Before: Recorder Humphrey Lloyd QC
 
 

B E T W E E N

JUDGMENT
 
DATED: 17 November 1991

Recorder Humphrey Lloyd QC :

This action is brought by a firm of architects to recover about £56,000 plus VAT as fees said to be due to them for work on a Feasibility Study on a possible Visitor Centre at Llanberis, Gwynedd. It was prepared for the Defendants. It is common ground between the parties that the agreement for the work the subject of this part of the action made payment of any fees conditional. On 17 May 1991 His Honour Judge Fox-Andrews QC ordered certain issues to be determined. To these issues there has been added a sixth issue. The issues were in part reformulated and in their final form are as follows:

1. What agreement was reached between the Plaintiffs and the Defendants with regard to the payment of the Plaintiff's professional fees for work to be carried out by the Plaintiffs in connection with the proposed Visitor Centre at Llanberis ("the Project") and in particular:

(1) The precise terms upon which the Plaintiffs would become entitled to remuneration in respect of work undertaken by them in connection with the Project.

(2) The extent to which the Plaintiffs were entitled to be remunerated "on the basis of out-of-pocket expenses only" as referred to in its letter of 4 March 1985.

(3) The extent to which the Plaintiffs were undertaking the work on the project on a "without commitment" basis as referred to in its letter of 4 March 1985.

2. Were the Defendants under any obligation under the agreement to submit an application for outline planning permission in respect of the Project? If so, what precisely was the extent of that obligation?

3. Were the Defendants at liberty within the terms of the agreement to decline to pursue the Project as far as submitting an application for outline planning permission without incurring any liability to the Plaintiff to pay anything other than out-of-pocket expenses:

(1) for any reason?

(2) in restricted circumstances only and, if so, in what circumstances?

(3) if they genuinely believed (whether reasonably or not) that an application for outline planning permission would stand no reasonable prospect of success?

(4) if they genuinely believed on reasonable grounds that an application for outline planning permission would stand no reasonable prospect of success?

(5) if, in fact, an application for outline planning permission would have stood no reasonable prospect of success?

(6) notwithstanding continued advice and protestations from the Plaintiffs that an application for outline planning permission would have stood a reasonable prospect of success?

(7) on the basis that, if the application for outline planning permission were to be successful, local bad feeling would be generated towards the Defendants?

(8) notwithstanding that the Plaintiffs had done all of the work necessary to enable an application for outline planning permission to be made?

4. If the answer to Issue 2 is in the negative, did the fact that no planning application was submitted in respect of the Project give rise to any obligation upon the Defendants to remunerate the Plaintiffs (other than in respect of out-of-pocket expenses) or to pay compensation to the Plaintiffs?

5. To the extent that there was any obligation upon the Defendants to remunerate the Plaintiffs (other than in respect of out-of-pocket expenses) or to pay compensation to the Plaintiffs was such an obligation to pay the Plaintiffs:

(1) a sum by way of quantum meruit;

(2) a sum based upon scale fees calculated in accordance with the RIBA booklet "Architect's Appointment";

(3) a sum by way of damages for the lost opportunity of earning remuneration or further remuneration from the Project;

(4) a sum calculated upon some other (and if so, what) basis?

6. If:

(a) there was a partnership between the Defendants; and

(b) land in the ownership or control of the Defendants had become property of that partnership

would there have been a disposal of that land within the meaning of the agreement between the parties upon the Defendants deciding not to proceed with the project (and thereby dissolve that partnership) so as to give rise to an obligation on the Defendants to pay RIBA scale fees to the Plaintiffs?

For the purposes of determining these issues oral evidence was called by the Plaintiffs from Mr Brian Lingard and by the Defendants from Mr Derek Rogerson, Mr Nigel Ross, Mr Andrew Jaye, and Mr Dilwyn Evans. In addition reliance was placed by both parties on a number of the documents in a large agreed bundle. Many of the facts were not in dispute.

The background to this claim and to the issues is as follows. The First Defendants own and operate the Snowdon Mountain Railway ("SMR") which operates between Llanberis and Snowdon. In 1984 Cadogan Properties Limited acquired a majority shareholding in the First Defendants. That company's directors included Mr Nigel Ross and Mr Andrew Jaye, owners of a London estate agency, Ross Jaye & Co Ltd, and, as such, very experienced in property matters. They became directors of SMR and joined with one or more of the existing directors including Mr Ninian Davies, a solicitor and former partner of Lee, Bolton & Lee, who continued as chairman, and Mr Derek Rogerson, the Managing Director, who had been appointed General Manager of SMR in 1981 before being appointed Managing Director. The new owners of SMR were keen to expand and they decided to raise capital by the use of the Business Expansion Scheme primarily for the purposes of the Railway itself but also with a view to expenditure on other projects such as improving facilities for visitors to the Railway and to Llanberis generally.

The Second Defendants own and operate The Royal Victoria Hotel in Llanberis and have done so since 1973. The hotel is situated close to the railway terminus and is also surrounded by substantial areas of land. The Second Defendants are effectively run by its two Directors, Mr Michael Ackerley and Mr Dilwyn Evans. Mr Ackerley's primary interests lie elsewhere in shipping and freight forwarding and accordingly Mr Evans acted for the Second Defendants throughout although consulting with Mr Ackerley.

Llanberis is a well-known village. Not only is it a place from which people can ascend Snowdon (by railway or on foot) but it also has other attractions such as the Padarn Country Park, which embraces the old Dinorwic slate quarries and buildings, Dolbardarn Castle (which is within the grounds of The Royal Victoria Hotel), two lakes, one of the Welsh "little trains", and a museum (Oriel Eryri). The Dinorwic Power Station and Pumped Storage Scheme were constructed nearby. This massive civil engineering project was the creation of the former CEGB. However the CEGB did not take the opportunity of doing more than providing limited facilities to enable visitors to see this unique scheme. There was therefore clearly potential for its development as a tourist attraction and in particular for the creation of an Energy Information Centre which although linked to the Power Station would be an attraction in its own right. In addition the improved A55 now enables more people to reach Llanberis from the north-west of England more quickly. With these factors in mind there had been a local initiative to consider the possibilities for the further development of tourism in Llanberis and the surrounding areas. This identified the need for a central arrival and information point with parking for 500 - 700 cars etc. Like many other places in Wales, tourism has in the past been seasonable but the season is gradually being extended. Nevertheless there was in 1984/85 little to attract tourists out of season, as Mr Evans pointed out in his evidence. If people were to stay a week at The Royal Victoria Hotel they would wish to have somewhere to go to locally, beyond the existing shops and might well wish to visit an all-weather feature such as the CEGB Power Station.

On the other hand as is well known -- but was also recorded by Mr Rogerson -- there is an understandable resistance against tourist development in North Wales because it brings in more English-speaking people (both as tourists and for the purpose of business) and thus erodes Welsh culture and the use of the Welsh language. For example, applications for planning permission might be refused by the local planning authority because of the influence of such local considerations not all of which might be justifiable on planning grounds. Thus such applications might be allowed to appeal.

In January 1985 a relatively brief and informal meeting took place at The Royal Victoria Hotel between Mr Evans and Mr Ross and Mr Jaye. At this meeting the seeds of a possible co-operation between the Defendants were sown. Each saw advantages in developing the hotel car park since its entrance was across the road from the Railway terminus and also in developing adjoining land. The First Defendants had acquired an interest in land which could be brought into a scheme.

Matters moved relatively quickly for on 8 February 1985 a further meeting took place in London between Mr Ackerley, Mr Evans, Mr Ross and Mr Jaye. The notes of this meeting were written by Mr Ross and show that the parties were agreed that there should be a redevelopment scheme to provide a reception area -- subsequently to be known as a Visitors' Centre -- and ancillary facilities. The purpose of this Visitors' Centre was primarily, but not exclusively, to provide the arrival point for prospective visitors to the Llanberis. It would contain the Information Centre, shops and cafes and be the departure point for other attractions, not least the Power Station. However the Centre would also serve the SMR and the little train as well as the slate museum and Dolbadarn Castle. Catering from the cafes and restaurants would be provided by the Hotel. Visitors might not have to go further than the Centre for a day's outing. It was agreed that both Defendants would form effectively a joint venture -- although the interests would be split 51% to SMR and 49% to the Ackerley Group. Soundings revealed that each side could find £250,000 but it was contemplated that the balance would have to be found from other sources, principally grants such as that from the Welsh Tourist Board or, perhaps, the Welsh Development Agency. The latter only provides money for infrastructures and does not normally provide money where the former is making a grant. The former cannot make a grant until the necessary permissions (including planning permission) have been obtained. Agreement was also reached on the land that would be pooled. The nature of the scheme would also require the acquisition of a large site owned by Gwynedd County Council. The meeting concluded on the basis that each side would consult with its respective Boards and if the Boards agreed a further meeting would be arranged after which solicitors would be instructed to prepare the necessary documentation. However it was not necessary for Mr Ackerley and Mr Evans to consult anybody else as they formed the effective Board.

The meeting also agreed that an architect would have to be appointed and that "politically" this ought to be a "North Wales firm". It was also recorded that "any architect will have to work on a totally nominal fee on the basis that if the project succeeds he will get the instruction but he must agree that any architectural work on SMR or The Royal Victoria Hotel would be given to that firm so that some of the fees could be earned".

Mr Brian Lingard is the senior partner of the Plaintiffs' firm of architects. He has offices in Llandudno, as well as in Caernarfon, Newtown and Cardiff. He has practised in Wales since 1950 and is therefore very familiar with local conditions. His practice had completed a comprehensive study for the conservation of the historic cores of principal Welsh holiday resorts for the Welsh Tourist Board and also a Feasibility Study for a major theme park in Llandudno. His firm was clearly well placed to be appointed as architects by the Defendants.

On 28 February 1985 meetings took place at The Royal Victoria Hotel to interview Mr Lingard and another firm of architects. The point of the meeting was to outline to the prospective architects what the Defendants had in mind and to invite the architects to submit their proposed terms for carrying out a Feasibility Study. It was envisaged that the Feasibility Study would serve two purposes: it would enable an outline scheme or schemes to be prepared so as to see whether the concepts of the Defendants were capable of being achieved both on planning grounds and, also importantly, for land purposes, since the extent of the scheme was such that it could not be accommodated on the land owned by either of the Defendants and would necessarily have to be constructed on land owned by the County Council. This in turn therefore made political considerations especially important. I shall deal later with what took place at the meeting.

Following the meeting Mr Lingard wrote to Mr Ross on 4 March 1985. The following extracts are relevant:-

"Your outline proposals for the Visitor Reception Area for Llanberis accord closely with my own views on the manner in which we should be catering for our visitors at the principal tourist venues in the principality ... As you surmise however, the main difficulty will lie in convincing local opinion that what is proposed is not just another example of a tourist enterprise which will result in yet further deterioration for the surrounding environment.

The major problem will be one of designing proposals which are environmentally acceptable and this will not be an easy task, bearing in mind the large numbers of cars and coaches which have to be accommodated and the largely open nature of the terrain. It is however a project with which we would be most pleased to be associated. As we understand the position, you are anxious not to incur fees ahead of a time when it is possible to judge whether the project will be a viable one from the point of view of land acquisition, of participation by the parties concerned and of the likely level of grant which is likely to be forthcoming. For negotiations to occur on these matters, it will be necessary for you to have outline design proposals on paper, sufficiently illustrated to provide a general impression of how the completed project will appear and backed by a short written reasoned study which will highlight the environmental problems and show how it is proposed that these might be overcome.

I confirm that we would be willing to prepare these outline proposals on the basis of out-of-pocket expenses only, up to the stage at which negotiations had been completed as far as is initially possible with the other parties and you are ready to make an outline planning application. Our initial participation in this way would be conditional on receiving your assurance that we would be appointed as architects for whatever project eventually proceeds past the outline planning application stage on the site or on a disposal of any of the land involved in the study to others. The fees then to be in accordance with the Architect's Appointment published by the Royal Institute of British Architects and these fees would also look back to cover the earlier design stages which had been carried out on a 'without commitment' basis."

The letter was drafted in order to present Mr Ross with the information that he needed but it was not set out in formal terms. Although Mr Lingard in evidence explained that it had been prepared with care soon after the meeting, it is not however in my view to be read as a legal document nor is its language to be dissected and subjected to careful analysis. It deserves to be read broadly and fairly and without the advantage of hindsight. In my view Mr Lingard wrote it to cover all the matters which he considered it was necessary to record and upon which he thought it right to secure agreement, but it was not to be a precise or complete statement of such matters.

Mr Ross replied on 6 March 1985 informing Mr Lingard that it had been unanimously agreed that he should be appointed architect but that he was not in a position to take up this position until his next Board meeting on 29 March. Following that meeting Mr Ross wrote again to Mr Lingard on 1 April 1985 confirming that the Directors of the First Defendants had unanimously agreed to appoint him as architect.

In terms of canons of offer and acceptance a contract was in my judgment concluded by Mr Lingard's letter of 4 March 1985 and Mr Ross's reply of 1 April 1985. Mr Lingard thereafter proceeded to produce a brief for the project and submitted it to the Defendants on 26 April 1985. The Plaintiffs relied on this document as constituting part of the contract. In my judgment the contract had by then been concluded. It remains relevant, however, to determine the dispute as to what took place at the meeting on 28th February 1985 and for that purpose I draw attention to paragraphs 1, 2, 7, 9, 10, 11, 15, 16 and 17. Paragraph 16 concluded by stating that the documents forming part of the study "in their final form" would then form the basis of "an outline planning application in respect of the proposal".

The solicitors who had acted for the First Defendants in the BES scheme prepared from April 1985 drafts of a letter to be exchanged between the Defendants which was to record the basis upon which their joint venture would go forward. The terms of this draft letter and of a subsequent draft agreement (since it was decided that an agreement would be better than a letter) referred to the existence of a prior agreement. However no such letter was ever exchanged nor was any agreement entered into. It does not appear that there was any fundamental disagreement between the Defendants as to the terms upon which their interests might be linked but I am quite satisfied that if there was any agreement between the Defendants it was not made by the exchange of drafts of either the proposed letter or the proposed agreement. The representatives of both the Defendants firmly denied in their evidence any intention to enter into a binding agreement prior to the conclusion of a formal document. It is of course quite possible for people to reach an agreement which the law will regard as binding and effective even though it may not be expressed in a formal document. Therefore the notes of the meeting of 18th February 1985 would be read as a record of "heads of agreement" which might have a contractual effect. Since however those present at the meeting were adamant that nothing was said or done at that meeting which was intended to have contractual effect I decline to find, for the purposes of any of the issues presently before the Court, that any agreement was reached between the parties at that meeting.

For the First Defendants it was forcefully argued that the terms of the BES scheme would have precluded them entering into a direct arrangement with the Second Defendants. It is therefore of significance to note that the proposed letter and the proposed agreement were drafted by the solicitors acting for the First Defendants in the name of a company which would have been a subsidiary of the First Defendants but which had not yet been formed at the commencement of the exchange.

I return to the history of the project. Mr Lingard's proposals were discussed with his clients. A draft Feasibility Study was drawn up and given an airing at a meeting in October 1985 in the form of a presentation to people who might be sympathetic to the scheme. It was also then submitted to the local planning authority on an informal basis and copies were sent also to the CEGB on the same basis.

The final version was prepared in November 1985 and submitted to the local planning authority (the Arfon District Council), to the Gwynedd County Council and to the CEGB. In a covering letter to the planning authorities, Mr Lingard stated:

"We confirm that it is our clients' intention to proceed to a planning application, or planning applications, in respect of the proposals in due course, but the date for this will obviously depend upon the reaction of your Council to the proposals which are now being put forward." (I quote from the letter to the Gwynedd County Council.)

The CEGB's reaction, given in a letter of 12 November 1985, was not unhelpful but, equally, only set out their basic requirements and did not endorse the treatment set out in the Feasibility Study. It is not my intention in this judgment to describe the proposals in the Feasibility Study save to say that three schemes were put forward: two involved the development on land not owned by either of the Defendants and only the third scheme -- a much abbreviated version of the other two schemes -- was confined to land owned by the Defendants.

At the same time as Mr Lingard was working on his proposals a Sub-Committee of the Arfon Borough Council had met in order to consider the most appropriate strategy for Llanberis. At a meeting on 30 July 1985 it resolved, amongst other things:

"not to support or encourage any major development proposals involving commercial, parking and retail uses in Llanberis beyond these [sic] identified in the approved strategy of consolidation and limited expansion."

It was further resolved to accept the recommendations of the inter-departmental officers' working party which, amongst other things, meant that the Sub-Committee decided that:-

"Development of a major terminus, parking facilities, visitors' centres, etc near Oriel Eryri, is not considered essential to efficient tourist management of the Settlement, -- sufficient provision and scope being available elsewhere in a dispersed form ...

A consolidation of limited expansion strategy is considered appropriate, but a major development strategy is considered less appropriate, -- if the relaxed semi-rural character of Llanberis is to be maintained.

The proposed Energy Information Centre should be discussed further with the CEGB to gauge their intentions and commitment to the project and to discuss possible sites for its location."

It appears that the decisions made at that meeting were endorsed by the Sub-Committee at a further meeting held on 7 February 1986 at which it was also resolved, expressly:-

"to reject the view that the creation of a major terminus was essential for efficient tourist management of the Settlement"

and

"to protect the attractive lakeside meadows from large scale development, because of their considerable landscape value and significance."

The report of that Sub-Committee was approved by the full planning committee of Arfon Borough Council on 5 March 1986.

On 4 March 1986 Mr Rogerson on behalf of the First Defendants wrote to the CEGB asking for their views and stating:

"Without a firmer indication from the CEGB as to their intentions we are in some difficulty in making a presentation to the open public meeting and certainly it would not be practicable to proceed to a planning application."

At the request of the First Defendants Mr Lingard had also been carrying out work on the proposal for the Llanberis Aircraft Museum. A difference arose about the payment of fees (not the subject of the present issue). In the course of the correspondence about this difference Mr Lingard raised the question of the Visitor Centre, pointing out (in a letter of 18 April 1986) his firm was already very heavily committed in respect of that project and that:-

"We had expected by now to have seen a planning application lodged and good progress being made towards a planning permission which would permit the release to us of some fees in respect of that project."

This led Mr Ross to write on 21 April 1986 stating:-

"Turning now to your comments on the Visitor's Centre, we too had hoped to have submitted a planning application by now. However, it was always made clear, from the outset, that this project was dependent upon total support being given to us by the CEGB and at least some support from the various local authorities. It seems to be becoming clear now that the CEGB will not firmly come out in support of us and the local opposition to the scheme to far outweigh the local support and the likelihood of either Council supporting us or selling us the necessary land is remote. The scheme that is totally built on the Royal Victoria Land was designed purely as a negotiating factor and I think that if we went ahead with the scheme on which both Councils and a majority of the public were against, we would have a lot of difficulty in getting the necessary grant support. We too have spent a lot of time and a lot of money, both by buying various pieces of land and in legal fees, and we would be as disappointed as you will be if this matter does not proceed."

On 6 May 1986 the CEGB replied to Mr Rogerson informing him that the First Defendants:

"... should not assume that the CEGB's Energy Information Centre would necessarily be incorporated in your proposed development. This is particularly so as your letter might be taken to imply that the commercial viabilities of your proposals would be affected by or even be dependent on the presence of the EIC".

This letter led Mr Ross to write to Mr Rogerson stating:

"I cannot see how we can proceed any further. I think the time is right for a well arranged withdrawal."

However Mr Lingard's view, expressed in the letter of 19 May 1986, was that it was necessary to obtain planning permission, and to offer a positive scheme and site for their centre even if it was on land owned by the County Council. This view was not accepted by Mr Ross who in the letter of 21 May 1986 asked how the Defendants could possibly go through the planning application without the support of the CEGB and stated that unless positive support from the CEGB was forthcoming then "we are stuck fast". Mr Lingard re-iterated his views in a long letter dated 2 June 1986 but the Defendants declined to accept Mr Lingard's advice. In his reply of 3 June 1986 Mr Ross told Mr Lingard that he did not think that a planning application had the remotest possible chance and that he did not wish to go ahead with a project that would arouse so much local bad feeling towards the Railway and The Royal Victoria Hotel.

Mr Lingard took that letter as a decision to withdraw instructions but in his reply on 4 July 1986 said:-

"If we are, as a result, to be denied the settled arrangements for proceeding to a planning application (and if necessary to an appeal) on the proposals we have prepared, you will appreciate that we are bound to seek our fees on the work which has been executed to date."

Thereafter there was an exchange of correspondence in which the Defendants took the position that Mr Lingard's letter of 4 March 1985 made it absolutely clear that the work was being done on a speculative basis (subject to payment of out-of-pocket expenses) and Mr Lingard took the view that a decision not to proceed with a planning application prevented his firm from finding itself in a position in which fees could be recovered on the work which it had carried out to date. He said, in the letter of 11 July 1986:-

"In these circumstances, we would be bound to claim our scale fee on the basis that your company had suspended the agreed procedures."

That therefore sets the scene for this action which was commenced in 1990. I draw no adverse inference from the lapse of the period of time: it does not in my view signify any lack of sincerity or confidence on the part of Mr Lingard in his firm's case.

It is convenient to take these issues together.

The essential question separating the Plaintiffs and the Defendants is whether the Defendants were under an obligation to proceed to obtain planning permission or not to stand in Mr Lingard's way to enable outline planning permission to be sought. The Plaintiffs put their case on the basis of an express obligation to submit an application for outline planning permission based upon the Plaintiffs' Feasibility Study. This obligation was said to arise either because there was an agreement to that effect at the meeting on 28 February 1985 or on a proper interpretation of the letter of 4 March 1985. In the alternative the Plaintiffs contended that there was an implied obligation on the Defendants to take the project at least as far as an application for outline planning permission: the Plaintiffs relied upon Stirling v. Maitland (1864) 5 B & S 840. It was argued that Mr Lingard had entered into an agreement which could only be effective by the continuance of the Defendants' commitment to the project and the Defendants were accordingly under an implied obligation to do nothing to put an end to that situation. In the further alternative the Plaintiffs maintained that the Defendants were under an obligation of positive co-operation founded on Mackay v. Dick (1881) 6 App Cas 251 at page 263 where Lord Blackburn said:-

"I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectively be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect."

Insofar as the Plaintiffs' case is based upon the letter of 4 March 1985, I do not consider that it is right so to read it as to impose such an obligation on the Defendants. Mr Lingard made his proposal:

"conditional upon receiving your assurance we would be appointed architects for whatever project eventually proceeds past the outline planning application stage ..."

He did not make it conditional upon an obligation on the part of the Defendants to take the scheme to that stage. I do not think that it is possible fairly to read the previous sentence as inferring an obligation on the part of the Defendants to make an outline planning application simply from the words "and you are ready to make an outline planning application".

However the terms of the letter do not in themselves preclude such an obligation being expressly accepted at the meeting of 28 February 1985 although if such an undertaking was given, it is a matter of comment that it was not expressly recorded by Mr Lingard in his letter of 4 March 1985. Apart from some scrappy notes of the meeting taken by two of the participants no formal record was made upon which reliance might be placed: the notes themselves served only to enable two witnesses to refresh their memories to a limited extent. Undoubtedly the Defendants, led by Mr Ross, were enthusiastic at that meeting. Mr Lingard undoubtedly gained the impression that there already had been discussions of an informal nature with planning officers which had led the Defendants to believe that such a scheme might be favourably considered by the planning authorities. I also find that Mr Lingard was also correct to form the impression that the relationship between the Defendants was closer than in fact it was although I do not consider that he was at that stage concerned as to the form of the relationship. I am also satisfied that the Defendants made it clear that it was their intention, all being well, to proceed to obtain outline planning permission. However I do not consider that the Defendants undertook to do so. They were all prudent businessmen and I do not believe that they would have gone that far. They were after all seeking a feasibility study and, as Mr Lingard's own letter of 4 March 1985 correctly records, the purpose of that was:

"to judge whether the project will be a viable one from the point of view of land acquisition, of participation by the parties concerned and of the likely overall grant which is likely to be forthcoming."

Mr Lingard's letter also recorded that there would be difficulty in convincing local opinion. In these circumstances I consider it improbable that the Defendants would have given, said or done anything which could have given Mr Lingard the impression that they wanted to do more than to put the best case forward to see whether such difficulties could be overcome. I also cannot ignore the fact that Mr Lingard did not record Mr Ross's intention to proceed to planning application, come what may, in his letter of 4 March 1985 nor did he even recall it until he prepared his second witness statement. I therefore find that Mr Lingard was not informed that the Defendants were committed to apply for outline planning permission whatever the results of or reaction to the feasibility study.

On the other hand, I do not consider that the Defendants made it clear to Mr Lingard at that meeting that the participation of the CEGB, amongst others, was so vital to the scheme that without it it could not go ahead. I believe that this only became apparent at a much later stage. Participation of the CEGB was of course important but not so important as to prevent the scheme going ahead. I do not regard the CEGB as having any greater prominence than any other local factor such as, for example, the attitude of the Welsh Tourist Board: the scheme could not be economic unless planning permission was obtained when the finance for it would become available. So too the position of the CEGB might not become known until planning permission was likely. I do not consider that Mr Lingard was informed (or believed) that it was fundamental to the scheme that the support of the CEGB was forthcoming before a planning application could be made.

Everything turned upon producing a scheme that would have local support or would not so opposed locally as to make it imprudent to take it forward even to the stage of applying for outline planning permission and also of course on having a scheme which would stand a good chance of getting planning permission, if necessary, on appeal. Although I do not accept Mr Lingard's evidence about this aspect of the meeting on 28 February 1985 I ought to state that because of the attacks made upon his credibility in other respects, he was otherwise a credible witness. I am sure that the Defendants shared Mr Lingard's view that if the matter could be taken to the stage of outline planning application it might gain an impetus of its own and thereafter stand good prospects of success. However such a decision remained that of the Defendants: their interests were at stake and I do not consider that at the early stage of February 1985 anybody in the position of the Defendants would unequivocally undertake to pursue a planning application which all concerned knew might provoke serious local opposition. Both Defendants were key local employers of long-standing with a reputation which they wished to safeguard for being good employers: they, and in particular the Second Defendants, would not have wished to appear to side with those who see villages in Wales as ripe for exploitation. But at this stage, in 1985, I am quite satisfied that (as Mr Evans said in evidence) the Defendants had underestimated the force of the local interest groups and took a reasonably optimistic view of the possibility of achieving a viable scheme. Mr Evans' evidence, which I accept, was that if the Defendants had thought that local opposition would frustrate the project they would not even have met Mr Lingard. They probably did contemplate that it might be necessary to pursue an application vigorously in order to overcome local opposition but because there was for the future and its strength could not be gauged I am sure that they did not commit themselves to go that far.

At one stage it seemed to suggest on the part of the Plaintiffs that even if the Defendants were unwilling to make an application they had engaged themselves to enable Mr Lingard to make that application on their behalf. I do not think that this happened, as a matter of fact: as a matter of law or practice an architect requires the authority of his client before proceeding to such a stage: see Clause 3.2 of the RIBA Conditions of Engagement which so stage. Although as such Conditions were not part of the contract between the Plaintiffs and the Defendants, they provided some evidence of practice on the part of architects. I do not consider that the First Defendants would have done anything other than authorise Mr Lingard to proceed on a step by step basis, particularly since both Defendants were most anxious to keep the costs down.

As to the implied obligations, Mr Rosen for the Defendants relied on the well-known case Luxor (Eastbourne) Ltd v. Cooper [1941] AC 108. This is helpful in indicating the extent to which a person might impliedly agree not to destroy the basis of a transaction, but its value is more by way of analogy than one of law. In my judgment neither of the propositions relied upon by the Plaintiffs are applicable to the facts of this case. The venture was necessarily a speculative one: whilst there might be room for argument that the Defendants had committed themselves to allow a feasibility study to be prepared, once that document had been produced the decision to proceed further lay solely with the Defendants. In these circumstances I see no room for either of the implied obligations: as to the first, the Defendant's position in 1986 indicated that they did not consider the time was opportune to take the matter further. In 1985 no term could in my judgment be implied that would require them to fetter their judgment as to when it would be in their best interests to pursue the scheme. Their commitment to the scheme was essentially conditional and an obligation not to put an end to it would be incompatible with such a commitment: it would indeed make it unconditional.

Similarly, I do not consider that Mackay v. Dick (1881) 6 App Cas 251, is directly applicable: that case is authority for the negative obligation of co-operation, ie one not to hinder or prevent something being done. Since the Defendants had not undertaken to permit Mr Lingard to take the matter further than the production of a feasibility study which the Defendants might thereafter use for the purposes of an application for outline planning permission, I do not consider that they were under any obligation positively to co-operate with Mr Lingard to take the matter beyond the stage which he had undertaken.

Finally, before setting out my answers to these issues, I note that the statement of the Plaintiffs' case in relation to Issues 2 and 3 originally envisaged that the Defendants were under an implied obligation not to withdraw from the project without first submitting an application for outline planning permission -- "unless, possibly, it became apparent that any such application would be doomed to failure and/or would stand a reasonable prospect of success". This seems to me to be correct and also fatal to the two alternative ways in which the Plaintiffs put their case.

I pause at this point to say that for the purposes of the letter of 4 March 1985 I regard the work carried out by the Plaintiffs to prepare a Feasibility Study to involve the preparation of a design on a "without commitment" basis so that had the project proceeded the Plaintiffs would then have been remunerated in accordance with the RIBA Conditions, as provided in the letter itself.

Accordingly, I answer the first three issues as follows:

The agreement was that the Plaintiffs would receive no remuneration for the work to be carried out in the preparation of a feasibility study (other than out-of-pocket expenses) until the Defendants were ready to make an outline planning application. The Plaintiffs would then be entitled to be paid for all the work that they had done in the preparation of the feasibility study and any other design work in accordance with the RIBA Conditions of Engagement. Otherwise the work would be treated as having been done on a "without commitment" or speculative basis.

No.

The Defendants were at liberty within the terms of the agreement to decline to pursue the project as far as submitting an outline planning permission once the feasibility study had been prepared without incurring any liability to the Plaintiffs to pay anything but out-of-pocket expenses, for any reason other than an intention not to proceed solely to deprive the Plaintiff of an opportunity of receiving remuneration. The reasons would include those set out in sub-paragraphs (iii) -- (viii) of the issues.

Under this head the Plaintiffs advanced some ingenious arguments. The first must be rejected. It was to the effect that in order to give business efficacy to the agreement it was necessary to imply a term that any withdrawal before an application for outline planning permission rendered the Defendants liable to pay the Plaintiffs in accordance with the RIBA Conditions of Engagement, alternatively a reasonable remuneration. In my view such a term would be completely inconsistent with the nature of the agreement and not only would it not be necessary to imply it but it would be impossible to do so.

On the other hand the Plaintiffs argued that since there was a mutual belief and understanding that the project would go forward to the stage of outline planning permission the Plaintiffs were entitled to be paid upon a quantum meruit by reason of the Defendants' withdrawal of the scheme before it reached that stage. I am not certain that this is not another intriguing way of advancing an argument similar to that based upon Stirling v. Maitland (1864) 5 B & S 840. In my judgment it must however fail, not least because there was no such mutual belief and understanding that the project would be carried forward to that stage, come what may. In my judgment the Plaintiffs took the risk that in the course of the preparation of the feasibility study it might be discovered that there was some insuperable obstacle to the scheme going forward, eg affecting the infrastructure required. (Mr Lingard at one stage in his evidence said as much). In such circumstances the project might have to be abandoned and I see no reason why the Defendants should then become liable to pay the Plaintiffs on a quantum meruit. The initial request made for the Plaintiffs' work was one clearly made on the basis that no fees were to be incurred even if the Defendants decided to withdraw. Accordingly I see no reason to infer an obligation in the nature of an implied contract or, if that is no longer the basis for the claim for payment, on any other basis.

Similarly, I do not consider that the case falls within the principle the proposition for which William Lacey (Hounslow) Ltd v. Davis [1957] WLR 932 at page 939 was cited by Mr Terry for the Plaintiffs as authority. The Plaintiffs here were not doing anything other than that which is normally required of an architect and it was not done in the reasonable expectation, encouraged by the Defendants, that an application for outline planning permission would be submitted in anticipation of a contract then arising. Unlike Lacey's case, a contract had already been made: the Defendants had promised that they would remunerate the Plaintiffs at least for out-of-pocket expenses and had also agreed that, in certain circumstances, the Plaintiffs would be appointed as architect to carry the scheme to fruition; the Plaintiffs were thereafter obliged to proceed with the feasibility study. This is not a case where "the beliefs of the parties were falsified" so that the law should imply an obligation: there was no mutual belief or understanding which was vitiated.

Finally, under this head, it was argued that if the Defendants wrongfully prevented the Plaintiffs from completely fulfilling their obligation to submit an application for outline planning permission then the Plaintiffs were entitled to damages for breach of contract or to recover under a quantum meruit. In my view I do not have to determine this issue: the documents suggest that the Defendants were not guilty of any such wrongful prevention but merely took a commercial decision to postpone the scheme when faced with the combination of local opposition and unwillingness on the part of the CEGB to participate in any one of its forms.

Accordingly my answer to Issue 4 is: No.

This issue does not therefore arise.

This was the additional issue introduced at a late stage. It was primarily advanced on the basis of that part of the text of the letter of 4 March 1985 in which Mr Lingard stipulated that:-

"Our initial participation in this way would be conditional on receiving your assurance that we would be appointed as architects ... on a disposal of any of the land involved in the study to others."

On the face of it this part of the letter would normally be read as directed towards the common situation that arises when a prospective developer of land disposes of his interest and leaves the architect "high and dry". It is not uncommon for the developer then to promise that the architect will, as it were, travel with the land. However I am prepared to read this part of the agreement, for the purposes of Issue 6, in the sense that it was an undertaking to pay fees should there be a disposal of any of the land involved in the feasibility study to others. Mr Terry on behalf of the Plaintiffs advanced an attractive argument which in its essential terms was to this effect. The assumptions made for the purpose of Issue 6 required the Court to assume that the Defendants' respective lands had been transferred and had become the property of the partnership. Upon the dissolution of that partnership the land would be held upon a trust for sale (since it could not be assumed that the land would revert to its previous owners since one or other of the participants of the partnership might have contributed more than the other and seek to recoup its expenditure out of a sale of the land). There would then be a "disposal" which on the authority of Carter v. Carter [1986] 1 Ch 62 would result in the creation of a new legal or equitable interest in the land. The abandonment of the scheme effectively resulted in a dissolution of the partnership so that by some time in 1986 there must be taken to have been a notional "disposal" for the purposes of the letter of 4 March 1985. Although a considerable amount of time was spent in examining the drafts exchanged between the Defendants I was not however required to decide whether or not a partnership was ever formed, or whether it was dissolved: the only issue was whether if those and other assumptions were correct there was nevertheless a "disposal" within the meaning of the letter which would or might entitle the Plaintiffs to recover fees from the Defendants. I consider that Mr Rosen for the Defendants was right in arguing that there was or would have been no such disposal within the meaning of the agreement, certainly not one to give rise to an obligation on the Defendants to pay RIBA scale fees to the Plaintiffs. The words "disposal to others" in my judgment clearly means disposal to parties other than the Defendants. It would be artificial to read it in any other sense. If the Plaintiffs' argument were correct and if the Defendants had not formed a partnership at the time when the Plaintiffs were engaged then the formation of a partnership or joint venture thereafter would amount to a disposal. Was it really intended by Mr Lingard that in those circumstances he might be paid off?

Furthermore, as Mr Rosen pointed out, the subject-matter of the obligation referred to "any of the land involved in the study". The letter did not make it clear by whom there might be a disposal: on its face it might mean that if Gwynedd County Council sold the land to another party then the Plaintiffs would become entitled to their fees since that the feasibility study would cover that land.

In my judgment, interesting though the Plaintiffs' argument was, it must necessarily fail. Accordingly my answer to issue 6 is: No.