Stratfield Saye Estate Trustees v AHL Construction Ltd

A cost-plus construction contract may arise from correspondence, drawings, site discussions and conduct even though no fixed price, programme or completion date has been agreed. Where the agreed scope is sufficiently defined, the employer’s power to vary or omit work does not ordinarily permit cancellation of the whole project or removal of the work necessary to achieve its fundamental objective. For Housing Grants, Construction and Regeneration Act 1996, s 107, an agreement is evidenced in writing under subsections (2)–(4) only if all its express terms are recorded in writing. An exchange of written adjudication submissions may provide the necessary record under s 107(5) where the agreement is alleged and not denied.

The Trustees of the Stratfield Saye Estate engaged AHL Construction Ltd to carry out phase 1 works at Heckfield Wood House on a cost-plus basis. The works began but were stopped after eight days. AHL subsequently obtained an adjudicator’s award for losses arising from cancellation of the project.

The Estate sought declarations that no contract existed for a defined scope, that the contract was not an agreement in writing for the purposes of s 107 of the Housing Grants, Construction and Regeneration Act 1996, and that the adjudicator lacked jurisdiction. AHL sought enforcement of the award. The central issues were whether a defined contract existed, whether it was evidenced in writing, and whether the award was valid and enforceable.

The claim was dismissed and the adjudicator’s decision was ordered to be enforced.

1. Contract and scope. A contract arose on 8 September 2003 when AHL commenced work in acceptance of the Estate’s offer. The agreed scope comprised the works shown on three construction drawings and the matters recorded in the site-meeting minutes. A fixed price, programme and completion date were unnecessary for contract formation. Completion within a reasonable time was implied.
2. Limit on omissions. The contract was for phase 1 works intended to make the property wind and weathertight. The employer could instruct changes to details as the work progressed, but could not omit work which removed or altered that fundamental characteristic. The court relied on Abbey Developments Ltd v PP Brickwork Ltd [2003] EWHC 1987 (Technology), including the principle that a contractor has a corresponding right to complete sufficiently defined work and that reasonably clear words are required to remove it for performance by another.
3. Authority. The agent who negotiated the arrangement had actual authority. Alternatively, the Estate ratified the contract, or the agent acted with apparent or ostensible authority.
4. Agreement in writing. Following the majority reasoning in RJT Consulting Engineers v DM Engineering (Northern Ireland) Ltd [2002] BLR 217, all express terms had to be recorded in writing under s 107(2)–(4). The drawings, minutes and correspondence recorded the scope, cost-plus basis and payment rates. Alternatively, the written submissions in the first two adjudications constituted an agreement in writing under s 107(5), because the Estate had admitted the existence of an agreement within the Act.
5. The grounds challenging Mr Wakefield’s award failed. The Estate’s declarations were refused, and an order enforcing the award was made.