STEPHEN HIRST v MICHAEL PAUL DUNBAR

A claimant who performs construction work on the footing that it will acquire and benefit from the development has no contractual or restitutionary entitlement to payment from the owner unless the evidence establishes an engagement to pay.

For limitation purposes, the usual rule is that a cause of action for payment accrues when the work is completed. Contractual or statutory provisions governing billing, payment notices or the date payment is due do not postpone accrual unless they make satisfaction of a further condition precedent necessary before the right to payment arises. The Scheme for Construction Contracts regulates the process of billing and payment; it does not, without more, postpone limitation.

The claimants carried out substantial works completing partially constructed dwellings at a development site. They claimed that the defendants had engaged them under an oral contract, alternatively by conduct, to perform the works for a reasonable sum. They also advanced a quantum meruit claim.

The defendants contended that the claimants had undertaken the works at their own risk while seeking to acquire the site. The defendants denied any liability and pleaded limitation. The principal issues were whether the alleged engagement existed, whether any claim was statute-barred, and, if liability existed, what reasonable sum was due.

1. Contract and quantum meruit. The claimants were not engaged by the defendants to perform the works. The contemporaneous documents, the role of the defendants’ employee, the absence of formal contractual arrangements, the claimants’ conduct in seeking to purchase the site, and the evidence of independent witnesses made the defendants’ account more likely. The claimants acted on their own behalf and at their own risk.
2. The later discussion about payment and the offer of land in lieu did not establish contractual liability. It represented recognition that the defendants had obtained the benefit of the works, rather than an admission that the works had been performed under a contract or that a legal obligation to pay existed.
3. The claim formed by conduct failed for the same reasons. The quantum meruit claim also failed because the works had been undertaken at the claimants’ own initiative and risk, in the expectation that they would benefit through acquiring the site.
4. Limitation. The usual rule is that a right to payment for work accrues when the work is completed: Birse Construction Ltd v McCormick (UK) Ltd [2004] EWHC 3053 (TCC) and Coburn v Colledge [1897] 1 QB 702. Contractual construction may produce a different result where a further condition precedent is required before entitlement arises, as in Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] EWCA Civ 814.
5. The provisions of the Act and the Scheme concerning payment dates, claims and payment notices regulate billing and payment. They do not determine when the substantive right to payment arises. The Scheme therefore did not postpone accrual of the cause of action. Even if the contract and the Scheme had applied, the cause of action accrued when the works were completed, at the latest on 4 December 2012, and the claim issued on 2 August 2019 was statute-barred.
6. The claim accordingly failed on both the primary finding that no engagement existed and the alternative limitation ground. The court did not need to determine the reasonable value of the works, but found that, if payment had been due, no more than £99,310.10 could safely have been established.