Lloyd Projects Ltd v John Malnick [2005] EWHC Civ

This summary was provided by CMS Cameron McKenna LLP.

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A construction contract made orally and recorded subsequently in writing will only satisfy the criteria set out in s.107(2)(c) of the HGCRA if it contains all of the material terms and there are no disputes between the parties as to the terms of that contract.

Her Honour Judge Kirkham – Queen’s Bench Division, Birmingham District Registry, Technology and Construction Court

Background

Mr Malnick, a commercial property solicitor, engaged Lloyd Projects to convert his offices into three residential flats.  The agreement was concluded orally.  Five months later, Lloyd Projects sought to record the agreement reached in a letter dated 11 February to Mr Malnick, a duplicate of which Mr Malnick was requested to countersign and return.  Instead of doing so, Mr Malnick replied in writing on 17 February raising issues in relation to the scope and standard of the work, asserting that the price agreed was final and that no further extras would be necessary.

Sometime thereafter, Lloyd Projects referred a dispute to adjudication.  The adjudicator found in its favour and ordered Mr Malnick to pay some £116k.  From the outset, Mr Malnick argued that the adjudicator had no jurisdiction, as there was no contract in writing within the meaning of s.107 of the HGCRA.  The adjudicator decided that he did have jurisdiction and made an award in Lloyd Projects’ favour.  Mr Malnick continued to resist payment on this basis and Lloyd Projects brought an application for summary enforcement of the adjudicator’s decision.

Decision

The question before the court was whether the contract was a contract that was made in writing: (i) by exchange of letters dated 11 and 17 February (under s.107(2)(b)); or (ii) that the letters were evidence in writing of the agreed terms (under s107(2)(c)).

It was common ground between the parties that the agreement had been concluded orally and that the parties had been working pursuant to that agreement for five months before the exchange of correspondence took place. On that basis, HHJ Kirkham concluded that it would be stretching the wording of s.107(2)(b) to say that the agreement was made by exchange of communications in writing.

As to whether the contract was evidenced in writing pursuant to s.107(2)(c), the judge found that there were significant items in dispute between the parties, including who was to bear the risk of unforeseen site conditions, the standard and scope of the work to be carried out for the price quoted.  In short, not all of the material terms were evidenced in writing, therefore the criteria for s.107(2)(c) were not satisfied.  The application for summary enforcement of the adjudicator’s decision therefore failed.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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