Nash v Tonbridge Estates (Sussex) Ltd

Where negotiations and correspondence do not establish a concluded construction contract, the parties’ rights are assessed on a quantum meruit basis. The claimant is entitled to the reasonable value of work actually done and materials supplied, rather than contractual rates or other contract terms. A defendant cannot rely on contractual obligations, delay damages or contractual set-off where no contract exists. Recovery in restitution for failure to deduct tax requires proof that the claimant was unjustly enriched by a payment made for his benefit. A possible future liability to the revenue is insufficient where the defendant has made no corresponding payment.

Mr Nash, a decorator and building contractor, carried out construction work for Tonbridge Estates (Sussex) Ltd during the redevelopment of The Sussex Stud. The parties relied on budget quotations, specifications and a letter purporting to accept them. Mr Nash claimed further payment for work and materials. The defendant alleged that the work was incomplete or defective, that Mr Nash had caused delay and mismanagement, and that it had paid sums which should have been deducted under the construction industry tax scheme. It also advanced claims concerning VAT and other alleged costs.

The central issues were whether a contract had been concluded and, if not, what sum was reasonably due on a quantum meruit basis, subject to any properly established deductions or restitutionary claim.

1. No concluded contract. The August quotations were steps in negotiation and were not offers capable of acceptance. The letter of 22 September 2001 purported to accept the quotations but left significant matters, including the programme of works and additional items, open for further negotiation. It was therefore not an acceptance of an existing offer.
2. Quantum meruit. The claim was consequently assessed on a restitutionary basis. In the absence of a contract, there were no contractual rates, completion obligations or other contract terms governing the parties’ rights. Mr Nash was entitled to the reasonable value of work actually done and materials supplied, subject to appropriate credits. Work which he had not done was not payable.
3. Defective work, delay and management. The defendant’s evidence concerning snagging, defective work and mismanagement was general and insufficiently particularised. The court accepted that work Mr Nash had completed was properly done. No contractual completion date existed. Even if a contract had existed, any implied obligation to complete within a reasonable time could not be assessed on the evidence, particularly given delays attributable to the defendant and others.
4. Tax deductions and restitution. The defendant had paid sums without making deductions required under the construction industry tax provisions, and the revenue had indicated a possible liability. That liability arose from the defendant’s failure to apply the law, not from a mistake causing excessive payment to Mr Nash. Since the defendant had made no payment to the revenue from which Mr Nash gained an advantage, he had not been unjustly enriched. A restitutionary claim might arise in future if such a payment were made for his benefit, but the present claim failed.
5. VAT and final order. The evidence did not establish that VAT had been paid in addition to the sums otherwise due. The court rejected the alleged contractual VAT term. Judgment was entered for Mr Nash in the sum of £76,523.50, exclusive of interest, with the question of interest adjourned for further submissions.

Not stated in the judgment. This was a first-instance decision.