This was an application to enforce an adjudication decision that the defendant homeowners, Harrison, pay the claimant builders £72k. Harrison was a residential occupier, therefore statutory adjudication did not apply. The primary issue was whether they had agreed contract terms containing an adjudication clause. As Deputy Judge Bartlett QC made clear, he could only decide the application in Goldsworthy’s favour if Harrison had no real prospect of successfully defending the enforcement claim.
Goldsworthy said that the parties agreed, and proceeded on the basis that, the JCT Minor Works (MW) terms applied. These terms contain a provision for adjudication. Harrison said that although the parties expressed an intention that they would enter into a MW form of contract, the parties did not do so because they never reached final agreement on the terms of such a contract. Further, the parties’ conduct was not consistent with a concluded agreement. As the Judge noted, the principal difficulty here was that the parties had proceeded with works without fully formalising the terms of their legal relationship, even though a Final Certificate had been issued. Thus the Court had to make the best sense possible of unclear expressions. The Judge referred to the Supreme Court case of RTS Flexible Systems Ltd v Molkerei (see Issue 118) which said that:
“i) It is possible that parties may agree to be contractually bound by agreed terms even though they defer other important matters to be agreed later.
ii) Contracts may come into existence, not as a result of offer and acceptance, but during and as a result of performance.”
Further, the Judge noted that the provisions of the Minor Works form constitute a carefully designed package which, when properly filled in, sets an agreed balance of costs, liabilities and risks. He continued:
“This feature needs to be kept in mind when considering whether an incomplete Minor Works form constitutes a binding contract. When parties intend that they will contract on a Minor Works form, but fail to complete it, the Court needs to be wary of imposing on them a less complete contract, with a different balance of risks partly reflecting the Minor Works form and partly inconsistent with it: a contract which, if asked, they would not have agreed to.”
Having considered the facts carefully, Deputy Judge Bartlett QC commented that it was ironic that:
“the defendants, who for most of the period from October 2012 onwards envisaged and desired that the full works would be done under a Minor Works contract, now contend that this intent was never contractually agreed or implemented, whereas the claimants, who resisted signing the Minor Works form when it was offered and did not revert with any altered version said to reflect the parties’ agreement, now contend that the Minor Works terms were contractually agreed...”
However, he said that the fact that the use of the MW form was envisaged for the full works did not amount to a finding that there was a contractual agreement by the parties at that stage to use the MW form and bind themselves to the MW terms. Goldsworthy’s case on offer and acceptance was that the relevant offer was their quotation in February 2013 and the contractual acceptance was an instruction to commence works in its email of 28 March 2013. But that offer was made against the invitation in the email of 4 January 2013, which expressly referred to the need to fill in a MW contract. However, as the Judge made clear, without knowing what was said between the parties in March 2013, and this was only a summary judgment application, he could not make a definitive finding that the email of 28 March 2013 concluded a contract for the carrying out of the full works on MW terms. Neither the fact that the certificates referred to the “correct” MW clauses, nor that the parties agreed terms of payment inconsistent with the MW terms and that they made no agreement on completion date and liquidated damages, established conclusively that the MW terms did not apply. The position was simply not clear.
The problem for the Judge was that in all the circumstances, without fuller evidence from both sides, in particular of the discussions lying behind the emails, he found it impossible to say whether the parties did or did not reach a stage where they agreed with contractual effect to the application of the Minor Works terms, with gaps where particular options were not filled in or agreed. Given that it could not be confidently decided without the full evidential picture, he was not in a position to grant summary judgment to the claimants for enforcement of the adjudicator’s decision. However, the Judge concluded:
“I reach this conclusion with a degree of regret. So far as the present evidence goes, the reasons given by the defendants for not paying the claimants’ invoices do not appear to justify particularly large reductions, and it is common ground that there is an outstanding balance due to the claimants in respect of the works. In theory the next step would be to proceed to a full trial of the issue of whether the parties’ contract included the adjudication clause. Such a trial would determine only the enforceability of the adjudicator’s decision. It would not finally determine how much money is owing from the defendants to the claimants in respect of the works. The parties may take the view that a better course, to avoid the risk of legal costs escalating on both sides in a manner disproportionate to the amount truly in dispute, would be to sit down and arrive at a fair figure for payment to resolve all their differences.”