The Supreme Court has allowed an appeal over a building contract for a development of 32 houses and 14 apartments at Rocky Valley, Kilmacanogue, County Wicklow. It declared that a binding contract existed between McCabe Builders (Dublin) Limited and Sagamu Developments Limited, with its terms set out in the signed RIAI form, an August 2005 letter and documents incorporated into that letter.
The dispute centred on whether descriptions of the work in a Bill of Approximate Quantities formed part of the contract. The Hanly Group companies argued that those descriptions helped define the contractor’s obligations. McCabe Builders maintained that the signed RIAI form excluded the bill from the contract except as a schedule of rates.
The tender process began in 2005 for a project at Rocky Valley. McCabe Builders submitted a tender of €17,222,620, which was reduced after negotiations. In an August letter, John Hanly recorded an agreement for a fixed price of €15.3 million plus VAT and referred to the specification and Bill of Quantities. The letter was signed on behalf of McCabe Builders on 8 August. A formal RIAI contract was later signed on behalf of both parties, on 24 November 2005 and 19 January 2006.
The High Court had found that the parties were not in agreement on the contract’s central terms. It held there was no concluded contract and that McCabe Builders should instead receive reasonable payment on a quantum meruit basis. The developer group appealed.
In the Supreme Court, Mr Justice Fennelly said the parties’ exchanges showed an intention to enter a binding written agreement. He concluded that the RIAI form did not fully describe the works for which McCabe Builders had tendered and which the parties had agreed to carry out for the negotiated price. The August letter and the bill were relevant to identifying those works, he held, and the contract was intended to include work described directly or indirectly in the August correspondence.
The Court allowed the appeal and declared that a binding contract existed between McCabe Builders and Sagamu Developments Limited. The declaration covers the RIAI Articles of Agreement and Conditions of Contract, signed on the stated dates, together with the 5 August letter, signed by McCabe Builders on 8 August, and the documents referred to and incorporated in it. The judgment does not state a new payment order or determine the value of any work under the contract.