Construction Case Update - Adjudication - Part 3 of 2018

• It would be an overly technical approach to the identification of the dispute referred for the Court to insist that the contract must be precisely as particularised in the notice of intention to refer. Further it was not in accordance with the spirit it of the Act to do so. The same point answered the submission that the adjudicators acted under a second contract. They did not. They decided the dispute referred to them as more fully set out in the course of the adjudication. • Support for the view that the adjudicator had jurisdiction though the contract was misdescribed was found from the judgment of Stuart-Smith J in Purton v Kilker Projects Ltd. 11 • In respect of PKM, there was never an issue that PKM was a party to the contract with Ideal. The issue of novation was only addressed in response to Ideal’s jurisdictional challenge. If there was no novation then the dispute arose under the admitted tripartite contract. Only the reference to the contract being with MHCL provides Ideal with any defence. The notice of intention to refer misidentifies one of the three parties, but not one of the parties to the adjudication, and the misdescription had no relevance to the substantive dispute. PKM was entitled to judgment. Even if the Court had been satisfied there had been a novation it would have given summary judgment. Comment Adjudications involving contested novation can and do give rise to difficulties on enforcement, as this case shows. The interest in this case lies in the absence in the notice of intention of any details of the contract from which the dispute arose. The Court adopted a purposive approach and decided this was not fatal to the validity of the notices, nor did it deprive the adjudicators of jurisdiction. The notice of intention to refer did not need to expressly identify as a separate procedural requirement, the contract under which the dispute arose though as the Court pointed out that in describing the dispute it would often be the case that the contract was identified. Though not necessary it is no doubt good practice to identify the contract in the notice. It is also worthy of note that whilst a misdescription in the notice as to the parties to the contract was not relevant, a misdescription of the parties to the adjudication might have had very difference consequences. 5. Jurisdiction—oral contracts Dacy Building Services Ltd v IDM Properties LLP 12 The preliminary issue in this case concerned whether a contract had existed between two parties to an adjudication, where the contract was alleged to have been made orally. A contract was entered into between an employer and HOC (UK) Limited (“HOC”) as the main contractor on a mixed use development project in London. The defendant (“IDM”) was the Employer’s Agent. HOC ran into financial difficulties during the project with sub-contractors having left site due to non-payment by HOC and the project was in delay.

HOC had previously engaged the claimant (“Dacy”) on other projects with Dacy leaving its last project being owed approximately £17,000 by HOC. HOC’s senior construction manager contacted Dacy to see if it would be involved in the struggling project, knowing that Dacy would not contract with HOC due to its previous non-payment. Contemporaneous evidence showed that discussion had taken place between HOC and IDM about an IDM company, of which there were many entities, contracting directly with sub-contractors to complete the project. Dacy came to site on 3 December 2015 and a short meeting took place in a bus shelter adjacent to the site with Mr Keran of Dacy, HOC’s senior construction manager and Mr Mcloughlin of IDM. It was Dacy’s case that an oral contract was formed between Dacy and IDM at that meeting. IDM contended that the meeting was a casual “meet and greet” which came about by chance. Dacy continued to work on the project from this date. Dacy submitted applications for payment to HOC for approval with HOC passing the paperwork to IDM for processing and payment after HOC had approved the amounts. The first three invoices were fully paid but the second three were not. Dacy left site in May 2016 and subsequently commenced adjudication for the balance of the value of the performed works. At adjudication, IDM’s consultant asked the adjudicator to resign on the basis that there was no contract between the parties and consequentially there could be no dispute. Thus, the adjudicator would have no jurisdiction. In his decision, the adjudicator set out that there was an oral contract between the parties and he had jurisdiction. He decided that IDM were liable to make payment to Dacy. Dacy applied for summary judgment on the enforcement of the decision and the application was resisted by IDM on the basis that the adjudicator lacked jurisdiction. Jefford J held that IDM had a realistic prospect of succeeding on its defence of there being no contract and ordered a trial on that specific issue. This issue came before Fraser J who agreed with Dacy’s argument that there was a valid oral contract between Dacy and IDM formed at the meeting on 03 December 2015. This was based on consistent and reliable evidence from Dacy and HOC that it made complete business and common sense for Dacy not to contract directly with HOC. It followed that the adjudicator’s decision was reached with jurisdiction and Dacy were entitled to judgment. The Court supported Coulson J’s comments in Penten Group Ltd v Spartafield Ltd 13 that the courts should give adjudicators “latitude” in grappling with the difficulties of dealing with all of the issues within the limited timetable for adjudication. Fraser J held that it is rarely justifiable that a trial of issues is necessary in an adjudication enforcement application, even on the question of the existence of a contract.


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