Sub-contract – Construction – Claimant agreeing to provide staircase for development– Architect rejecting work as inadequate – Defendant contractor refusing to pay – Adjudicator making award – Claimant applying for summary judgment – Whether triable issue existing on presence of written contract – Whether adjudicator having jurisdiction to award interest – Application dismissed
The claimant company manufactured and installed joinery. The defendant, the main contractor on a development project, employed the claimant to manufacture and install a staircase.
In May 2007, the defendant sent the claimant plans and a section detail illustrating broadly where the stairs were to go. They did not identify the precise dimensions or provide any detailed information. In June 2007, the claimant provided a budget quotation for the work upon which the contract between the parties was based. It also sent a number of drawings to the defendant before starting work on the stairs in January 2008. The architect working on the project maintained that the staircase was unacceptable. The defendant therefore refused to pay for the work done.
A dispute arose between the parties as to whether the claimant was entitled to any payment from the defendant. The latter argued that no sum was due because the design or manufacture of the staircase was inadequate and the work had been subject to substantial delays.
The claimant claimed the amount due under the contract together with interest, and the matter was referred to an adjudicator. The defendant challenged the adjudicator’s jurisdiction on the ground that the contract between the parties was not in writing, as required by section 107 of the Housing Grants, Construction and Regeneration Act 1996. It also challenged the adjudicator’s jurisdiction to award interest.
The adjudicator issued his decision, allowing the claimant less than it had claimed but awarding some interest. The defendant did not accept the adjudicator’s decision and the claimant issued proceedings to enforce it, applying for summary judgment of its claim.
Held: The application was dismissed.
There was a triable issue, at least with regard to the terms said to have been orally agreed. Leave to defend would be therefore granted subject to the defendant paying £10,000 into court.
For the purposes of section 107 and Part II of the 1996 Act, a construction contract required the terms of the contract to be in writing and recorded in one of the ways set out in section 107. Although adjudicators and judges should be robust in determining whether trivial matters said to have been agreed only orally could prevent what would otherwise be a written contract for section 107 purposes from being a written contract, the exercise of determining what was trivial was objective in respect of the particular contract and parties concerned. What might be “trivial” in one contract might not be in another. It was always necessary to determine whether a so-called agreement made orally was expected or intended to be binding as between the parties: RJT Consulting Engineers Ltd v DM Engineering (Northern Ireland) Ltd [2002] EWCA Civ 270, [2002] 1 WLR 2344 applied; Stratfield Save Estate Trustees v AHL Construction Ltd [2004] EWHC 3286 (TCC) considered.
Terms were implied into contracts by the operation of law, albeit that some terms might be implied in the context of a factual relationship or even a factual history existing between the parties. Some terms were implied into contracts by statute; others were implied to give the contracts “business efficacy” or to make them work. There was no reason to distinguish between different implied terms in the context of section 107. Thus, the implication of any terms did not render what would otherwise be a written contract under that section into something not covered by Part II of the 1996 Act: Connex South Eastern Ltd v MJ Building Services Group plc [2004] EWHC 1518 (TCC), [2004] BLR 333 applied, Galliford Try Construction Ltd v Michael Heal Associates Ltd [2003] EWHC 2886 (TCC) considered.
In any event, the adjudicator did not have jurisdiction to award interest, assuming that he had general jurisdiction as an adjudicator under the 1996 Act. This was not a case in which the parties had agreed or accepted that he should have jurisdiction and the defendant had made it clear that it was expressly arguing that the adjudicator did not have such jurisdiction. Moreover, the question of interest was not one that the adjudicator could properly consider to be necessarily connected with the dispute: Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358, [2006] BLR 15 applied.
Crispin Winser (instructed by Gullands, of Maidstone) appeared for the claimant; Jennifer Jones (instructed by O’Callaghan & Co) appeared for the defendant.
Eileen O’Grady, barrister
