Adonis Construction v O'Keefe Soil Remediation

For statutory adjudication, a construction contract must be evidenced in writing in a way that records all contractual terms relied upon. A draft order is not necessarily an offer, particularly where it is expressly described as a draft and contemplates a later formal order. Work carried out after a letter of intent does not necessarily create a contract on the terms referred to in that letter. Acceptance by conduct requires conduct clearly referable to the alleged offer and objectively inconsistent with any other explanation. Where there is an arguable case that no qualifying written contract existed, or that the adjudicator applied a term absent from the contract, summary enforcement should be refused.

Adonis Construction engaged O’Keefe Soil Remediation in connection with soil stabilisation works. The parties exchanged quotations, a letter of intent, meeting minutes, a draft subcontract order and later a formal order, but O’Keefe never signed the draft order and proposed amendments to the later order were not accepted.

After a conciliation process, an adjudicator ordered O’Keefe to pay damages, costs and fees. O’Keefe challenged enforcement, contending that there was no construction contract in writing within section 107(1) of the Housing Grants Construction and Regeneration Act 1996. The central issues were whether a contract arose by acceptance of the draft order, under the letter of intent and related documents, or by performance, and whether the adjudicator had applied a costs term which formed part of the relevant contract.

1. Application dismissed. Summary judgment to enforce the adjudicator’s decision was refused because O’Keefe had an arguable defence and a real prospect of establishing that the adjudicator lacked jurisdiction.
2. The email of 5 March, attaching a document expressly described as a draft subcontract order and stating that the official order would follow, did not clearly amount to an offer. If it was an offer, its requirement that the attestation page be signed and returned specified the mode of acceptance, which had not occurred.
3. Acceptance by conduct is assessed objectively. Conduct must be clearly referable to the alleged offer and, in the absence of relevant reservations known to the offeror, not reasonably capable of another interpretation. Commencing and continuing the works could equally be referable to the letter of intent, earlier discussions or an arrangement awaiting formalisation.
4. The letter of intent stated an intention to enter into a subcontract and contemplated that the subcontract might never take place. It was therefore arguable that it was not itself a subcontract or an offer to contract on the terms mentioned. The contractual terms also included an alleged oral agreement recorded incompletely in writing.
5. For statutory adjudication, section 107 required the contractual terms to be embodied in the written contract relied upon. The authorities recognised an alternative position where the adjudication agreement was contractual independently of the statutory scheme, but the DOM 2 adjudication clause could operate only if the relevant contractual terms had been incorporated.
6. The adjudicator had applied a clause making the subcontractor responsible for adjudication costs. That clause was absent from the contract said to arise from the letter of intent. If that was the relevant contract, applying the clause was outside the adjudicator’s jurisdiction. The court left open whether that error alone would invalidate the whole decision, because the wider jurisdictional objection was sufficient.

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