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The facts

In 2016 USL was engaged to carry out bridge expansion joint replacement works on the A1 viaduct in Gateshead. During 2017 USL made enquiries of Sanders for the delivery and supply of the concrete required for the expansion joints. 

There was a telephone conversation on 21 February 2017 but the contents of this discussion were disputed and, in particular, Sanders did not accept that during this conversation USL had specified M50 grade concrete. That this grade was required was, however, confirmed in an email from USL to Sanders the following day. Sanders said it telephoned in reply to the email to explain that it could not provide M50 but could provide ST5 grade concrete, which was of a lesser strength. 

On 23 February 2017 USL issued a subcontract order to Sanders which specified M50 concrete and proposed a price per cubic metre and a delivery charge. There were some further telephone discussions that did not touch upon the specification of the concrete but Sanders did not issue any written response to the subcontract order. 

On 7 March Sanders delivered the concrete to the site and USL鈥檚 foreman signed a delivery note that set out Sanders鈥� terms and conditions. The method of delivery involved the concrete being poured direct from the concrete mixer lorry into the channel that formed the expansion joints. 

Neither USL鈥檚 subcontract order nor Sanders鈥� delivery note included express provisions for adjudication.

The concrete delivered was ST5 grade which was found to be unfit for purpose and the expansion joints had to be broken out and replaced. USL commenced adjudication and in a decision issued during April 2019 the adjudicator found there had been a breach of contract by Sanders and awarded USL 拢52,529 in damages. 

Sanders did not pay and raised two jurisdictional objections. First, it contended that the adjudication was commenced under the wrong contract, where, absent any written response to USL鈥檚 23 February subcontract order, there was no acceptance and thus no concluded agreement on USL鈥檚 terms. It followed that Sanders鈥� delivery note comprised an offer to supply ST5 grade concrete, which was accepted upon delivery when the delivery note was countersigned by USL鈥檚 foreman. 

Secondly, Sanders argued that the Construction Act did not apply because delivery of the concrete did not comprise 鈥渃onstruction operation鈥� in accordance with section 105 where section 105(2)(d) excluded agreements for the delivery to site of components, equipment, materials, plant or machinery, unless the agreement also provided for their installation. Sanders said there had been no installation and pointed out that the subcontract order did not include any reference to installation or a rate or price for installation. 

The issue

Should the adjudicator鈥檚 decision be enforced?

The decision

The judge had little hesitation in finding for USL on the contractual question. She said it was entirely clear that USL鈥檚 subcontract order had been accepted by conduct through the delivery of the concrete to site. Although Sanders鈥� delivery note did include different terms, it was produced too late to stand as a counter-offer given the unchallenged evidence from USL that the note was presented to its foreman after the concrete had been discharged from the mixer lorry. 

Regarding Sanders鈥� second point, the judge said it was clear that roadworks per se would fall within the definition of 鈥渃onstruction operations鈥� as described in section 105(1) of the Construction Act. The question to be determined was whether or not the subcontract made between USL and Sanders fell within the exception set out in section 105(2)(d) as being an agreement for delivery only. While accepting that in order to avoid the concrete setting, the act of delivery and the pouring of the concrete are usually simultaneous, the judge rejected USL鈥檚 submission that if delivery and installation were indivisible, pouring must have involved some element of installation. The judge found that the word 鈥渁lso鈥� within section 105(2)(d) required some separate act and accepted Sanders鈥� argument that the pouring of the concrete was part of the delivery and did not amount to an additional and discrete act of installation involving work on or related to the concrete itself. 

As a delivery-only agreement the subcontract order did not encompass 鈥渃onstruction operations鈥� and the Construction Act did not apply.

Commentary 

It is surprising this issue has not arisen before. Albeit concerning concrete delivery, the judge鈥檚 conclusions include the general principle that when considering the section 105(2)(d) exception, the word 鈥渋nstallation鈥� need not be given a narrow construction but must involve some form of work done to the materials after delivery. 

Ted Lowery is a partner at Fenwick Elliott