Will there ever come a time when parties can stop arguing over whether all of their contract terms are in writing?
Some may argue that this time will come (maybe next year) when the amendments to the Construction Act 1996 come into force. That’s because part of the proposed amendments do away with the section 107 requirements (agreements in writing).
That may be true, but I think those days are still some way off. After all, the consultation on the Scheme for Construction Contracts 1998 has only just closed, which most likely means yet more delay, before we see (perhaps) another set of draft amendments for the industry to consider and be consulted on. Those of us in the construction industry have to be a patient lot since we all know how long these amendments have been kicking around!
But I digress. Back to contracts in writing.
I read the judgment in ROK v Bestwood and thought that the parties, their advisors and the adjudicator should all be congratulated for adopting a commonsense approach to the question of whether the parties had a sub-contract (or two) and whether that contract, if there was one, was a “construction contract” within the meaning of section 107. By taking the positive step of issuing proceedings and asking the TCC for a declaration on this point, the parties most likely saved time and money, and, more importantly, avoided a situation where an adjudicator’s decision was not enforceable through a lack of jurisdiction. Akenhead J also thought this was a sensible course of action (see paragraph 12).
I was initially surprised that Bestwood had started CPR Part 7 proceedings, rather than using Part 8 for the declaration (often we see judgments where the parties have used Part 8), but then I realised that it was actually a rather neat idea. If the declaration point went against Bestwood (which it did), it still had its high court proceedings (the adjudication had come to an end through a lack of jurisdiction) and could continue its claim against ROK for outstanding money (some £240,000 odd). That claim may now have to be amended to reflect how the court decided the contract point, but that was also dealt with by the court.
So, while it may have been better if the parties had entered into a contract in writing in the first place, it seems that when they couldn’t reach agreement on what sums were due to Bestwood, or even agree on the terms of their contract, they did the next best thing and asked the court.