Clerkenwell sought summary enforcement of an adjudicator’s decision. In Part 8 proceedings, HG sought a declaration that there was a binding agreement between the parties as a result of email correspondence on 8 February 2023, the effect of which was to revise the contractual completion dates by extending them generally by 12 weeks. The adjudicator had failed to take account of those revised dates and the decision, therefore, contained an error of law such that it should not be enforced.
The project was for the design and construction of a new 153-room hotel and 9 new-build affordable apartments. The contract was based on an amended JCT Design and Build Contract 2016. During the project, delays occurred. Following discussion, the Employer’s Agent (“EA”) emailed HG. The email said that it was an update on the “two Extensions of Time” (“EOTs”). It concluded:
“As previously discussed, a 12 week EOT has been agreed with the client. I understand James is drafting a letter to formalise your request (including the proposed section completion date for the residential), so we will issue the EOT once received.”
On 8 December 2022, in reply, HG requested an EOT of 12 weeks and said: “Should this request be granted, there would be a revised Practical Completion date for the hotel of 15 September 2023 and for the affordable apartments of 18 August 2023.” On 1 February 2023, the EA emailed HG stating that, following the email of 7 December 2022 and a subsequent conversation:
“I have now spoken to the client and have approval to put forward the following proposal in relation to the on-going Party Walls matters and your two Extension of Time requests.”
That was followed by the email exchange on 8 February 2023, including an email with the following terms:
“… the final proposals for the EOTs are as follows …
In consideration of the above [proposals], we will issue the following EOTs:
- Hotel Contract – 12 weeks. Revised PC date of 12 September 2023 …
- Office Contract – 10 weeks. Revised PC date of 28 April. Note: Doesn’t currently include any delay as a result of the scaffold / Party Wall addendum, as this will be issued separately once the full extent has been established.
We trust the above is acceptable and would appreciate a prompt response in order that we can issue the formal paperwork this week.”
HG replied the same day saying: “Thanks for issuing and I can confirm agreement.” On 9 February 2023, the EA wrote to HG, referring to the letter of 8 December 2022 requesting an EOT, and saying:
“Having assessed your request, and in accordance with clause 2.25 of the Building Contract, we hereby grant an Extension of Time for a period of 12 weeks.”
The letter stated that the extension was granted having due regard to two Relevant Events and provided that:
“This Extension of Time has been issued subject to the terms of our email dated 8 February 2023, which were accepted by HG Construction on the same date.”
Delays continued and, following the issue of the relevant non-completion notices, Clerkenwell ultimately claimed to be entitled to a further £1.1 million as liquidated damages.
In the Part 8 proceedings, HG said that there was a binding agreement between the parties as a result of the email correspondence on 8 February 2023, which the adjudicator failed to take account of. It would be “unconscionable” to enforce the decision, which did not reflect the true position.
Jefford J noted that HG was obviously right that the emails in December 2022 and February 2023 referred to agreeing an EOT and used “the language of agreement.” However, the judge also considered that the word “agree” was being used in the sense of being prepared to, or willing to, do something, rather than indicating an intention to enter into a legally binding agreement.
Following the December discussions, once the period of extension was agreed, the EA asked HG to make an application for an extension of time and said that he would then grant it. In other words, “the parties were agreeing how they would operate the contractual mechanism and not that they would enter into some free-standing and binding agreement to revise the completion dates.”
That position did not change, and the contractual mechanism was operated in February 2023 when the EOT was granted. The proposal in the email of 8 February 2023 was far more complex than a simple binding agreement to revise the completion dates by extending them by 12 weeks, which had nothing to do with any particular Relevant Events. The judge considered that it was “impossible” to see the apparent offer to issue an EOT of 12 weeks as an offer to enter into a binding agreement to revise the completion dates by 12 weeks outside the confines of the contractual mechanism for extensions of time.
Even if there was supposed to be a binding agreement, it lacked certainty. The application for an EOT made on 7 December 2022 relied on four Relevant Events. The EOT granted, however, was in respect of only two of those Relevant Events. Nothing was said about the other two matters relied on by HG. If HG was correct and the agreed revised completion dates had nothing to do with Relevant Events, then what was being agreed? Did it remain open to HG to claim a further EOT relying on those four (or two) Relevant Events, or was any such claim compromised by the alleged agreement?
And whilst subsequent conduct may be relied upon as evidence of whether there was a contract and what its terms were, here neither party had conducted itself as if there were a binding agreement. Further, HG had not, in the adjudication, argued or drawn the adjudicator’s attention to the fact that there was this alleged binding agreement. The judge was therefore satisfied that there was no binding agreement made on 8 February 2023.
In addition, the judge noted that the EA lacked authority to enter into a binding agreement on behalf of Clerkenwell. Article 3 of the contract defined the scope of the EA’s authority, which did not extend to entering into further contractual agreements being limited to the exercise of the functions of the employer or the EA under the contract.