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Burnt Luxury House Adds Heat to Contract Formalities

Tuesday, 19 August 2014

On April 2012, fire destroyed a large house which was in its course of construction on Green Island in Poole Harbour.

Consequently, the claimants filed an action against the defendant builders, Feltham Construction Limited, claiming damages in excess of £3,500,000.

The court found in favour of the claimant and against the defendant despite the fact that the defendant had not actually carried out the work that led to the fire.

One of the key issues in the case was the fact that contractual formalities had not been completed by the time construction had begun.

Background to Iliffe v Feltham Construction Limited [2014]

The Claimants had ordered and bought a pre-fabricated wooden chalet made out of cedar from Canada which was to be erected on Green Island in Poole Harbour, Dorset. When the construction of the building was almost complete, on 20 April 2012, a fire started in the roof and destroyed the chalet.

The house was expected to be completed in 3 phases. Phases 1 and 3 were handled by the defendant and the house was in Phase 3 when the fire occurred.

Tender for Phase 1 was accepted by the defendant in September 2010 on the basis of a document called “Specification for Phase 1” and work commenced. No written contract was signed by both parties but the Specification for Phase 1 stated that the JCT Intermediate Building Contract with Contractor's Design 2005, Revision 2, 2009 would apply, and the parties conducted themselves in like manner.

By a letter sent to the defendant with the Phase 1 contract documents, it was indicated that the same documents were to be used as a basis for Phase 3 except that the works to be carried out under Phase 3 would serve as a variation to the contract.

Phase 3 was split into two parts with an instruction from the claimants that orders for part of Phase 3a relating to mechanical services should be placed with another company, Affleck, by the defendant. Affleck itself sub-contracted the design and installation of flues for a wood burner to Docherty.

According to the claimants, the fire started from the roof which was constructed by the defendant. The defendant however, argued that there was no contract signed by the parties with regards to Phase 3 works. It also contended that the claims brought by the suit arose from the installation of the wood-burner and flue by Affleck, who was the sub-contractor.

The court held that there was a contract incorporating the terms of the JCT Form between the parties. The contract was formed by conduct upon the acceptance of the tender package sent to the defendant without any contradiction of same by the defendant.

The court also stated that the appointment of Affleck as a sub-contractor did not detract from the fact that contractual responsibility for the design and detailing of the heating system lay with the defendant as contained in Item T90/210. It explained that the defendant's obligation was not limited to just placing an order with Affleck.

The court added that even if the terms of the JCT Form were not incorporated into the contract, s.13 of the Supply of Goods and Services Act 1982 was applicable, which required the defendant to apply reasonable care and skill.

Feltham was therefore, responsible in contract for the acts and omissions of its sub-contractors.


The court was willing to imply a contract in this case on the basis of the parties’ intentions, their actions and the existence of other documentation such as emails. The unique circumstances surrounding this case mean it is unwise for parties to hope to rely on the courts if they fail to put in place proper contractual arrangements.

Poor contracting processes can lead to contract failure and where the rights and obligations of the parties are not certain disputes can leave parties highly vulnerable to loss.

Without doubt, the absence of an express contract that has been agreed and completed between the parties prior to any works being carried out is particularly unwise for projects of this scale.

For specialist advice contact Peter Gourri today by email or telephone 0207 611 4848.

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