This is one of the first reported cases that deals with oral construction contracts and the implications of the court’s decision on future cases.

Background

Mr Purton carried out works for Kilker Projects Limited at the Dorchester Hotel in London.  The parties did not enter into a formal written contract but instead attended a series of meetings to determine the nature and scope of the works.

In December 2014, Mr Purton submitted his final account to Kilker Projects Limited, requesting payment of £147,223.  Kilker Projects Limited did not pay this sum and did not submit a payless notice.  A dispute arose between the parties and the dispute was referred to adjudication.

The adjudicator ordered Kilker Projects Limited to pay to Mr Purton £147,223, plus his fees and expenses.  When Mr Purton did not receive payment, he issued proceedings against Kilker Projects Limited to enforce the decision of the adjudicator.

Case discussion

Kilker Projects Limited argued that there was no contract between the parties and that even if one existed, it was not the same contract that was referred to adjudication.  Accordingly, the adjudicator lacked jurisdiction to determine the dispute.

Mr Justice Stuart-Smith rejected this argument.  There was substantial performance on both sides – Mr Purton had carried out the works and Kilker Projects Limited had made significant payments to Mr Purton.  While this was not definitive evidence of the existence of a contract, it was nonetheless a relevant factor.  There was conduct between the parties that identified agreement as to the original price and scope of the works.  The judge found that it was unrealistic to suggest that there was no legally binding contract between the parties.

The judge also dismissed Kilker Projects Limited’s secondary argument that, even if a contract existed, it was not the same contract that was referred to adjudication.  As signatories to a construction contract, both parties had a statutory right to refer a dispute to adjudication at any time.  Consequently, it did not matter whether the contract existed on the terms put forward in the referral notice.

The judge concluded that Kilker Projects Limited did not have reasonable prospects of successfully defending the claim.

Implications

This is one of the first reported cases that deals with oral construction contracts.  The judgment provides useful guidance concerning the court’s approach to establishing the existence of a construction contract.  It also demonstrates the court’s willingness to enforce adjudicators’ decisions, regardless of the precise terms of the contract.

For more information please contact Ron Cheriyan, solicitor in the dispute resolution team, on 020 7405 4600 or email email hidden; JavaScript is required.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.