Cases - Marston Construction Co Ltd v Kigass Ltd

Record details

Name

Marston Construction Co Ltd v Kigass Ltd

Date

[1989]

Citation

15 Con L 116

Keywords

Tendering and procurement

Summary

Owners Kigass informed contractors Marston that they would be awarded the contract for rebuilding a factory destroyed by fire for which Marston had tendered. The contract would be concluded once the insurance money had been received by Kigass. As HH Judge Bowsher put it, 'while all concerned firmly believed ... that a contract to rebuild would be entered into, it was also clear that in the unlikely eventuality which ultimately occurred, no contract would be made'.

Anticipating the arrival of the insurance money and the need for an early completion of the project, Kigass asked Marston to undertake certain preparatory works. Kigass admitted having known that they were leaving the contractors 'a fair amount of work' and 'that they would incur costs and that they would have to do preparatory work in the form of working drawings and an application for building regulation approval ... more detail had to be submitted to the local authority to satisfy the conditions attached to the planning permission'.

No contract was signed because the insurance money proved to be insufficient for the project. Marston successfully claimed remuneration for the works carried out, relying on William Lacey (Hounslow) v Davis and British Steel v Cleveland Bridge. The judge was clear that 'It was never alleged ... that the plaintiffs were told that any preparatory works undertaken before contract were to be at the plaintiff's financial risk'.

A notable feature of this case was that Judge Bowsher felt unable to distinguish between basic tender expenditure and the cost of the preparatory works:

'... it is not possible without further evidence to draw a line at the date of submission of tender and say that everything that went before was part of the preparation of the tender and everything that followed was preparatory work.'

The basis for the contractor's ability to recover its costs was a mixture of express and implied requests for works which could not be characterised as simply part of the basic tendering process. The key was a benefit to the owner which 'may consist in a service which gives a realisable and not necessarily realised gain'. In the result,

'... there was an express request made by the defendants to the plaintiffs to carry out a small quantity of design work and ... an implied request to carry out preparatory works in general ... both the express and the implied requests gave rise to a right of payment of a reasonable sum.'