Blowing Hot and Cold

KIM FRANKLIN
It is easy to lose sight of the fact that many construction disputes have less to do with buildings
than with the rights and obligations of those who build them. This is why lawyers who have no
construction background still end up specialising in project work. (Although it has to be said that,
after practicing construction law for a decade or two, you end up knowing more about the industry
generally, and drains in particular, than do most people.) Conversely the absence legal training
does not prevent the industry from expressing a view on the law, particularly when things start to
look contentious.

But it is a minefield out there, especially now that many forms of dispute resolution depend upon
the nature of the agreement entered into between the parties. In the old days it used to be
common enough for a contractor to refuse to pay a sub-contractor on the grounds that there was
‘no concluded contract’. The same contractor would now regret such a stance if they subsequently
wanted to refer a dispute, for example over contra charges, to adjudication. Without a contract
there is no right to adjudicate. Could they do a nifty U-turn whilst, with uncharacteristic modesty,
professing their new found ignorance of matters legal?

This question was considered in the recent case of Redworth v Brookdale Healthcare Limited
(Judgment 31.7.06). The claimant contractor agreed to build a care home for the defendant
employer for £4.5m. No contract was executed but all appeared to go well until the conclusion of
the works when the parties fell out over delay, defects and damages. As the temperature was
raised, Redworth sent a heated letter denying the existence of ‘a design and build or any form of
contract’. A few months later, however, Redworth referred the dispute to adjudication claiming that
the contract incorporated the JCT standard form of Design and Build contract. At Brookdale’s
request the adjudicator was called upon to reconcile Redworth’s apparent schizophrenia. The
adjudicator dismissed Redworth’s original position as ‘a knee jerk reaction’, found that there was a
contract entitling Redworth to adjudicate and ultimately awarded them £200,000.

In court Redworth’s Mr Roberts sought to explain away the ‘no contract’ letter as ‘lashing out’ as a
result of ‘pure anger and frustration’. He concluded, ‘I knew it was wrong when I wrote it’. The
Judge accepted that Roberts was angry but still found him to be ‘rational and coherent’. He
pointed out that Redworth were blowing hot and cold over the existence of a contract, or, as we
lawyers would say trying to ‘approbate and reprobate’ their argument. This was not permitted.
Redworth should be held to their election and not allowed to resile from it. The judge concluded
that there was no contract in writing, that the adjudicator had no jurisdiction and that Redworth
were not entitled to the sums awarded.

So next time, think twice before lashing out. Phone a friend. Phone your lawyer. Or you may be
held to your election.