Following instructions

The recent Court of Appeal judgment in Dinkha Latchin (T/A Dinkha Latchin Associates) versus General Mediterranean Holdings SA and Another confirmed the general position that when a professional consultant is given instructions to carry out work which he performs, the client has an implied duty to pay for that work even if there is no express contract between the parties. Commercial common sense demands that this is so.

In the Dinkha case the professional was an architect (Mr Latchin) who claimed that the defendants (a company and its chief executive officer) owed him architectural fees which he incurred while working on four projects based in Tangiers over a period of around two years.

In April 1994 Mr Latchin started to carry out work for the defendants on spec, that is, on the basis that he would not be remunerated but in the hope that at some point in the future he would be engaged as architect for the projects and remunerated fully. At no point thereafter was a formal written agreement entered into between the parties. So the question was: could Mr Latchin recover his fees?

Is remuneration due?
The parties were in agreement as to the applicable legal principles: if there is agreement between the parties on essentials (such as scope of work) with sufficient certainty to be enforceable and an intention to create legal relations then there is an enforceable contract – Baird Textiles Holdings versus Marks & Spencer.

In this situation, where there is no express contract, one will be implied by the courts. However, if the parties would, or might have, acted as they did without any contract, the courts will not imply one.

The Court of Appeal referred to the 'officious bystander' test which provides a useful indication for those who may find themselves in a similar situation. Basically, this involves the court putting itself in the position of an impartial onlooker and asking the question: 'taking into account all the circumstances, and in the absence of a clear statement to the contrary, would the parties have recognised that the work being done would be remunerated?' In the Dinkha case the answer to this question, it was held by the court, was 'yes'.

Determining the facts
One point of particular interest is where and how the actual line was drawn between when Mr Latchin was working without remuneration (the actual basis on which he started work) and when he was working on a fee-recovering basis.

The Court of Appeal supported the judge’s findings that the claimant’s explanation for the late claim, that he didn’t want to upset the apple cart, was correct.

The judge at first instance decided that the line should be drawn at 1 September 1994. On appeal, counsel for the client submitted that the judge had "just plucked a date out of the air" but the Court of Appeal did not agree. The 1 September 1994, it said, was when the work "went up a gear" and "so much more work was by then being ordered and done… a line had been crossed."

In particular, Mr Latchin's work had moved from outline design work to detailed design work and he had also undertaken a trip to Tangiers for the purposes of the work. The chief executive officer knew that Mr Latchin was a professional architect who earned his living by fees.

Counsel for the client pointed to the fact that there was no request for payment from Mr Latchin until an oral request made in October 1995. The first written request wasn't made until October 1998. This, it was claimed, supported the contention that all work was done speculatively.

The Court of Appeal supported the judge's findings that the claimant's explanation for the late claim – that he "did not want to upset the apple-cart" – was correct. It added that it was impressed by the fact that when Mr Latchin sent a bill to an associated company of the defendant company in 1999, the chief executive officer's personal assistant wrote back stating that Mr Latchin had the 'wrong company'. The Court of Appeal pointed out that one would have expected the chief executive officer's office to reply saying that there was no contract if that was what it believed the true position to be.

Put it in writing
The case yet again illustrates that, where there is no express contract but work has been carried out, the courts are reluctant to find that the person doing the work is not entitled to payment. There are potentially a number of different theoretical bases on which the person carrying out the work might be entitled to payment, including quantum meruit and unjust enrichment. In this case the legal basis was an implied contract.