Mowlem Plc (t/a Mowlem Marine) v Stena Line Ports Ltd

A series of letters of intent may create successive “if” contracts. Where the final letter governs the parties’ relationship, its express financial limit applies according to its proper construction, including to variations and work undertaken after the date stated as the anticipated period of performance. The limit cannot be avoided simply by continuing work or exceeding the stated sum.

Where a valid contract governs entitlement to payment, a quantum meruit cannot be superimposed on that contractual regime. Waiver and estoppel require conduct or a common assumption that is supported by the evidence.

Mowlem carried out marine and onshore works for Stena in connection with the construction of a ferry terminal. The works proceeded under successive letters of intent. The final letter, dated 4 July 2003, authorised the works and provided for payment of substantiated reasonable amounts, subject to a maximum of £10 million, while stating that the sum would enable the works to proceed until 18 July 2003.

Mowlem claimed a declaration that it was entitled to reasonable remuneration for the works as a whole, including work undertaken after 18 July 2003 and work exceeding £10 million. It relied alternatively on further contract, quantum meruit, waiver and estoppel. Stena contended that the final letter governed the relationship and imposed the £10 million maximum.

1. The claim was dismissed and the counterclaim succeeded. The parties’ relationship was governed by the 4 July 2003 letter of intent, which operated as an “if” contract. Mowlem’s entitlement to payment was subject to a maximum of £10 million.
2. The financial limit applied to the execution of the Works, including variations instructed after 4 July 2003. The reference to 18 July 2003 identified the period which Stena anticipated the stated sum would cover. It did not make the letter ineffective after that date, exclude later work, or confine the limit to work instructed before that date. A construction allowing the limit to be avoided by continuing work or exceeding £10 million made no commercial sense.
3. Following British Steel Corporation v Cleveland Bridge & Engineering Co Ltd (1983) BLR 94, an “if” contract did not oblige Mowlem to continue or complete the work. Stena’s assertion that a contract existed and that Mowlem would be in breach if it stopped was a statement of its position, not a new request, instruction or offer to pay additional sums.
4. The contractual regime excluded a quantum meruit for work governed by the contract. The judge accepted the principle stated in Trimis v Mina (2000) 2 TCLR 346, that restitution cannot be imposed where a valid and enforceable agreement governs the claimant’s right to payment.
5. There was no sufficient evidence of waiver or estoppel. Mowlem’s requests for further letters of intent showed that it understood the significance of the £10 million limit and did not establish any common assumption that the limit was ineffective. The declaration sought by Stena—that Mowlem’s entitlement was subject to the £10 million maximum—was made.