Galliford Try Construction Ltd v Michael Heal Associates Ltd

A party cannot enforce an adjudicator’s decision where the decision rests on breach of a contract which the court finds was never made. A construction-industry instruction to proceed with limited work pending formal appointment may be preparatory rather than an offer capable of acceptance. Parties may nevertheless agree, independently of any contractual adjudication clause or statutory entitlement, to submit existing disputes to adjudication. Such an agreement ordinarily makes the adjudicator’s decision binding only until final determination by legal proceedings, arbitration or agreement. Once final proceedings establish that the contractual basis of the adjudication was absent, the temporary binding effect ends.

Galliford sought enforcement of an adjudicator’s decision requiring Michael Heal Associates Ltd to pay £722,586 and adjudication fees. The dispute concerned structural engineering services for the redevelopment of the former Wellesley Hotel in Leeds.

Galliford alleged that a post-tender contract had been concluded by correspondence and conduct. Heal disputed the existence of any contract and challenged the adjudicator’s jurisdiction. The court also considered whether correspondence between the parties’ solicitors created an independent agreement to adjudicate, and the significance of Galliford’s changing its case about the contractual terms before the court.

1. No post-tender contract. Applying the principles in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 and G. Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25, the correspondence had to be considered as a whole and objectively. The memorandum of 20 October 2000 was not an offer. It was an instruction to continue design work in anticipation of a formal contract. It did not commit Galliford to appoint Heal or pay the stated fee, and the scope of services remained unresolved.
2. The memorandum resembled the type of construction-industry request considered in British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504. Heal’s subsequent conduct did not amount to acceptance because the work had already begun and the relevant meetings were not requested by the memorandum.
3. The court did not need to decide the effect of section 107 of the Housing Grants, Construction and Regeneration Act 1996. It nevertheless observed that the reasoning in RJT Consulting Engineers Ltd v DM Engineering (Northern Ireland) Ltd [2002] BLR 217 might require careful consideration where a performed agreement is completed by implied terms.
4. Independent agreement to adjudicate. The correspondence between Masons and Beachcroft Wansbroughs amounted to an unqualified agreement to submit unresolved disputes concerning the post-tender services to adjudication. The references to jurisdiction were directed to whether there should be one adjudication or two, not to a reservation that no adjudicator had jurisdiction.
5. In context, the agreement adopted the process contemplated by section 108(3) of the Housing Grants, Construction and Regeneration Act 1996: the adjudicator’s decision was binding until final determination by legal proceedings, arbitration or agreement.
6. Galliford had succeeded before the adjudicator on the basis of a contract incorporating ACE Conditions, but abandoned that contractual case before the court. Since no contract existed, the adjudicator’s decision was legally wrong. Its temporary binding effect had ended. The court distinguished C&B Concept Design Ltd v Isobars Ltd [2002] BLR 93, which concerned errors of law within an existing referred dispute. The claim for enforcement was dismissed.