Mast Electrical Services v Kendall Cross Holdings Ltd

The sub-contractor was not entitled to declarations that the disputes it wished to adjudicate in respect of the three projects in question arose out of contracts in writing within the meaning of section 107 of the Construction Act 1996
 
MAST ELECTRICAL SERVICES v KENDALL CROSS HOLDINGS LTD

Technology and Construction Court
Jackson J
17 May 2007
 
The sub-contractor applied for declarations that the disputes it wished to adjudicate arose out of contracts in writing within the meaning of section 107 of the Construction Act 1996. Jackson J held that the sub-contractor was not entitled to such declarations. The basis for this conclusion was that the documents relied on by the sub-contractor did not set out, evidence or record all the material terms of the alleged contracts, including in particular any agreed payment rates, that it was highly probable that there were in any event no contracts concluded and that the sub-contractor's entitlement to payment was therefore probably based on a quantum meruit. The judge did, however, state that one could have some sympathy with the sub-contractor's position insofar as (a) the sub-contractor was permitted and indeed invited to start work before rates had been agreed and recorded in writing and (b) the sub-contractor would have been entitled to refuse to start work before all the contractual terms had been agreed but commercial pressure on the contractor or the sub-contractor overrode legal considerations and the parties decided to get on with the project and hope for the best.
 
In coming to this conclusion Jackson J stated that the correct approach to be adopted as to whether an agreement was in writing was that of Ward LJ in RJT Consulting Engineers v DM Engineering (2002), namely that the true construction of section 107(1) was that that writing was important on the basis that it provided certainty insofar as (i) the adjudication process was envisaged to take place under a demanding timetable (ii) disputes as to the terms of oral construction agreements were surprisingly common and were not susceptible of resolution by summary procedure such as adjudication and (iii) the adjudicator had to start with some certainty as to the contract's terms. Jackson J also pointed out that the correct approach to be adopted in determining on the documents whether the alleged agreements were in writing was for the court to make that determination based on the documents relied on by the sub-contractor (and was not for the court to review the documents before it to see if any of them satisfied the requirements of section 107).
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