Mr Malnick converted his former offices in Islington into three residential units. The claimant carried out the construction work. The oral agreement was reached on 3 September for the builder to carry out the conversion work. A manuscript note of the telephone conversation recorded the price at £412,000 inclusive of VAT with no extras. The work commenced on or around 12 September 2003. Shortly afterwards the parties agreed a variation of £10,000.
On 11 February 2004, the contractor wrote to Mr Malnick setting out his understanding of the terms of the contract. A response of 17 February 2004 identified that there were some differences in the understanding in terms of the quality of the work, the scope of the work (did the additional £10,000 relate solely to the chimney work, or did it cover the additional pointing and the drainage work), and whether the PC sum for the kitchen and bathroom fittings was a maximum prices that was not to be exceeded or whether the actual cost was to be paid to the builder.
Disputes arose in connection with these items and others. The dispute was referred to adjudication. The claimant sought to enforce the adjudicator’s decision.
The issue was whether the letters of 11 and 17 February 2004 were sufficient evidence in writing of the agreed terms pursuant to section 107(2)(b) or (c) of the Construction Act. The defendant argued that not all of the material terms had been recorded in the documents. Further, the letters were some five months after the work had started and demonstrated that the parties had a different understanding of the agreement.
Reference
Judge Kirkham said that whether the adjudicator felt able to deal with the claim was irrelevant, what mattered was objectively whether the material terms had been recorded in writing. The contract had formed orally on 3 September 2004. The question was whether that contract was sufficiently recorded in writing. The judge referred to Lord Justice Ward in RJT who said that “what has to be evidenced in writing is, literally, the agreement, which means all of it, not part of it.” She also referred to Mr Justice Jackson who in Stratfield Saye considered that all of the expressed terms needed to be recorded in writing. This meant all of the material terms.
The judge held that it was clear from the documents that the scope of the work to be carried out for the sum of £10,000, and whether the PC sum for the kitchen and bathroom fittings were the maximum amount or whether the builder was to be paid the actual cost were material to the parties, and had not been adequately recorded in writing at the time that the oral contract was made. The agreement was therefore not adequately recorded in writing for the purposes of section 107(2)(b) and (c) and the judge refused to enforce the decision.
*Full case details
22 July 2005, TCC, Birmingham, HHJ Frances Kirkham
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Postscript
If a term that is essential to the parties has not yet been agreed then there cannot be a contract, let alone a construction contract in writing. Recording all of the essential terms (such as price, scope of work, start date, finish date, quality to be expected, and so on) before the work begins on site could save the parties from a costly and time-consuming dispute.
