The Trustees of Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd  EWHC 2137 (TCC)
Disputes arose between Ampleforth College and their contractor Kier Northern, which were was settled through mediation. The project manager was TTPM. HHJ Keyser QC noted that there was an implied term of the contract between the Trust and TTPM that TTPM would exercise reasonable care and skill. It was common ground that TTPM owed to the Trust a substantially similar duty of care at common law. Following the “Bolam test”, that duty is: “the standard of the ordinary skilled man exercising and professing to have that special skill”.
The Judge also noted that it may be impossible in any event, to defi ne with precision the expression “project manager”. In general terms, a project manager will act as the representative of the employer for the purpose of co-ordinating the diff erent aspects of a construction project. Here, there was no dispute that TTPM was engaged to perform the full range of duties of a project manager, and these included facilitating, assisting and being involved in the procurement of the building contractor and the building contract.
During the project, the works were carried out under various letters of intent. This meant that Ampleforth had not been able to claim any liquidated damages for delay against Kier. The Trust did not contend that TTPM was wrong to advise that the works be commenced under a letter of intent; it was accepted that, in view of the perceived importance of achieving early completion and, specifi cally, early commencement of the works, it was acceptable to advise commencing the works under a letter of intent rather than waiting until a formal building contract could be executed. However the Trust argued that TTPM should have advised the Trust:
- Of the limited protection aff orded to it by letters of intent as compared with an executed contract, in particular with regard to the availability of liquidated damages and the possibility of holding Kier liable for design defects;
- Of the increasing risk that the repeated issue of letters of intent would make it less likely that Kier would execute the contract.; and
- Of the need to take resolute action to procure the execution of the contract by: (a) taking positive action to remove specifi c obstacles, (b) identifying, by list, all outstanding matters and maintaining constant pressure on Kier to address them; (c) bringing commercial pressure to bear at a senior level; (d) threatening to withhold payment until all the outstanding matters had been dealt with; (e) threatening not to issue further letters of intent.
The Judge noted that, TTPM in performance of their role acted as:
“co-ordinator and guardian of the client’s interests”, eff orts to fi nalise the contractual arrangements were of central importance. The execution of a contract is to be seen not as a mere aspiration but rather as fundamental. It is the contract that defi nes the rights, duties and remedies of the parties and that regulates their relationships. Standardform contracts, such as the JCT contracts, are precise, detailed and structured documents; their elaborate nature refl ects the complexities of the projects to which they relate and attempts to address the many and varied problems that can arise both during the execution of the works and afterwards. By contrast, letters of intent such as those used in the present case are contracts of a skeletal nature; they pave the way for the formal contract, once executed, to apply retrospectively to the works they have covered, but they expressly negative the application of most of the provisions of the formal contract until it has been executed. They do not protect, and are not intended to protect, the employer’s interests in the same manner as would the formal contract; that is why their “classic” use is for restricted purposes.
HHJ Keyser QC held that TTPM was not under any absolute obligation to procure the execution of a formal contract. However, even if the outcome in this case (a project carried on from start to fi nish without an executed contract) did not of itself dictate the conclusion that TTPM was negligent, it was suffi cient to suggest that something went wrong with the project. First, the evidence showed that it is extremely unusual for a building project of this scale to proceed from commencement to completion pursuant to letters of intent. Why, then, was no contract signed? To suggest that a contract should have been in place no later than April 2004 was hardly to suggest unreasonable haste. Works had started in early December 2003; by the expiry of the fourth letter of intent construction had been going on for about four months, and the works covered by the letters of intent accounted for more than 25% of the contract price.
The Judge felt that TTPM had failed to take the steps reasonably required of a competent project manager for the purpose of fi nalising the contract and was therefore negligent and in breach of contract. In particular, approaching the situation on the basis of the repeated issue of letters of intent was not a proper response to the continuing diffi culties regarding the execution of the contract: “it effectively treated the contract as a dispensable luxury”. The Judge considered that TTPM failed adequately (i) to focus on the matters that remained outstanding before a contract could be signed, (ii) to work urgently to resolve those matters one by one, (iii) to advise the Trust of the need to ensure that a contract was signed, and (iv) to bring proper pressure to bear on Kier and on the situation generally to that end. That pressure would have included letting it be known that there would be no more letters of intent.