Diamond Build Ltd v Clapham Park Homes Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 25 June 2008 |
| Neutral Citation | [2008] EWHC 1439 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT 08 69 |
| Date | 25 June 2008 |
[2008] EWHC 1439 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Akenhead
Case No: HT 08 69
Mr Marc Rowlands (instructed by CJ Hough & Co LLP) for the Claimant.
Miss Camille Slow (instructed by Trowers & Hamlins) for the Defendant.
Hearing dates: 11 and 25 June 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is yet another case which relates to a Letter of Intent on a construction project. The issues in this case revolve around whether the Letter of Intent had been superseded by a contract incorporating the JCT Intermediate Form of Building Contract, 2005 edition. There is an estoppel said to have arisen. The case illustrates the dangers posed by letters of intent which are not followed up promptly by the parties' processing of the formal contract anticipated by them at the letter of intent stage. The Claimant seeks a declaration that by the time its relationship with the Defendant was terminated the Letter of Intent had been replaced by the standard form contract.
The history
Clapham Park Homes Ltd (“CPH”), the Defendant, wished in early 2007 to have refurbishment and regeneration works carried out to a number of houses and flats on the Clapham Park Estate in South London. To that end, through its Quantity Surveyors, Ian Sayer & Co, and in particular their Mr Cutts, CPH invited the Claimant Diamond Build plc (“DB”), a contractor, to tender for these works. The invitation to tender letter dated 2 March 2007 enclosed a Specification, Tender Drawings and a Form of Tender.
The Specification contained various Particulars of the Project. Having described the works and who the relevant parties were likely to be, such as the Quantity Surveyor, there then followed a description of what the Contract and Form of Agreement was to be:
“The Articles of Agreement of Conditions of Contract will be the JCT Intermediate Building Contract 2005, with Contractor's Design. A schedule of the amendments is set out in Appendix A to this document …
The Contractor is to note that the Articles of Agreement of Contract Particulars within the Form of Contract as ultimately executed will be reproduced as separate documents incorporating all relevant contract details and amendments scheduled hereafter …
Articles of Agreement
The agreement will be executed as a deed …”
It was indicated at Paragraph 120 that the Contract Drawings would be the same as the tender drawings. The invitation to tender was amended by a further letter dated 28 March 2007 from Mr Cutts to DB.
By letter dated 2 April 2007 to CPH, DB enclosed its tender in the sum of £2,489,302 for the works as described in the Specification. DB then stated:
“We have endeavoured to interpret your requirements in accordance with the Specification and site visits. Should our tender prove of interest there are a number of points we would welcome further discussion on.”
The Form of Tender accompanying this letter was in a relatively standard form:
“Dear Sirs
We the undersigned do hereby tender and undertake to execute the various works in accordance with the Conditions of Contract Specification and to the satisfaction of the Contract Administrator for the sum of:
TENDER —£2,489,302.00 …
This is a fixed price tender and is not subject to any variation in the costs of labour and materials and will hold for acceptance for a period of three months from the date fixed for the submission or lodgement of tenders …
I/We undertake to commence the works within four weeks of acceptance of my/our tender and to complete the works within 36 working weeks of being given possession of the site …”
A summary breakdown of the tender was provided which showed that, amongst other things, there was an additional adjustment to overheads and profit with an addition of £200,000 within the tendered price.
Mr Cutts emailed DB on 23 April 2007 referring to the letter accompanying the tender and asking DB to advise him what the points referred to were which DB wanted to discuss. The response by email on 24 April 2007 by CPH was that DB had no further points for discussion.
On 5 June 2007, CPH sent to DB the Letter of Intent which has given rise to the major part of the issue between the parties. It was in the following terms (with my numbering of the paragraphs in square brackets):
“Refurbishment Works to 16 NR Houses and 51 NR Flats – Clapham Park Estate London, SW4.
We confirm that it is our intention to enter into a Contract with you on the basis of a JCT Intermediate Form of Contract, 2005 Edition with further amendments as specified in the Specification upon which your tender of 2nd April 2007 was based on. [1]
Clapham Park Homes Ltd wish that you now commit the appropriate resources to permit you to take possession by no later than 28 calendar days from the date of this letter and to regularly and diligently proceed with the refurbishment works to achieve an overall completion with 36 working weeks from the date of possession. [2]
The Contract Sum will be £2,489,302.00 as set out in your tender. [3]
Should it not be possible for us to execute a formal Contract with you in place of this letter, we undertake to reimburse your reasonable costs up to and including the date on which you are notified that the Contract will not proceed provided that the Supervising Officer is satisfied that those costs are appropriate and that, in any event, total costs will not exceed the sum of £250,000 … [4]
Clapham Park Homes Ltd do not undertake to reimburse any anticipated profits for the works as a whole, nor actual costs or actual or theoretically incurred general or specific overheads arising after the date of notification that no further work is to be carried out. [5]
You are to comply with the Construction (Design and Management) Regulations 2007 (“the CDM Regulations”) and be the “Principal Contractor” for the Project as defined in the CDM Regulations and fulfil in relation to the Project all the obligations of the Principal Contractor as set out in the CDM Regulations … [6]
You are also to effect all insurances stipulated in the Form of Contract and Specification referred to above and relevant to the work undertaken pursuant to this letter. [7]
It is hereby confirmed that the undertakings given in this letter will be wholly extinguished upon the execution of the formal Contract. [8]
Please confirm receipt of this letter and indicate acceptance of its terms by signing and returning the enclosed copy where shown.” [9]
The first version of this letter which was sent, although addressed to DB, left room for a signature by another company, Hilife Construction. At a Preliminary Meeting on 6 June 2007 attended by representatives of DB, CPH and the Contract Administrator (Estia Building Consultants –“Estia”) there was some discussion about the Letter of Intent; it was agreed that it would be reissued with the name of the Contractor corrected. This duly happened and the Letter of Intent with room for signature by DB was received by DB on 7 June 2007. I was told by Counsel for DB, and I accept, that it was signed by DB shortly thereafter.
There is a minor issue of fact between the parties as to whether or not on 6 June 2007 there was agreement reached as to the date for commencement. I am satisfied that agreement was reached, although it is clear from a letter dated 18 June 2007 to which I will return that there was undoubtedly discussion about the topic. I am sure that if there was disagreement at the meeting it would have been recorded in the minutes. It was not and I am satisfied that agreement on commencement date was reached at that meeting. The fact that, after the meeting, the Letter of Intent was signed without demur supports this view; it is corroborated by Estia's unchallenged letter of 13 June 2007 (see below).
By letter dated 11 June 2007, DB wrote to CPH thanking CPH and confirming receipt of the Letter of Intent. It was indicated that a “contract management team had been assigned to this project”. It was hinted however, extremely obliquely, that DB might not wish to commence within 28 days of the Letter of Intent.
Estia responded to DB on 13 June 2007:
“We have concerns by the wording of your final paragraph with reference to an anticipated start date.
As you will be aware the contract documents stipulate a four week lead-in period and at our meeting on 6 June a contract start date was agreed on 9 July 2007, some 4.5 weeks after the Letter of Intent.
We therefore confirm that the contract start date will be 9 July and that this is the date from which the contract completion date will be calculated …”
DB responded on 18 June 2007 to Estia's letter:
“…we should advise you that we are unhappy with the start date that was discussed at the initial meeting and it is unlikely that we will have covered all of the processes that are required under our quality control system to meet the proposed date.
There are various issues that the contract team will have to clear with you besides placing orders with approximately 30 major items of supply and subcontractors that need to be in place on this contract and we do not see this being completed to enable us to start within the four week period stated in the documents …”
I was told, and I accept, that, over the first two to three months of this project after the Letter of Intent, DB placed orders with suppliers and subcontractors to a total value of about £1.5m.
At a meeting, said to be the “Pre-Contract Meeting”, held on 4 July 2007...
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