Supreme Court rules contractor can claim maximum of €15.3m on deal

THE Supreme Court has ruled a binding contract exists under which a building contractor was to be paid a maximum €15.3 million to construct a housing scheme in Co Wicklow.

The three judge court yesterday overturned a High Court finding there was “no concluded contract” between McCabe Builders (Dublin) (MCB) and three companies in the Hanly Group of companies — Sagamu Developments, Laragan Developments and Hanly Group — relating to construction of the housing scheme at Rocky Valley, Kilmacanogue.

The result of the High Court decision was both sides were left with the uncertainty of an unquantified claim, the Supreme Court said. If there were no contract, there was no reason to limit MCB to the e15.3m sum set out in documents and the entitlement to payment was to be assessed on a merit basis.

In the High Court, Mr Justice Peter Charleton held there could be no concluded contract on grounds there was no agreement between the sides on the essential terms of the contract but he also directed MCB was entitled to “reasonable” remuneration at 2005 prices for works done.

The issue in the case was whether the sides ever concluded a contract for the building by MCB for e15.3m of some 32 houses and 14 apartments at Kilmacanogue. In his Supreme Court decision, Mr Justice Nial Fennelly noted the Hanly Group contended the contract consisted of a series of contractual exchanges between the sides and the works carried out were to be defined according to descriptions set out in one of the tender documents, the Bill of Approximate Quantities (BAQ).

The BAQ stated the contractor “shall properly execute the works whether or not shown on the drawings or described in the BAQ”.

Mr Justice Fennelly noted both sides had embarked on the High Court case asserting there was a contract but differing as to what contractual documents governed their relationship. In those circumstances, it was “striking” the High Court had found there was no binding contract.

He ruled the sides went through three distinct phases of contractual negotiations. It was “indisputable” both sides wished their agreement for this very substantial development contained in a formal written agreement.

The courts should seek to give effect to the apparent intentions of parties to enter into binding contracts.

He ruled there exists a binding contract between MCB and Sagamu set out in a document signed by the sides in November 2005 and January 2006, together with a letter from the Hanly Group of August 5, 2005, with various documents enclosed and signed on behalf of MCB on August 8 2005.