Mast Electrical Services v Kendall Cross Holdings Ltd

A claimant seeking to use the adjudication provisions of the Housing Grants, Construction and Regeneration Act 1996 must establish both a construction contract and an agreement in writing satisfying section 107.

The documents relied on must set out, evidence or record all material terms of the contract. Where payment rates remain unresolved, correspondence confirming the contractor’s appointment or permitting work to begin will not ordinarily satisfy section 107. The court must assess the documents identified by the claimant and is not required to search the bundle for other documents capable of establishing an agreement in writing.

Mast Electrical Services, a sub-contractor, carried out electrical works for Kendall Cross Holdings Ltd on three refurbishment projects: Vale House, Maytree House and Hawthorn Estate.

The parties disputed the rates payable. Mast sought declarations that specified quotations, correspondence and meeting minutes constituted contracts in writing for the purposes of section 107 of the Housing Grants, Construction and Regeneration Act 1996, so that it could pursue adjudication claims. Kendall accepted that disputes had crystallised but contended that the documents did not establish contracts in writing, particularly because the payment rates had not been agreed.

The central issue was whether the identified documents set out, evidenced or recorded all material terms of the alleged sub-contracts.

1. Vale House. The 11 April 2005 quotation and later documents did not establish certainty as to the applicable rates. The project-specific quotation of 9 May contained substantially different rates, and the correspondence did not show acceptance of either set of rates. Kendall’s later letters did not constitute or evidence an agreement in writing. The documents therefore failed section 107.
2. Maytree House. The telephone conversation and pre-start minutes confirmed that Mast would carry out the electrical work, but neither accepted the rates nor recorded the other material contractual terms. The 16 May quotation contained unexplained lump sums without identifiable underlying rates. The documents therefore failed section 107.
3. Hawthorn Estate. The February conversation did not amount to acceptance of the 12 January quotation. Kendall’s 3 March letter agreed to pay the quoted rates only for a two-week period, and no document recorded what those rates were or settled the terms for the remainder of the project. The documents therefore failed section 107.
4. The court followed the approach of the Court of Appeal in RJT Consulting Engineers Ltd v DM Engineering (Northern Ireland) Ltd [2002] EWCA Civ 270, including the guidance at paragraphs 12 to 16. The written record must provide sufficient certainty about the material terms giving rise to the dispute. The court also adopted the approach in Trustees of the Stratfield Saye Estate v AHL Construction Ltd [2004] EWHC 3286 (TCC).
5. It was highly probable that no contract had been concluded for any of the three projects and that Mast’s payment entitlement was based on quantum meruit, but that issue was not required to be decided. All declarations were refused and the claim was dismissed.

First-instance decision. No appellate history is stated in the judgment.