Clarke & Sons v Act Construction

A building contract may arise even where the parties have not agreed the whole scope of work, a final price or a formal document. An instruction to do work and acceptance of it can create a contract carrying an implied obligation to pay reasonable remuneration. A later course of conduct cannot add terms to a contract already made. Prior dealings imply a pricing term only where they disclose a coherent and settled practice. In assessing reasonable remuneration for daywork, the court may consider typical margins and the parties’ actual charging and payment history. Interim applications that are estimates and paid on account do not become settled accounts merely because payments were made. A party cannot introduce an unpleaded challenge to labour rates at a later stage.

Clarke appealed from a judgment of the Technology and Construction Court entered for ACT Construction in the sum of £186,567.02. The first-instance judge held that no contract had been formed for redevelopment works at Clarke’s proposed coach depot, that ACT was entitled to reasonable remuneration on a quantum meruit basis, and that a 15 per cent uplift applied only to the final unpaid applications. Clarke challenged the findings on contract formation, paid interim applications, the uplift and labour costs. ACT’s respondent’s notice contended that the work was governed by a time-and-materials contract and that prior dealings fixed the applicable mark-ups. The central issues were whether a contract existed, whether its terms could be implied from dealings, and how reasonable remuneration should be calculated.

1. Disposition. The appeal and cross-appeal were allowed in part. The court rejected the finding that there was no contract, but that conclusion did not materially advance either party’s substantive case.
2. Contract formation. An instruction to carry out work and acceptance of that instruction were sufficient to create a contract, although the parties had not agreed the entire scope, a final price or a formal building contract. The contract was a contractual quantum meruit, under which reasonable remuneration was payable for work performed. The contract did not include Clarke’s proposed cap or an obligation to complete the whole project within a specified time.
3. Implied pricing term. The parties’ earlier jobs were undertaken on materially different bases and did not establish a sufficiently coherent or settled course of dealing. Nor could a pricing term be implied from interim applications made after the contract or its variation had been formed. ACT’s cross-appeal on the alleged time-and-materials term therefore failed.
4. Reasonable remuneration. The judge was entitled to assess the reasonable uplift at 15 per cent. The evidence of typical margins, the higher uplifts charged and paid on earlier invoices, and the circumstances of daywork supplied a sufficient basis. An appellate court should be very slow to interfere with such an assessment by an experienced judge in a specialist tribunal.
5. Interim applications. The earlier applications were estimates and interim payments on account, not settled accounts. The parties’ reconciliations and later final account showed that ACT reserved and exercised a right to review the account. The 15 per cent uplift therefore applied to all costs from April 1992, and the calculation was remitted to the court below.
6. Labour costs and further orders. Clarke could not reopen the labour figures because that was a new, unpleaded case and the relevant labour sum had been treated as admitted. The matter was remitted for calculation and for the Technology and Construction Court to determine whether any claim for defective workmanship remained outstanding. Costs were ordered as set out in the operative order.

• Court of Appeal (Civil Division) — In [2002] EWCA Civ 972, the court allowed the appeal and cross-appeal in part, remitting the calculation of the uplift and any surviving defective-workmanship issue.
• Technology and Construction Court — On 24 May 2001, judgment was entered for ACT for £186,567.02. The judge held that no contract had been formed, awarded reasonable remuneration on a quantum meruit basis, fixed a 15 per cent uplift on the unpaid applications, and declined to reopen earlier payments and labour rates.