Iliffe & Anor v Feltham Construction Ltd

A contract may arise from a tender, an instruction to proceed and subsequent performance, even though no formal contract is executed. The court determines formation and terms objectively. Subsequent conduct may assist in deciding whether terms were agreed, although it cannot generally construe an existing contract. A letter of intent may create a free-standing contract where its essential terms are sufficiently certain; uncertainty about peripheral matters is not fatal. A main contractor remains contractually responsible for subcontracted work where the contract so provides or the obligation is otherwise established. On a summary judgment application, compelling expert and documentary evidence may establish causation where no realistic contrary case is advanced.

The claim arose from the destruction by fire of a house undergoing construction. The claimants sought summary judgment against Feltham Construction Ltd for damages to be assessed and a substantial interim payment.

The Phase 3 works included the design, supply and installation of a log-burning stove and flue. No formal Phase 3 contract was executed, but the tender documents referred to the JCT Intermediate Building Contract with Contractor’s Design 2005, Revision 2, 2009. Feltham carried out the works, subcontracted the mechanical package, submitted valuations and received payment.

The issues were whether a contract had been formed, whether the JCT terms applied, whether Feltham was responsible for the subcontractors, whether defective flue installation caused the fire, and whether any compelling reason required a trial.

1. Summary judgment. The claimants established that Feltham had no real prospect of defending liability and that there was no other compelling reason for a trial. Summary judgment was entered for damages to be assessed.
2. Contract formation and terms. Contract formation was assessed objectively. The tender package, the architect’s instruction of 5 July 2011, the removal of the word “draft”, the subcontract order, performance and payment established a contract for the Phase 3 works. The JCT Intermediate Building Contract with Contractor’s Design 2005, Revision 2, 2009 formed part of that contract, at least so far as its Clause 2.1 obligations were concerned. The court applied the principles in GNER v Avon [2001] Lloyds Rep IR 793, G Percy Trentham v Archital Luxfer Ltd [1993] 1 Lloyds Rep 25 and Mamidoil-Jetoil Greek Petroleum SA v Okta Crude Refinery AD No 1 [2001] EWCA Civ 406.
3. Letter of intent. Applying Diamond Build Ltd v Clapham Park Homes Ltd [2008] EWHC 1439 (TCC) and Twintec Ltd v Volkerfitzpatrich Ltd [2014] BLR 150, the instruction was sufficiently certain to create binding contractual obligations. Even if the JCT terms had not been incorporated, Feltham would have owed a contractual duty to provide the services for reasonable remuneration, with a term implied by section 13 of the Supply of Goods and Services Act 1982 requiring reasonable care and skill.
4. Responsibility and causation. Feltham’s obligations extended beyond placing an order with Affleck and included responsibility for the acts and omissions of its subcontractors. The evidence established that the fire began in the roof near the flue and that defective installation, including inadequate separation from combustible materials, was the cause. No realistic alternative explanation was supported by evidence.
5. Disposition. Feltham was in breach of Clause 2.1 of the JCT terms, alternatively the term implied by section 13 of the Supply of Goods and Services Act 1982. The court would hear submissions on the interim payment and costs.

First-instance decision. No earlier appellate decision was stated in the judgment.