Cases - Costain Civil Engineering Ltd and another v Zanen Dredging and Contracting Company Ltd

Record details

Name

Costain Civil Engineering Ltd and another v Zanen Dredging and Contracting Company Ltd

Date

(1996)

Citation

85 BLR 77

Legislation

ICE Conditions of Contract ('the Blue Form')

Keywords

Contract - building contract - payment - implied term - quantum meruit - restitution for unjust enrichment - work outside subcontract - distinction between a claim for a quantum meruit and a claim for unjust enrichment - whether contractor was entitled to payment for work which fell outside the subcontract - whether the quantum meruit could properly be valued by reference to any profit allegedly made by the joint venture and/or by reference to charges, or whether the determination was confined to the value of work done and the materials supplied with a fair and reasonable percentage uplift in respect of overheads and profit

Summary

The appellant joint venture acted as the main contractor for the construction of the A55 Conwy Bypass and river crossing in Wales. The respondent subcontractor was responsible for various dredging operations. On appeal in relation to issues of law, the Court upheld the arbitrator's award that the respondent was entitled to a sum by way of a quantum meruit in respect of marina work that it had performed outside the subcontract. The Court held that in respect of quantum meruit, there is a distinction to be drawn between cases involving an implied term for payment, and those where there is no contract and hence the assessment is based upon restitution and unjust enrichment. This was a case that fell into the latter category.

The sum awarded by the arbitrator having found an entitlement to a quantum meruit for additional work outside the scope of the subcontract, was assessed at £370,756 plus costs for the work done; and a sum of £386,000 in respect of the subcontractor's share of the profit arising from the works to the marina. The Court was asked whether the determination of the quantum meruit could properly be valued by reference to any profit allegedly made by the joint venture and/or by reference to charges (such as the costs of mobilisation and demobilisation), which a competitor for the said work would have incurred but which the subcontractor in the circumstances would not have incurred. Alternatively, was the determination confined to the value of work done and the materials supplied with a fair and reasonable percentage uplift in respect of overheads and profit?

The Court held that the approaches above were not mutually exclusive but were all elements that could be taken into consideration by the arbitrator in arriving at his judgment as to what was fair and reasonable. The question for the Court was whether or not the arbitrator gave such undue weight to any of the elements that the approach was demonstrably wrong. This was answered in the negative.