Cases - Laserbore Ltd v Morrison Biggs Wall Ltd

Record details

Name

Laserbore Ltd v Morrison Biggs Wall Ltd

Date

(1993)

Citation

CILL 896

Keywords

Contract - express terms - payment - term providing for the defendants to 'reimburse' the claimant's 'fair and reasonable payment' - whether the express term should be construed on a costs plus basis - whether the express term should be construed on a reasonable costs basis

Summary

The claimants were microtunnelling experts, employed by the defendants as subcontractors. There was a simple contract which contained an express term providing that the defendants 'reimburse' the claimant 'fair and reasonable payment'. The claimant's expert attempted to assess reasonable rates. The defendant's expert considered the matter on a costs-plus basis. The Court preferred to ask the question, 'What would be a fair commercial rate for the services provided?' and, thus, that the reasonable rates approach more closely answered this question.

Costs-plus was considered the wrong approach 'in principle', which conclusion the Court tested by asking whether, if a company's directors are sufficiently canny to buy materials at knockdown prices from a liquidator, must they pass on this benefit? Similarly, if an expensive item of equipment has been depreciated to nothing in the company's accounts, but by careful maintenance the company continues to use it, must the equipment be provided free of charge? A costs-plus basis would answer these questions 'yes', which is not correct.