Lloyd Projects Ltds v Malnick
The exchange of correspondence between the builder and the homeowner did not have the effect of there being an agreement in writing within the meaning of section 107(2)(b) or (c) of the Construction Act
22 July, 2005
LLOYD PROJECTS LTD v MALNICK
Technology and Construction Court
Her Honour Judge Frances Kirkham
22 July 2005
The builder applied to the court for enforcement of the adjudicator's decision in his favour. The homeowner resisted enforcement on the ground that the exchange of correspondence between the parties did not constitute an agreement in writing within the meaning of section 107(2) of the Construction Act. The correspondence comprised a letter from the builder in which he confirmed his understanding of the contract based what he described as "our verbal agreement" reached some five months previously and a letter in response from the homeowner in which he commented on the contents of the builder's letter. Section 107(2) provides that there is an agreement in writing if the agreement is: (a) made in writing (whether or not it was signed by the parties) (b) made by an exchange of communications in writing or (c) evidenced in writing.
Ward LJ in delivering the leading judgment of the majority of the Court of Appeal in RJT Consulting Engineers v DM Engineering (2002) stated that: (i) writing was important because it provided certainty and (ii) what had to be evidenced in writing was literally the whole of the agreement although not doubt adjudicators would be "robust" in excluding the trivial from the ambit of the agreement.
Judge Kirkham held that there was no agreement made by an exchange of communications in writing within the meaning of section 107(2)(b) because: (i) the oral agreement was already in existence by the time the parties exchanged their letters and (ii) the parties had been working pursuant to that oral agreement for some five months and were bound by it. Judge Kirkham also held that there was no agreement evidenced in writing by the correspondence because: (i) the letters did not contain all the material terms of the agreement on the basis that the following items not recorded in writing in the letters were material and should not be dealt with "robustly" as being "trivial", namely which party was to bear the risk of unforeseen events, the required standard of work and the scope of the work to be undertaken for the agreed lump sum and (ii) oral evidence was needed to enable a tribunal to identify what were the terms that the parties had agreed orally.