Harvey Shopfitters Limited v ADI Limited EWCA Civ 1757 [2003]
Harvey was asked to provide a tender to carry out works to ADI’s property, 22 Cornwall Gardens, which consisted of 6 flats pursuant to the IFC 98 conditions. In June 1998 Harvey offered to carry out the works for £339,000 odd. Thereafter the architects wrote a “letter of intent”. By the date of the letter there was nothing left for the parties to discuss or reach agreement about. Nor, it was found, did they necessarily contemplate that a formal contract would be issued at a later date. The contract works were carried out and payments made as though the IFC 98 conditions applied. A dispute about the final account was referred to adjudication.
Harvey then commenced proceedings alleging for the first time that there claim was for a quantum meruit. ADI said the work was done pursuant to a lump sum contract.
The crucial phrase in the letter was “If, for any unforeseen reason, the contract should fail to proceed and be formalised, then any reasonable expenditure incurred by you in connection with the above will be reimbursed on a quantum meruit basis”. Harvey argued that this meant the parties intended the contract should be “formalised” by formal contract documents being signed, absent which Harvey was entitled to a quantum meruit.
The Court of Appeal rejected this argument. It held it was entitled to look behind the letter and to have regard to the surrounding circumstances. It had regard to the fact that the letter was the culmination of a procedure which had resulted in the agreement of everything necessary to be agreed. The Court of Appeal found that the words meant that the only circumstance in which Harvey would be entitled to a quantum meruit was if the contract did not proceed and was not finalised. The contract did proceed and so Harvey was not entitled to a quantum meruit.
The case reflects two principles. First, it is sufficient that the parties are agreed on all material and necessary terms. Second, the labels the parties attach to their documents are not determinative. What matters is the intention of the parties to be gathered from all the relevant evidence including, so far as admissible, the factual matrix in which the documents in question were written.
Harvey Shopfitters Ltd v ADI Ltd [2003]
Malaysian Construction and Contract Law 