Cases - Mowlem Plc (t/a Mowlem Marine) v Stena Line Ports Ltd

Record details

Name

Mowlem Plc (t/a Mowlem Marine) v Stena Line Ports Ltd

Date

[2004]

Citation

EWHC 2206 (TCC)

Keywords

Contract - building contract - letter of intent - implied term- if contracts - payment 'up to £10 million" - work carried out in excess of maximum value - whether contractor entitled to payment above liability cap for work done on quantum meruit basis – whether employer waived or estopped from relying on liability cap

Summary

Mowlem were appointed by Stena Lines to construct a facility known as Terminal 5 at Holyhead.

Mowlem were appointed on successive letters of intent the last one of which capped the liability of Stena to £10 million. Mowlem asked for this cap to be raised as their costs increased but continued working despite their costs exceeding the £10 million cap.

It was common ground that the works were undertaken by Mowlem pursuant to a series of letters of intent written on behalf of Stena. It was also common ground that each of the relevant letters of intent took effect in law as an offer capable of acceptance so as to bring into existence what was described in British Steel (above) as 'an "if" contract', that is to say a contract under which A requests B to carry out a certain performance and promises B that, if he does so, he will receive a certain performance in return, usually remuneration. The last letter of intent included a promise to pay 'such reasonable amounts as can be substantiated in respect of your costs for orders placed or work done', up to a maximum of £10m. Mowlem in fact carried out work it alleged exceeded this maximum value.

It was argued that it was an implied term of the contract created by Mowlem's acceptance of the last letter that if Stena permitted Mowlem to carry out the works beyond that date and/or so that they exceeded that value, then Stena would pay a reasonable sum for those works. The Court rejected this argument on the basis that there was no justification in law for any such implication. It was found that Stena had not conducted itself in such a way as to lead Mowlem to believe that it would not seek to rely upon the terms of the letter dated 4 July 2003. Mowlem were entitled to no more than the £10 million stated in the letter of intent.

The New South Wales Court of Appeal judgment in Trimis v Mina was applied as a correct statement of the law in England and Wales.