Adonis Construction v O’Keefe Soil Remediation - TCC 5 August, 2009
In this case, Adonis sent O’Keefe a tender enquiry on 25 October 2007 for soil remediation on site at Westcott Venture Park in Aylesbury.
O’Keefe quoted on 2 November with the reservations that ‘[soil] suitability testing must be carried out prior to commencement ...’ and ‘the level ... of liquidated or consequential damages are to be agreed prior to any contractual commitment’. Adonis did not reply.
On 28 February 2008 Mr McQuade from Adonis emailed O’Keefe’s Mr Horsley, saying that Adonis had been trying to use another subcontractor that had pulled out. That email contained some preliminary soil test results. The following day Mr Horsley confirmed that O’Keefe could still carry out the work.
On 3 March Adonis called Mr Horsley to a pre-start meeting. Adonis wanted the works to start on 6 March under a DOM 2 subcontract. Mr Horsley said O’Keefe could start on 6 March if Adonis provided a copy of the sub-contract order with a letter of intent.
On 4 March, Mr McQuade sent the letter of intent by email, which included an instruction to proceed and also said that O’Keefe had no claim for loss of profit or consequential loss if the sub-contract did not take place.
Adonis also included O’Keefe’s 3 March quotation with hand-written additions that ‘rates are based on the limited soil information provided’ and O’Keefe would be ‘required to carry out on-site suitability testing 4 weeks before commencing on site’. (With the timescale, this was impossible but a further note said testing had started on 3 March.) Adonis also sent a copy of the pre-start meeting minutes for Mr Horsley to sign so Adonis could raise its official order.
Mr Horsley returned the signed minutes on 4 March, noting that although the further soil testing had started, the results would not be known until after O’Keefe had finished.
Adonis replied by email on 5 March, enclosing a draft subcontract order asking for it to be signed as a deed and returned within seven days. In it, Adonis had made changes requiring O’Keefe to bear the costs of any adjudication and to pay for any remedial works and consequential costs if the soil tests proved additional work was required. Mr Horsley later denied agreeing to these new clauses.
O’Keefe did not receive this email until 7 March. O’Keefe never signed the draft order. In the meantime, it started work on 6 March, completing its works on 11 March.
On 22 April, Adonis sent the numbered and dated sub-contract. O’Keefe signed and returned the subcontract adding: ‘Provided always that the material is as described in the Adonis email of 28 February.’
When O’Keefe’s test results arrived, they showed that further remediation work was necessary. O’Keefe carried this out and sought payment. Adonis refused. A conciliation held that O’Keefe was due £14,000 from Adonis. However, Adonis went to adjudication to seek consequential damages.
O’Keefe contested the adjudicator’s jurisdiction as there was no written contract. However, the adjudicator decided O’Keefe had to pay £150,200.42 plus adjudication costs of £9,515.16 and the adjudicator’s fees.
Adonis tried to enforce the adjudicator’s decision in court. The court held that no contract had been agreed in writing, therefore the adjudicator had acted without jurisdiction and Adonis’s application was dismissed.
Ann wright’s analysis
Adonis first contended that a contract in writing had been formed with O’Keefe accepting the Adonis order sent on 5 March by starting on site.
The court noted this was only a ‘draft sub-contract order’ and had not been signed or returned within seven days as requested.
O’Keefe argued a contract had not been formed because first, it had not received the 5 March email until 7 March – after it had started work. Second, the earlier letter of intent contained an instruction to proceed. Third, Adonis knew or should have known that O’Keefe would accept neither of the new cost or risk clauses. The court agreed that the 5 March draft order had not formed a contract.
Adonis then argued that the earlier letter of intent and the agreed minutes of the 3 March meeting had formed the contract. However, that letter clearly contemplated that a subcontract might never be agreed.
Finally, the adjudicator had decided O’Keefe should pay all Adonis’s adjudication costs. These could only be charged under the new costs clause in the draft subcontract order, not under the letter of intent. As a result, the adjudicator had exceeded his jurisdiction and his decision was void.