Amey, the main contractor in relation to refurbishment works of Sheffield’s road network, engaged Aggregate as subcontractor to undertake surfacing, planning and civil engineering works.
The court granted two declarations concerning the deadline for submitting a final statement under a subcontract and Aggregate’s right to refer interim payment disputes to adjudication.
The subcontract provided that the subcontractor issue its final statement to the contractor within one month following completion. After it emerged that there was an unusually high level of material containing tar in the Sheffield road network – management of which is more expensive than other materials – Aggregate undertook additional works (despite refusing to agree to a variation agreement). A dispute subsequently arose about the amount payable to the subcontractor.
The judge held that there was no valid variation or agreement of a new subcontract. On the facts, the scenario was akin to an estoppel and therefore:
- The parties’ conduct had prevented the contractor from invoking the original subcontract during the additional works; and
- The estoppel ended when the additional works did, allowing the contractor to rely on the subcontractor’s original obligation to submit a final statement within one month of completion.
He granted declarations that the subcontractor was therefore obliged to submit its final statement and that it could not make any further interim payment applications at this stage.
He did not grant a declaration that the subcontractor remained in breach as the subcontract made no provision for failing to submit a final statement within one month of completion.
He also refused a declaration that the subcontractor could only open up, review or revise any interim applications once, to determine their “true value”. In particular, he pointed to parties’ statutory right to adjudicate on disputes “at any time.” Whether a dispute could be referred to adjudication depended on the referral and this was a matter for the adjudicator to decide.
The application of an estoppel here was interesting as the judge believed that there were “difficulties with this analysis.” Nonetheless, he believed that “the obstacles to analysing the dealings as having given rise to a contract effected by conduct are greater and are, indeed, insuperable.” He ultimately relied heavily on the fact that Aggregate refused to sign the draft deed of variation.
Employers and contractors alike will be reminded, again, of the court’s continued refusal to infer much beyond that which is written in the contract. Here, the judge noted that he would not “rewrite the parties’ bargain.” If you want the other side to face consequences for their action, you must ensure they are drafted into the contract.