Glendalough Associated SA v Harris Calnan Construction Co Ltd

Under section 107(5) of the Housing Grants, Construction and Regeneration Act 1996, an exchange of written submissions may establish an agreement in writing where the referral notice alleges, expressly or on a reasonable reading, an agreement made otherwise than in writing and that allegation is not denied in the response. A later denial is too late. The agreement is established only to the effect alleged. For section 107(2)(c), the relevant contractual terms must be recorded in writing, but the scope of work may be defined by written references to drawings and instructions, and price may be ascertainable by applying written tender rates. Whether a letter of intent constitutes a construction contract may remain for the adjudicator.

The claimant engaged the defendant to construct a residential development and studios under a letter of intent, although no formal contract was executed. The claimant deducted liquidated damages for delay. The defendant referred the dispute to adjudication, describing the arrangement simply as an agreement under which it had been employed to carry out the works.

The claimant challenged the adjudicator’s jurisdiction, contending that the alleged contract was not in writing under section 107 of the Housing Grants, Construction and Regeneration Act 1996, and raised procedural and natural justice objections. The central issues were whether section 107(5) applied and whether the letter of intent and associated documents could constitute a construction contract in writing.

1. Application dismissed. The claimant’s applications for declarations and an injunction were dismissed. It was declared that neither party could contend, and the adjudicator could not decide, that there was no agreement in writing for the purposes of section 107(5) of the Housing Grants, Construction and Regeneration Act 1996.
2. Section 107(5) is engaged where the referral notice does not clearly describe a written agreement and is reasonably capable of being read as alleging an agreement made otherwise than in writing. An allegation framed in loose terms may therefore suffice, even if the words could also describe a written agreement. The responding party must deny the allegation in its response. A denial made later in the adjudication comes too late.
3. Once section 107(5) operates, the parties are taken to have made an agreement in writing to the effect alleged. Here, the referral alleged an agreement under which the defendant was engaged to construct the identified development. No more precise contractual terms were established by the referral, so the precise terms remained unresolved. The adjudicator nevertheless had jurisdiction.
4. For section 107(2)(c), all relevant agreed terms must be recorded in the relevant document or documents. At least the parties, scope of work, price and time must be sufficiently identified. The scope may be defined by reference to drawings and written contractual procedures, and a price may be sufficiently certain where written tender rates and prices provide a method of calculation. An obligation to perform diligently and in a timely fashion does not prevent contractual effect merely because extension-of-time provisions are absent.
5. The conclusions concerning the letter of intent were provisional. The question whether it constituted a construction contract within section 107 was therefore left to the adjudicator. The judgment was not to be communicated to the adjudicator, save for the declaration, which could be communicated immediately to avoid unnecessary costs.

The judgment records an ongoing adjudication between the parties. No appeal or lower-court decision is stated.