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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Alebrahim v BM Design London Ltd [2022] EWCA Civ 183 (17 February 2022) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2022/183.html Cite as: [2022] EWCA Civ 183 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
MR ROGER TER HAAR QC (Sitting as Deputy High Court Judge)
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE COULSON
and
LORD JUSTICE SNOWDON
____________________
Mashael Alebrahim |
Appellant |
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- and - |
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BM Design London Limited |
Respondent |
____________________
Binkie Moorhead, a director of the Respondent for the Respondent
Hearing Date : 1 February 2022
____________________
Crown Copyright ©
LORD JUSTICE COULSON :
1. Introduction
2. The Contract
"The proposed presentation date will be the week commencing 1st May 2017. When the client approves the design and initiates the ordering process, 35% of their project Value is due, with the remainder payable in instalments throughout the duration of the project.
The week before installation, the outstanding balance from the clients approved project value (typically 5%) and any authorised modifications or approved services are due. BM Design will notify the client of the amount in advance, so the client can submit payment at least one week prior to installation day. To complete the look of the interiors, accessories and artwork may be added to the scheme on installation day. The client is not obligated to purchase the stock accessories. The client has five days to review these items and notify BM Design of any accessories they wish to purchase. Payment for items is due within seven days of the installation."
"Outline of interior service offered
1.1 Establishing client objectives
1.2 Analysing floor plan
1.3 Detailing internal layout
1.4 Specifying and Procuring fittings & furnishings
1.5 Overall Project Management
1.6 Implementation of Interior Design Scheme
1.7 Snagging of Interior Design Works
1.8 Travel Arrangements
1.9 Estimated Costs & Interior Design Fee
1.10 Increase to Scope of Works
1.11 Delivery Dates
1.12 Payment Schedule."
"Specifying Fittings and furnishings
To create your lifestyle objectives, a selection of furniture, fittings, fabrics and accessories will be sourced for client approval.
BM DESIGN Limited will source, design, commission and procure all aspects of the interior scheme including window treatments, bespoke furniture and joinery where necessary. Accessories and artwork may also be commissioned and procured where required.
Specifications will be drawn up for all paints colours, timber stains, ironmongery and electrical where appropriate.
On receipt of the signed off scheme and deposit funds, BM DESIGN Limited will place orders on behalf of the client."
"Estimated Costs & Interior Design Fee
The Interior Design Fee is based on 20% of the total cost of works and is clearly set out in the payment plan below. We will propose detailed guideline estimates of costs as the scheme evolves.
For your information, this fee covers all procurement, in connection with the interior scheme.
Any items sourced separately by parties outside of BM DESIGN Ltd and not purchased through BM DESIGN Ltd, will not form part of our 'Cost of Interior Design Works' and therefore will not [be] subject to our 20% Design Fee.
Any items sourced by BM DESIGN Limited but purchased separately by parties outside of BM DESIGN Limited will be subject to our fee.
Please note that the Interior Design Fee DOES cover the following areas:
o Furniture (sofas, tables, chairs, freestanding cabinets, decorative lighting, cushions)
o Window Treatments (curtains, blinds, shutters etc.)
o Rugs
o Artwork sourcing
Please note that the Interior Design Fee DOES NOT cover the following areas:
o Detailed drawings, design concepts, installation, sourcing, schedules and project management, which are chargeable hourly.
Please refer to "Our Services" document for additional services offered.
We will propose detailed guideline estimates of costs as the scheme evolves. We assure you that BM DESIGN Limited keeps a strong focus on budgetary control. For your information, our fees cover all meetings, design time, planning, estimating and procuring and overall installation in connection with the interior scheme…"
"Increase to Scope of Works
In the event that after submission and acceptance of the estimate changes are made to the Scope of Works or any circumstances arise or events occur which could not reasonably have been foreseen at the date of the estimate, any additional sums reasonably and fairly incurred will be charged to the Client."
INTERIOR DESIGN FIXED FEE |
COST OF INTERIOR DESIGN | STATUS OF PROJECT | |
Apr 2017 | 50% Deposit of Fixed Fee | Signing of Contract | |
May 2017 | 50% Balance of Fixed Fee | 35% Deposit for Furniture | Interior Design development/Orders Placed |
May 2017 | 30% Interim Payment | Management of Orders | |
Jun 2017 | 30% Interim Payment | Order Management | |
July/Aug 2017 | 5% Balance on completion | Installation of Interior Design |
"ESTIMATE OF COSTS
Whilst producing the scheme for the Interior Design Works, BM DESIGN Limited will produce an estimate of costs with instalment payment dates for the supply and implementation of the Scope of Works, which will be prepared in accordance with the Clients budgetary requirements.
Prices quoted in the estimate and any subsequent revised estimates are subject to finalised detail. BM DESIGN Limited reserved the right to alter all prices quoted if suppliers alter those quoted to them. Any fluctuation in the prices quoted above £500 will be confirmed in writing to the client for their approval.
The estimate of costs is subject to variation in accordance with clause 6 below. On estimates of a value less than £20,000 + VAT, BM DESIGN Limited reserves the right to invoice 100% on acceptance of estimate."
"ADDITIONALS TO SCOPE OF WORKS
Increase to Scope of Works. In the event that after submission and acceptance of the estimate changes are made to the Scope of Works or any circumstances arise or events occur which could not reasonably have been foreseen at the date of the estimate, any additional sums reasonably and fairly incurred will be charged to the Client.
Should the client request that BM DESIGN Ltd purchase an item on their behalf which has not been outlined or scheduled for in the Scope of Works, BM DESIGN Ltd will request that the client confirm this in writing. BMD will detail the price of the item as well as stating that the client will be required to pay for the item in full on the next invoice issued to them by BM DESIGN Ltd.
Additional work. If additional work is requested by the Client which is not included within the original Scope of Works and which cannot be accommodated within the original time scale the additional works will be subject to a separate proposal for agreement and implementation together with new payment terms and conditions."
3. The Judge's Judgment
"58. As the arguments and evidence emerged before me during the trial, it became apparent that there is a central issue between the parties as to whether, as the Claimant contends, the Defendant was obliged to charge for all items procured by it at cost, to which the Defendant would be entitled to add its 20% fee.
59. It was BM's submission and evidence upon behalf of her company that her task was to prepare estimates for approval by MA. Her belief was that in preparing the estimates she was not bound to put forward estimates based upon the cost to the Defendant of the items (with the fee on top) but rather that the Defendant was entitled to put forward an estimate based upon the retail price of the items. It was then for MA to accept (approve) or reject such estimates. If accepted, the estimates became binding."
"64. I do not find this an easy issue. In my view the Defendant's construction of the contract is to be preferred since it fits most closely with the machinery of the contract. On this basis, the Defendant would propose a budget for acceptance by its client. If this was accepted by the client, then it became binding as between them subject to the provisions in the contract permitting departure. If the client accepted the design concept, but disliked the price, then Clause 10 contained an option whereby the client could purchase the items directly from the supplier identified by the Defendant: see the provision "any items sourced by BM DESIGN Limited but purchased separately by parties outside of BM DESIGN Limited will be subject to our fee" . The reference to "sourced" must refer to a supplier of a particular item identified by the Defendant. If the client liked the design cost but did not wish to purchase the items through the Defendant or from the Defendant's sources, then Clause 10 provided that the 20% design fee was not payable.
65. For these reasons, I accept the Defendant's case on this important issue. However, I would emphasise that the contractual scheme was for the estimate to be accepted by the client before it became binding. Of course there could be details to be worked out, but the main substance of the estimate had to have been accepted for it to be binding. The consequence of this is that if the Defendant started procurement or performing any other services without an accepted estimate it did so at risk, and, in my judgment, would be entitled only to payment upon a quantum meruit basis if agreement was not reached later."
"5. However, I would comment on part of the argument put forward by Mr Butler in support of his application. Mr Butler drew attention to part of what I said in paragraph 59 "[Ms Moorhead's] belief was that …. the Defendant was entitled to put forward an estimate based upon the retail price of the items."
6. Mr Butler submitted that Ms Moorhead did not suggest that she applied the retail price, but rather applied an uplift to the cost to the Defendant to generate a profit.
7. I accept that Ms Moorhead did not formulate her position quite as I expressed it, but what I put in paragraph 59 appeared to me then, and still appears to me now, to be an accurate way of summarising what she was putting forward. However this is irrelevant: the construction adopted by me as set out at paragraphs 63 to 65 does not depend upon the estimate put forward by the Defendant being a retail price. On my construction of the contract, what is necessary is an estimate accepted by the client. How that estimate is calculated is irrelevant. By contrast, on the construction set out in paragraph 62 the way that the estimate is calculated is a necessary element of the construction of the contract."
The emphasis is mine.
4. The Law
5. The Proper Construction of the Contract
LORD JUSTICE SNOWDEN
LADY JUSTICE KING