of the performance bond and the need for this to be in place. Cyril Sweett Limited were clearly aware of the risk, and steps taken to ensure procurement of a performance bond by the contractor, Diamond Property Construction…

[p241]…2.1.8 - Cyril Sweett Limited were fully aware that a letter of intent was being issued prior to a performance bond being in place and in my opinion should have advised of the risk of allowing Diamond Property Construction Limited to start work without bond. Had they done so, the risk of commencing at that stage under the letter of intent would have been with Michael Wight Homes Limited. On this basis, Cyril Sweett Limited should not have allowed Diamond Property Construction to start works without a performance bond in place…

2.1.10 - In my opinion, the contract documentation would include the performance bond and contractor's insurance to be in place, and therefore the contract should not have been executed and Michael Wight Homes Limited advised of this.

2.1.11 - The question arises as to whether Cyril Sweett acted with reasonable skill and care to ensure that a performance bond was in place before and subsequently after the contract had been executed…

2.1.12 - The advice was for the need of a performance bond. In my opinion there is a failure on the part of Cyril Sweett Limited, despite the requirement within the documentation, to pursue and follow through obtaining this document from the contractor as the employer's agent….

2.1.14 - The lack of there being a performance bond in place put the employer at risk and amounted to a breach of contract by the contractor. There is a mechanism available within the contract where a withholding notice can be issued following an application for payment by the contractor if there is a legitimate reason for the employer to withhold part or all of a payment. A withholding notice could have been served following the first application for payment to withhold from the payment due to the contractor the full amount of the proposed bond (i.e. £93,444) until such time as the contractor provided the bond. This would have given the employer the same level of protection by way of retention as the bond would have provided. It is likely that the contractor then would very quickly have provided the bond, which I understand would have cost them £4,500, following which the employer would have paid the withheld sum to the contractor. It would not have been possible for the employer to obtain the bond themselves.

2.1.15 - Bonds cost money. Normally the cost of the bond would be passed on to the employer through the contract sum. In this case the contract sum had been agreed before the requirement for a performance bond was raised. The contractor may have been justified in requesting that the contract sum be increased to reflect this. Cyril Sweett cold have advised that such an amendment was appropriate and that may have avoided the dispute that subsequently arose about the contractor providing the bind. Once the contract was executed using the original contract sum Cyril Sweett should have made it clear to the contractor that they were contractually obliged to provide the bond and should have taken the steps set out above to enforce this contractual obligation'.

142. In evidence, he confirmed that his qualifications are as set out at p238. He is a chartered building surveyor. He is not a quantity surveyor. He has never acted as an employer's agent. He did not accept that he is not well qualified to advise the court on what a reasonably competent quantity surveyor or employer's agent might do. He acts as contract administrator and felt able to express opinions based on that experience. He said that he does not have a great deal of experience in projects involving new houses. I certainly do not regard it as permissible or correct to reject all of Mr Hart's opinions based on his qualifications. However, he does not have anything like the experience of Mr Haywood in relation to the expectations on a quantity surveyor or employer's agent. Further, in evidence, he retracted some very significant parts of the opinions that he had expressed in his report. Some of the matters that he retracted went to the very heart of the issues that were being litigated; if they had been accepted on the face of his report the outcome of these proceedings would have been wrong.
143. I found the evidence of Mr Haywood much more compelling than the evidence of Mr Hart.
144. Mr Hart accepted that, if Mr Wight knew what the bond was and its purpose, the risk of proceeding without it was obvious to him. His evidence was that if the risk of proceeding without a bond was self evident then there would be no need to advise upon that risk. I have already said that I consider that Mr Wight was very well aware about the purpose of the bond and therefore did know about the risk of proceeding without one. That, however, is not the end of the matter due to the continuing default duty of the Claimant to take reasonable care in relation to the execution of the bond by Diamond.
145. Mr Hart accepted in evidence that he had said in his report at p241 paragraph 2.1.8:'Cyril Sweet should not have allowed Diamond Property Construction Limited to start works without a performance bond being in place'. He accepted that, as a result of the joint statement this opinion did not hold 'in part'. He also accepted that the same must apply to para 2.1.10. (where he says that the contract should not have been signed without the bond being in place and that the Claimant should have advised the Defendant of this).
146. In fact the acceptances that he made in the joint statement represented a material departure from his report. In his report he was suggesting that the work should not have started and the contract should not have been signed without the bond being in place; he suggested that Cyril Sweett Limited should have advised the Defendant of this. If he had been right about this it would have made a very substantial difference to this case (for the Defendant would have succeeded on this aspect of the counterclaim). I regret to say that this must be a very clear signal of the lack of experience of Mr Hart in this field and the danger of relying on his opinion. It not simply a question of his opinion on this point not holding 'in part'.
147. As to the withholding of payments, he said he had never withheld payments under a contract. At paragraph 2.1.14 he said that 'a withholding notice could have been served following the first application for payment'. He said that this was an option that should have been considered, not that it should necessarily have been done. The first application for payment was on the 30^th May following the signing of the contract on 23^rd May 2008. In re-examination, he said that this should have done on 30^th May. I do not think it remotely realistic to suggest that, within a week of the contract being signed and in the circumstances that I have described, sums should have been withheld seven days after the contract was signed.
148. In the same paragraph he had said that withholding of the money would have been likely to lead to the contractor very quickly providing the bond. He accepted that this was speculative because it would depend upon the availability of the bond. He would not wish to quantify the likelihood. I deal with this point later when addressing issues of causation under paragraph 4c of the issues before me (from the schedule at page 0 of the bundle).
149. He said that as Employer's agent Cyril Sweett Limited would not be expected to deal with sales and marketing. Mr Hart accepted that the question of building at the back or the front of the site was a marketing issue and so was not part of their duty. The same applies to the question of an access road. This again amounted to a material departure from what he was saying in his report at p238 where he asserted that, if the Claimant knew about the order in which the houses were being built (back before front) 'in my opinion, Cyril Sweett's failure to provide this advice would amount to a failure to act with reasonable care and skill'. It was after that evidence had been given the Defendant abandoned that head of counterclaim against the Claimant. Although this head of counterclaim is therefore not before me, Mr Hart's evidence on it does add to my disquiet about relying on his evidence. Based his opinion and the evidence of Mr Wight, that issue was contested to point of closure of the evidence.
150. Conclusion on the question at 4b – I have already expressed my opinion on question 4a of the issues that I have to decide. The remaining points are b) Was the Claimant in breach of duty in relation to the provision of a performance bond and c) If the Claimant had complied with its duty as identified in a) above, would a performance bond have been provided by the contractor?
151. As will already be apparent, I have no difficulty at all in concluding that the Claimant was not in breach of duty in relation to the provision of a performance bond. I therefore answer the question in 4 b: 'No'.
152. I found Mr Haywood's evidence compelling (and I think the summary that he gave in relation to the performance bond, save as to the illegality of withholding the whole of the interim payment) was both succinct and accurate. However, entirely independently of that opinion I have worked through the chronology of the case to demonstrate why, independently of the expert evidence, I had formed the opinion that there was no breach of duty.
153. That being so, the issue of causation in paragraph 4c does not strictly arise but I will deal with it anyway. Mr Horne submitted, initially that, if I found that the Claimant should have advised that money should have been withheld, I should apply a straight balance of probability test and ask myself whether it is more probable than not that the bond would have been provided by Diamond. I was troubled by that submission and made that plain. He submitted that, given the apparent financial difficulties of Diamond, the greater the difficulties the greater would have been the effect of such pressure and therefore it is probable that the bond would have been provided
154. Mr Winser responded by submitting as follows: 'Causation is a complex issue in this case. The legal test has not been expounded correctly by Mr Horne. The court is being asked to hypothesize about what Mr Wight, the contractor and the bond providers would have done. The established test for causation is twofold. The Defendant must prove that i) but for any breach it would have acted differently – i.e., that Michael Wight Homes Limited would have withheld money if so advised and ii) in relation to third parties, the court does not require the balance of probabilities since this is the loss of a chance – 'a real and substantial chance' that a third party would have done what is suggested – Allied Maples v Simmons and Simmons [1995] 1 WLR 1602.
155. As to stage one there is simply no evidence about this. It is inappropriate for the court to draw inferences where evidence could be provided by the Defendant to address this issue. It was not. Therefore, the Defendant cannot establish on the balance of probabilities that he would have withheld money. The second aspect – how Diamond would have reacted to the threat of withholding money – there is no evidence about this. We have no idea about what would have happened.
156. Mr Haywood said that he doubted that withholding money would be effective – it could have had the opposite effect to that which was desired. Mr Hart said that, if the full amount of the bond was withheld, the bond would have been taken out. However in cross examination Mr Hart accepted that this was putting a finger in the air and was purely speculative'.
157. Mr Horne then replied saying that Mr Winser's analysis of the law of causation was correct. I agree that it is. The headnote of the Allied Maples decision (which is drawn with particular reference to the judgment of Stuart-Smith LJ at page 1609 to 1610) reads: 'where the defendant's negligence consisted of an omission, causation depended on the answer to the hypothetical question of what the plaintiff would have done if the defendant had not been guilty of the omission, which was a matter of inference to be determined from all the circumstances and that where the plaintiff's loss depended on the hypothetical action of a third party he was entitled to succeed if he could show that there was a real or substantial, rather than a speculative, chance that the third party would have acted so as to confer the benefit or avoid the risk to the plaintiff'.
158. Mr Horne said that 'it is quite clear that Mr Wight would have done more if he had been advised by Mr clough correctly in relation to enforcing the requirement that Diamond execute a bond'.
159. Mr Horne relied on paragraph 44 of Mr Wight's statement in which he said: 'Had I realised the consequences of allowing Diamond to start on Site and/or of entering into the contract without a performance bond in place I would not have allowed work to start without it. Neither Myles Clough, Cliff Barnes nor anyone at Cyril Sweett advised me of this consequence'. I have already referred to that paragraph and described it as patently untruthful. I am very far from persuaded it was probable that Mr Wight would have chosen to have exerted financial pressure in relation to the bond prior to 10^th September 2008. I am not going to repeat the circumstances that I find to have existed since they are set out in the chronology in very full measure. It is at least very possible that he would have responded by telling Mr Clough (as he did on 2^nd September): 'speak to Peter Acers'.
160. If Mr Wight had agreed to do so, I do not accept that it can be said with confidence that Diamond would have taken out a bond. I think it at least very possible that there would have been another round of discussion.
161. Therefore, on each of the issues that are before me, the Defendant fails. The representatives should draw up an order to reflect this judgment and must send the order to me by email by 4 p.m. on Tuesday 28^th February 2012. If there are subsequent issues about costs, they will have to be listed on another occasion. The parties will have to decide what remaining issues, if any, are to be litigated and will have to send to me proposed directions in relation to them. I think that it is correct for me to regard myself as part heard in this case in the event that there is further litigation and so the case should be listed for any subsequent hearing before me (subject to any further argument that I might hear on that issue).
162. I have typed this judgment myself at the end of this hearing during a week when I am fully listed. If there are typographical errors or errors of detail I would ask counsel to submit proposed corrections by using track-changes in one version of this judgment incorporating the proposals for amendment of both counsel.
163. Finally I would wish to thank Mr Horne and Mr Winser for the excellence of their representation. It has been my privilege to witness that. Both parties owe an immense debt of gratitude to their respective counsel.

Stephen Wildblood QC

23^rd February 2012.