Act Construction Limited v E Clarke & Son

A finding that the parties had a contract to perform work for reward can materially change the legal basis of a building dispute from restitution to contract.

Where an appellate court cannot determine whether a defective-work claim remains unresolved because the first-instance judge’s treatment is unclear, the issue may be remitted for determination. Costs of the remitted issue may be left to the lower court, which may consider appropriate costs sanctions for unreasonable further litigation.

Act Construction Limited appealed from a judgment of His Honour Judge Thornton QC in the Technology and Construction Court. The Court of Appeal found that the parties had entered into a contract to perform work for reward, although it was not either party’s pleaded or sought contract below.

The claim for damages for failure to complete the coach-station works was not pursued. The remaining issue concerned defective workmanship and whether the first-instance judge had already dealt with the defects identified by the experts. The appeal court was unable to resolve that issue on the information available and had to determine whether it should be remitted.

Disposition and contractual basis

1. The appeal succeeded to the extent that the parties were found to have established a contract to perform work for reward. The contract was not the contract pleaded or sought in the court below. The earlier claim for damages for failure to complete the coach-station works was not pursued.
2. The court recorded that, if a contract existed rather than merely a restitutionary claim, there was force in the submission that implied terms requiring good workmanship would arise and that breach could be actionable. It did not finally determine whether such terms applied or whether the first-instance award had already compensated the defects.
3. The parties disputed how the judge had dealt with the defective-work claim. The appellate court lacked sufficient information to resolve that dispute. The issue was therefore remitted to His Honour Judge Thornton QC to determine whether, and to what extent, the claim remained live.
4. The judge was invited to take a robust view of the costs of the remitted hearing. The court noted the available powers under Part 44, including consideration of indemnity costs, and referred to enhanced interest on costs by analogy with the powers under Order 36 if further litigation was unreasonable.
5. The appellant was awarded two-thirds of the costs of the appeal. There was no order as to the costs of the cross-appeal. The costs of the remitted matters were costs in the case for the judge below to determine. Any agreed arithmetical adjustment to the invoice mark-up was to be made from 8 per cent, or nothing where applicable, to 15 per cent; any dispute was to be restored to Ward LJ.

1. Court of Appeal (Civil Division): Found a contract to perform work for reward, remitted the unresolved defective-work issue to the Technology and Construction Court, awarded the appellant two-thirds of the appeal costs and made no order on the cross-appeal costs.
2. High Court of Justice, Queen’s Bench Division, Technology and Construction Court: Judgment of His Honour Judge Thornton QC. The citation and precise order are not stated in the judgment.