Scottish Court of Session Decisions

"3.1 Employer's Requirements: The parties shall confer in order to develop the Specification (including the Drawings) into fully detailed design drawings incorporating all service runs to accommodate the Tenant's reasonable fit out requirements and to agree the Employers Requirements and in the event of the parties being unable to agree the same within thirty working days then either party shall be entitled to refer any dispute for determination by the expert under Clause 17.2"

"'Specification' means the specification which is comprised in Part I of the Schedule and the Drawings all of which are to be comprised the [sic] Employer's Requirements and the Contractor's Proposals (and/or any specifications and/or drawings which the parties may subsequently agree shall be substituted therefore or used in conjunction therewith)."

"'Drawings' means the drawings annexed to the Specification and part of Part I of the Schedule."

"'Employer's Requirements' means the document issued by the Developer for the design and carrying out and completion of the Developer's Works (which shall incorporate the Specification) agreed or determined pursuant to Clause 3.1 with such Variations (if any) approved by the Tenant pursuant to Clause 3.3."

"'Developer's Works' means the construction of the Building with all mains services and loading bay as described in the Specification".

"'Building' means the building comprising the Subjects and other areas to be constructed by the Developer on the Property in accordance with the Specification the Employers Requirements and the Measurement Plans."

"'Building Contract' means the design and build contract in respect of the Developer's Works in the form of The Scottish Building Contract with Contractor's Design (August 1998 Edition) (which incorporates the JCT Standard Form of Building Contract with Contractor's Design 1981 Edition incorporating Amendments 1 to 7 and 9 and 10 and T.C./94/WCD) ('UK Form')) as amended by the Schedule of Amendments (which shall incorporate the Specification and the Employers Requirements) and as may be amended pursuant to Clause 12.1 to be entered into between the Developer and the Building Contractor and executed in self-proving form (together with any contract or contracts from time to time entered into by the Developer and the Building Contractor supplemental thereto which shall be in a form consistent with the UK Form as amended) with any Variations previously approved by the Tenant pursuant to Clause 3.3."

"5.1 Commencement: The Developer shall as soon as reasonably practicable after the date of this Agreement commence and thereafter proceed diligently and expeditiously with the execution and completion of the Developer's Works".

"'Certificate of Completion' means the written statement validly issued by the Developer's Project Managers under Clause 10 certifying that practical completion of the Developer's Works has taken place in accordance with the terms of this agreement and the expression 'Certificate Date' shall mean the date of issue of such certificate.

'Access Certificate' means the written statement validly issued under Clause 10 by the Developer's Project Managers certifying that the Developer's Works have reached the stage set out in Section 1 to Part A of the Schedule."

"'Estimated Date of Completion' means the earliest of:-

(a) the date which is 72 weeks after the last date of execution hereof and

(b) the date which is 60 weeks after the date of commencement of the Developer's Works."

"'Permitted Tenant's Variation' means any variation or amendment requested by the Tenant to the Employer's Requirements or the Contractor's Proposals after any Variations to the Employer's Requirements or the Contractor's Proposals have been approved by the Tenant pursuant to Clause 3.3."

"'Variation' means any alteration to any item contained in or referred to in the Building Contract the Detailed Documents and/or Deeds of Warranty which would have the effect of materially varying or materially changing the words or terminology of a document or the effect of the relevant document would be so altered as to be disadvantageous to the Tenant or changing the Specification so that the Developer's Works would not be constructed in accordance with the Specification".

"7. PERMITTED TENANT'S VARIATIONS

7.1 Tenant Requires a Permitted Tenant's Variation:

7.4 Disputes:

7.5 Basis of Costing Permitted Tenant's Variation:

"We can confirm that the general arrangement and elevations for this scheme are fixed and approved by Virgin Cinemas Limited. However, we recognise that as the project progresses there will be minor variations put forward by both parties which will need to be agreed as the design develops. We do not anticipate that they will be problematic and are to be expected in the course of any design and build project."

(ii) Louvres;

(iii) Foyer Layout; and

(iv) "Lafarge" Partitions.

"The Agreement for Lease contained a plant schedule and details of floor loadings developed specifically to incorporate the scheme prepared by Wilden. The plant schedule and floor loadings were based on, inter alia, the sizes and locations of the air handling plant required for the mechanical services scheme prepared by Wilden".

"The Cudd Bentley Scheme involved air being heated or cooled by a large chiller and central plant area and then the air being pumped from this location to each of the auditoria. The Wilden Scheme involved individual mechanical and electrical installations to heat or cool water for each cinema. The plant required for the Cudd Bentley scheme was located externally whereas under the Wilden scheme the plant was located internally. The external location of the plant under the Cudd Bentley scheme meant that the slab on which it was placed had to allow for snow loading and weather impact on the strength of the slab. The slab on which it was placed required to protected from the weather. The floor loading therefore had to be increased by the weight of weather protection. The loads and locations of plant were changed under the Cudd Bentley scheme from the position under the Wilden scheme. The Cudd Bentley scheme did not require understage voids, unlike the Wilden scheme."

"The mechanical services scheme prepared by Wilden was sufficiently developed reasonably to allow the Developer's Works to commence. Under the Cudd Bentley scheme (as finally developed), the level 11 plant room was external as opposed to being internal under the Wilden scheme. The change from an internal to an external plantroom made a significant difference to the structural design of the level 11 floor slab. The level 11 floor slab required to be amended and strengthened."

"At tenant liaison meeting number 2, held on 7^th April 1999, Kier were instructed by Gleeds [the pursuers' project management agents] to forward the cost and programme implications of the roof plant requirements as detailed at that time of the Cudd Bentley Scheme to Gleeds. At tenant liaison meeting number 2, it was also stated that the pursuers' agent, Gleeds would issue a number of 'Tenant Change Orders' (hereinafter referred to as 'TCOs') to Perspective [the defenders' project management agents] in respect of the proposed variation to the works relating to the roof plant requirements in terms of the Cudd Bentley Scheme, It was envisaged that Perspective would sign the said TCOs prior to Gleeds issuing an Employer's Agent Instruction under the Building Contract ('EAI') to Kier in respect of incorporation of the Cudd Bentley Scheme into the works thereunder. Under cover of letter dated 17^th May 1999 to Perspective, Gleeds submitted documents entitled 'Tenant Variation' (Nos 1 to 6) which were all dated 12 May 1999."

"The concept of TCOs was not part of the procedures contained in clause 7 of the Agreement for Lease. However, notwithstanding this, TCOs were treated by the parties as equivalent to the concept of PTVs under clause 7 of the Agreement for Lease. Said clause 7 was the only mechanism in terms of which the defender was entitled to instruct variations to the Developer's Works. At a meeting on 17^th June 1999, attended by inter alios Mr Bergmann of Gleeds and Mr Butler of Perspective, Perspective accepted that the defender had a liability to the pursuer in respect of the additional work referable to the said TCOs which had been issued, although the level of that liability remained in dispute with Mr Butler proposing alternative cost figures for the work. In these circumstances the parties were adhering to the basic agreement contained in clause 7.6 of the Agreement for Lease, namely, that the pursuer would be reimbursed by the defender in respect of the costs associated with a PTV or its equivalent. At the meeting on 17^th June 1999, Mr Bergmann of Gleeds again advised on behalf of the pursuer that the pursuer required the said TCOs to be signed before a variation order was issued to Kier under the Building Contract".

"At tenant liaison meeting number 7, Perspective also confirmed that if it received a letter by 4^th October 1999 confirming that Kier would not levy prolongation costs in respect of the proposed TCOs.... it would sign and return said TCOs to Gleeds by 4^th October 1999. Given the said discussions regarding prolongation, it was recognised that the TCOs relating to the proposed change to the mechanical plant requirements included in the Cudd Bentley Scheme were likely to cause delay in the anticipated construction period of the Building Contract. They could not therefore strictly be regarded as 'Permitted Tenant' Variations' given the definition contained in clause 7.2(d) of the Agreement for Lease. At the site meeting on 30^th September 1999, Kier confirmed to Gleeds that prolongation costs would not be levied by it if the proposed change to the Cudd Bentley Scheme were instructed by the pursuer in terms of the Building Contract by 4^th October 1999. By letter dated 30 September 1999, Gleeds advised Perspective of Kier's confirmation. Thereafter, however, Perspective failed to issue signed TCOs in respect of the proposed change to the mechanical plant requirements included within the Cudd Bentley Scheme."

"On 2^nd December 1999, at a site walk around, Mr Butler of Perspective indicated to Mr Jones of the pursuer that unless the Cudd Bentley Scheme was incorporated into the works, the defender would refuse to take occupation of the Cinema. At this point the pursuer considered itself to have been instructed to proceed with the incorporation of the Cudd Bentley Scheme into the works. There was an agreement between the parties that incorporation of the said variation would take place and the defender would reimburse the pursuer for the said incorporation. In addition, the pursuer consulted with Pearl, and it was confirmed, by Pearl's agent GVA Grimley, that the latter also wished the Cudd Bentley Scheme to be incorporated. Pearl thereby confirmed that the said variation was acceptable to it. In order to clarify exactly what the defender required, Gleeds consulted with Perspective. On 21^st December 1999, Gleeds wrote to Perspective confirming the scope of the additional work instructed on 2^nd December 1999. In particular, Gleeds confirmed which elements of additional work previously detailed in TCOs 1 to 11 together with further details contained in correspondence the defender required to be incorporated into the works."

"In all the circumstances, the defender, by its actings, abandoned its right to insist upon strict compliance with the requirements of clause 7 of the Agreement for Lease. Nonetheless, the defender accepted that the pursuer still required to be reimbursed by the defender as condescended upon above. In the circumstances condescended upon in Article 8.1, the defender's actings were not consistent with retention of its right to insist on strict compliance with the requirements of clause 7. In the circumstances condescended upon in Article 8.1, Pearl, by its actings, abandoned its right to insist on strict compliance with the requirements of clause 7. The pursuer conducted its affairs on the basis that the said right had been abandoned by the defender and by Pearl. In the foregoing circumstances, the pursuer is entitled to be paid in respect of the costs associated with the said TCOs (being equivalent to PTVs under clause 7.6 of the Agreement for Lease)....".

"Mr Butler of Perspective made it clear that the defender required the pursuer to incorporate all the requirements of the said revised layout prepared by Watson into the pursuer's works or the defender would refuse to take occupation of the Cinema. Accordingly, on 6^th May 1999, Gleeds on behalf of the pursuer issued EAI number 1 to Kier under the Building Contract, and the said revised layout was in due course incorporated into the works...."

"In all the circumstances, the defender, by its actings, abandoned its right to insist upon strict compliance with the requirements of clause 7 of the Agreement for Lease. In instructing the said revised layout for level 1, the defender, and its agent, Perspective, did not follow the detailed procedures under clause 7 of the Agreement for Lease. The said revised layout was not formally instructed as a Permitted Tenant's Variation under clause 7. Said clause 7 was the only mechanism in terms of which the defender was entitled to instruct variations to the Developer's Works. The pursuer proceeded to have the said revised layout incorporated into the works. In doing so the pursuer did not operate the precise procedures contained in said clause 7. Neither the defender, nor its agent Perspective, took any objection to this. The pursuer proceeded to have the works required for the revised layout, which was instructed by the defender, carried out. It incurred significant liabilities in so doing. In these circumstances, the parties were adhering to the basic agreement contained in clause 7.6 of the Agreement for Lease, namely, that the pursuer would be reimbursed by the defender in respect of the costs associated with a PTV or its equivalent. In the circumstances condescended upon in Article 8.5.3, Pearl, by its actings, abandoned its right to insist on strict compliance with the requirements of clause 7. The pursuer conducted its affairs on the basis that the said right had been abandoned by the defender, and by Pearl."

"The topic of waiver may arise in a number of guises in a variety of contexts. The truth is that it is a creature difficult to describe but easy to recognise when one sees it, subject to the proviso that it is on occasion difficult to distinguish it from variation of a contract."

"[16] It is not in question that a clause of written contract cannot be varied or altered by verbal agreement. However, the position may be different if there are facts and circumstances which are explicable only on the basis that there was an express or implied agreement. As Lord Robertson observed in Baillie v. Fraser (1853) 15 D. 747 at 750:

In such a case parole evidence may be led in order to prove such a case. In Sutherland v. Montrose Shipbuilding Company (1860) 22 D. 665 the question was whether a ship-owner had extended the time for completion of the vessel by the ship builder. In that context the Lord Justice Clerk (Inglis) stated at page 673 that the rule of law, in the light of the decision in Wark v. Bargaddie Coal Company (1859) 3 Macq. 467, was that 'where there are averments of acquiescence in operations inconsistent with the terms of the written contract, they may be admitted to proof; and if it appear that the acquiescence was the consequence of a previous arrangement, that is then competent to prove that arrangement'. Thus in Wark the landlord's acquiescence in the tenant's breach of a prohibition under the lease provided a relevant answer to the landlord's claim that the tenant had been in breach of contract. In Baillie v. Fraser the fact that the tenant had tendered, and the landlord had accepted, rent on a different basis from that stipulated under the lease effected a permanent conversion in the rent which was payable."

"In the foregoing circumstances, there was implied into the Agreement for Lease a term to the effect that the defender would not act in such a way as to hinder or prevent the pursuer from complying with its obligations under the Agreement for Lease or from executing its works in a regular and orderly manner, and to take all steps reasonably necessary to enable the pursuer to discharge its obligations and to execute the works in a regular and orderly manner. In particular, it was an implied term that the defender would not act so as to hinder or prevent the pursuer from fulfilling its obligation to procure that the Certificate of Completion was validly issued by 20^th January 2000. Further, it was an implied term that the defender was under an obligation to provided or arrange for the provision to the pursuer of such full and correct information concerning the Developer's Works as was, or ought reasonably to have been, known by the defender to be required by the pursuer, and that in such manner and at such times as was reasonably necessary to enable the pursuer to fulfil its obligations in terms of the Agreement for Lease. The said terms required to be implied as a matter of business efficacy. No reasonable man in the position of either of the parties would refuse to accede to them, and nor would any other party to the Agreement for Lease have done so. Without these implied terms, the Agreement for Lease would operate in a way which would not be the way in which practical businessmen, in the development and construction industry, on all sides of the transaction, would reasonably expect it to operate."

"to provide or arrange for the provision to the pursuer of such full and correct information concerning the Developer's Works as was, or ought reasonably to have been, known by the defender to be required by the pursuer and that in such manner and at such times as was reasonably necessary to enable the pursuer to fulfil its obligations in terms of the Agreement for Lease."

(a) Clause 16-09 (Roof Plant)

"Provision is to be made within the structural frame to support all roof mounted condenser, air handling plant and associated plant to requirements to be confirmed by Virgin. All supports and fixings shall be properly flashed and finished by the Developer. The Developer shall provide secondary steelwork supports for all plant and equipment to be installed by Virgin, steelwork to have a galvanised finish, in locations to be confirmed by Virgin and such supports shall take the form of the cranked frames, adjustable cross supports and the stub columns. The Developer to be responsible for the design of structural steelwork in accordance with loadings to be confirmed by Virgin, which is to include the central chiller unit (only where this is to be located at roof level) approximate weight 5 tonnes."

(b) Clause 19-02 (Louvres)

"The Developer will be responsible for the installation of all external doors, louvres, windows, entrance and exit screens. Louvres shall be to the specification to be confirmed by Virgin (free air area and attenuation requirement to be confirmed) and cavities closed around the perimeter of the opening so formed in hard boarded material. The Developer will also be responsible for the construction of all openings for vents, fans, flues, ducts, service passageways, etc, to sizes and locations to be advised by Virgin."

(c) Clause 28-01

"The Developer shall make provision for all builder's work items to be incorporated within the Building, the extent, location and size of which are to be confirmed by Virgin. All external apertures not to be completed by the Developer are to be made temporarily watertight and secure, and all roof openings properly trimmed, complete with upstands with roof coverings dressed around. The precise requirements shall be confirmed to the Developer within 2 weeks of receipt by Virgin of his general arrangement drawings, meaning dimensioned layout, section, elevation and roof drawings fully co-ordinated with the structural frame designs. The elevations will need to be punctured with many louvre positions and these will need to be integrated into the elevational designs for the building.

The Developer will provide horizontal and vertical duct risers to facilitate the distribution of mechanical and electrical services throughout the building, risers to be provided with removal panels and fire protection. Service risers to be for sole use of Virgin, wherever possible."

(d) Clause 24-04; 24-01

"The passenger lifts, goods lift, fire fighting lifts and the escalators, including standby generators to power up the lifts in the event of any emergency will be supplied and installed by Virgin. The Developer will reimburse Virgin the cost of lifts required solely for the use of class 3 users." (Cl. 24-04) and

"The Developer shall provide, together with the lift motor rooms, substructures, lift shafts and builders work complete:" (Cl. 24-01).

(e) Clause 25.01

"Location, size and layout of plantrooms and any special structural requirements shall be confirmed to the Developer, by Virgin, following confirmation by the Developer of any noise restrictions to be imposed by the Local Authority."

"Normally if the term in question is not already established as an ordinary incident of the type of contract in question, the test which will require to be satisfied before it can be held to be implied will be what I have been calling the business efficacy test, in other words it would be necessary for the party arguing for its implication to demonstrate that that is necessary in order to give the contract such business efficacy as the parties must both have intended that it should have (McWhirter v Longmuir; The Moorcock; Crawford v Bruce; Rockcliffe Estates). In seeking to judge whether that test is satisfied, it will ordinarily be helpful to ask the question posed in Morton v Muir Bros, namely whether the term is one which in the circumstances every reasonable man would seek for his own protection and no reasonable man would refuse to accede to.

It is, in my opinion, quite clear that there can be no question of implying a term which is contradictory of an express term to which the parties to the contract have agreed (Rockcliffe Estates). I do not consider, however, that is correct that there can be no implied term touching upon a subject matter on which the contract contains express terms. If the implied term is that to which the parties would have agreed so unhesitatingly that they saw no need to express it, I see no reason to exclude the possibility that they chose to express only so much as was necessary to modify to the extent desired the provision which would have been taken to apply if they had remained wholly silent."

"1. The Biggin principles may be relied on where the claim over arises as a claim under an indemnity or is a claim for damages for breach of contract. Equally they are applicable both when liability to the third party had been admitted by the claimant and when it remained in issue and had been included as part of the issues being settled.

2. The principles are applicable because, ordinarily, a defendant is to be taken to have foreseen that a consequence of its breach of contract would be both that the claimant would be liable to the third party and that that liability might give rise to litigation and a compromise under which the claimant incurred financial loss.

3. The principles are not merely an aspect of a claimant's duty to mitigate its loss but also involve the law concerned with the measure of recoverable damages following a breach of contract. Thus, the settlement figure, that is the sum being paid by the claimant to settle the third party's claim, is to be taken to be the upper limit of what may be recovered from the defendant in relation to the loss caused to the claimant as reflected in the claimant's liability to the third party.

4. As a starting point, a claimant may recover the sum paid in settlement if it can establish that that settlement was reasonable and that it was reasonable to settle the third party's claim. It is only necessary for the claimant to prove, in general terms, that the settlement was reasonable. It is not necessary for it to establish in great detail the extent and quantum of the third party's claim.

5. The evidence that may be adduced to establish reasonableness will vary but it may include, if the claimant so elects, evidence of advice given by relevant professionals to the claimant which was relied on in deciding to settle. The material that is discloseable when a settlement is relied on may, on occasion, include documents recording such advice but any consequent waiver or overriding of privilege involved in such disclosure will depend on how the claimant expects to establish reasonableness and on what material it proposes to rely for that purpose.

......

7. To the extent that the settlement was unreasonable or unreasonably entered into, it is irrecoverable since that element of the settlement was not caused by the defendant's breach and, equally, it resulted from the failure by the defendant to mitigate its loss."

"Furthermore the parties had agreed that the defender would make a contribution to the pursuer in respect of the use of Lafarge. In terms of the said agreement, the defender's contribution to the pursuer was to be the cost to the pursuer of the plasterboard material to be used in the construction of the Lafarge system".

"On 1 February 1999, Gleeds wrote to Perspective confirming that the defender's contribution to the use of Lafarge in terms of the parties' agreement was to be in the sum of £286,488.00 plus VAT. At a meeting on 15^th February 1999 attended by Messrs Jones and Edwards of the pursuer, Messrs Swain and Pullinger of the defender, and Mr Butler of Perspective, the parties' agreement in respect of the use of Lafarge was re-confirmed. At the said meeting, the pursuer once again advised the defender that the cost to it of the plasterboard material to be used in the construction of the Lafarge system was £286,488.00 plus VAT. Accordingly, the pursuer requested the contribution required from the defender in terms of the parties' agreement. At the said meeting, Mr Butler of Perspective stated that he considered that the Lafarge system could be purchased at a price below that quoted by the pursuer. Mr Butler undertook (on behalf of the defender) to revert to the pursuer with an alternative price representing the contribution that the defender would make in terms of the parties' agreement (being the cheaper price at which he considered Lafarge could be purchased). On 17^th February 1999, Perspective wrote to Gleed's confirming what had been agreed at the meeting on 15^th February 1999 that the costs of the plasterboard material to be used in the construction of the Lafarge system (being the defender's contribution to the pursuer in terms of the parties' agreement) were to be agreed. Neither Perspective nor the defender provided an alternative price to the pursuer for the costs of the plasterboard material to be used in the construction of the Lafarge system. The level of the contribution to be made by the defender to the pursuer in terms of the parties' agreement was never agreed. By letter dated 18^th May 1999 to Virgin Cinemas, the pursuer advised that in order to avoid delay to the construction of the Cinema it required to order the plasterboard material. In the said letter, the pursuer advised that, in the absence of any alternative price provided by the defender, the plasterboard material would be procured in accordance with the price advised to the defender by Gleeds' letter dated 1^st February 1999 and at the meeting on 15 February 1999. The pursuer proceeded to procure the plasterboard material, to carry out the construction of the Lafarge system and incurred significant liabilities in so doing".

"In all the circumstances, the agreement between the parties that the defender would make a contribution to the pursuer in respect of the use of Lafarge, was collateral to the Agreement for Lease. Further, it was implied into said collateral agreement that the pursuer would be paid a reasonable contribution by the defender for having the use of Lafarge, as further condescended upon below".