Sykes & Anor v Packham (t/a Bathroom Specialist)

An estimate does not create a fixed-price contract merely because it states a total figure. The court must assess the document objectively, considering its language and commercial context. Where the parties have agreed neither a fixed price nor another method of calculation, the contract may contain an implied term requiring payment of a reasonable price. A trial judge may resolve that issue using the available evidence and an element of rough justice where an adjournment would cause disproportionate cost and delay. Appellate intervention in such a case-management decision is justified only where the decision was unfair or outside the range of permissible decisions.

The respondent, a plumber and heating engineer, claimed payment for building works and materials supplied at the appellants’ house. The appellants denied liability, alleging that the parties had agreed a fixed price, and counterclaimed for overpayment and defective work.

The trial judge rejected both the fixed-price and cost-plus analyses. He held that the estimate gave rise to an implied agreement for payment of a reasonable price, assessed that price on the evidence available, and awarded judgment to the respondent. The appellants appealed on the contractual construction, case management and valuation issues. The respondent brought a cross-appeal concerning the alternative cost-plus analysis and an arithmetical error.

1. Contractual basis. The appeal court upheld the finding that the agreement was neither a cost-plus contract nor a fixed-price contract. The estimate’s description of materials, equipment, labour and expenses as approximate, together with the absence of a final specification when it was prepared and the use of conspicuously round figures, pointed decisively against a fixed price. Provisions concerning manufacturers’ price increases and extra works did not outweigh those indications.
2. The estimate was intended to provide a reliable basis for calculation, but it did not constitute a fixed-price contract. In the absence of an agreed method for ascertaining the price, the proper implication was that the appellants would pay a reasonable price for the works and materials, including additional works.
3. Case management. Although the respondent’s pleadings were deficient, dismissal or an adjournment was disproportionate. The trial judge was entitled to determine a reasonable price from the material before him, accepting that this involved an element of rough justice. His decision was a robust case-management decision, substantially fair to both parties, and the Court of Appeal declined to interfere.
4. Assessment. The judge was generally entitled to use the respondent’s actual expenditure as the starting point and to make conservative allowances. The appeal succeeded to the limited extent that the allowance for the respondent’s own labour was reduced to 80% of the hours claimed, and the profit margins on employees’ wages and sub-contractors’ charges were each reduced to 15%. The remaining criticisms of the valuation were rejected.
5. The cross-appeal succeeded on the arithmetical error in the sub-contractors’ figure, which was corrected to £16,863.43. The costs order below was left undisturbed. Counsel were directed to prepare a revised schedule with consequential recalculations.

• Court of Appeal (Civil Division): allowed the appellants’ appeal to the limited extent of reducing elements of the reasonable-price assessment, allowed the respondent’s cross-appeal to correct the arithmetical error, and directed preparation of a revised schedule.
• County Court before His Honour Roger Connor DL: judgment for the respondent for £25,910.72 plus £8,282.80 interest, with the appellants ordered to pay 85% of the costs of the claim and counterclaim.