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Does an adjudicator have jurisdiction to decide who the parties to a particular contract are?

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13/01/2017

Dacy Building Services Limited v IDM Properties LLP [2016] EWHC 3007 (TCC)

The TCC has declined to enforce an adjudicator’s decision because it found that the party seeking to resist enforcement had a realistic prospect of succeeding in its defence that it had not entered into the contract.

An adjudicator does not have jurisdiction to determine the identity of the parties to a particular contract.

However, the Court confirmed that, where it is clear that a contract existed between two parties, then an adjudicator can decide what the terms of that contract are.

Facts

  • in September 2014 O’Loughlin Leisure Ltd (“O’Loughlin“) and HOC (UK) Ltd (“HOC“) entered into a main contract for a mixed use development in Camberwell
  • the Employer’s Agent was Mr Walder of IDM Properties LLP (“IDM“)
  • O’Loughlin was a joint venture with Fastmild Ltd (“Fastmild“). Fastmild was a subsidiary of IDM Investment Holdings Ltd (“IDM Investment“)
  • Dacy Building Services Limited (“Dacy“) was a subcontractor to HOC on another project
  • HOC began to experience financial difficulties. Dacy was aware of such difficulties because of Dacy’s working for HOC on another project
  • O’Loughlin and Fastmild arranged for IDM Construction London Limited (“IDM Construction“) to manage the Camberwell site (so as to promote cashflow down the supply chain in light of HOC’s financial difficulties)
  • as independent quantity surveyor, Mr Taylor, was also engaged by O’Loughlin and Fastmild to approve payments on behalf of HOC. IDM Investment would then pay the subcontractors directly rather than making payment to HOC
  • on 3 December 2015 Mr Keran of Dacy met with Mr McLoughlin, HOC’s managing director, about Dacy being engaged to carry out some work at the Camberwell site. They met at a bus station which was close to the Camberwell site. The issue between the parties was the nature of this meeting
  • Mr Keran said that the meeting had been prearranged through Mr Cutmore, who was the foreman/project manager for HOC, and that he and Mr McLoughlin discussed that IDM would be taking over the site and that IDM would pay all contractors. Mr Keran said he asked expressly who he was going to be working for and who would pay him and Mr McLoughlin said he would be working for IDM and IDM would pay
  • on the basis of this meeting, Mr Keran and Dacy, argued that an oral contract had been concluded with IDM for the provision of sub-contract labour on the project
  • by contrast, Mr McLoughlin said that the meeting on 3 December 2015 had not been pre-arranged. He said that he had met Mr Keran and Mr Cutmore by chance in the bus station. Mr Cutmore had introduced Mr Keran as a sub-contractor who was already providing labour on site. Mr McLoughlin said that Mr Keran had indicated that he would like to work for IDM and they discussed other jobs that IDM was involved with. Crucially Mr McLoughlin’s position was that at no point had he indicated that Dacy would be working directly for IDM on the Camberwell project
  • the parties did not dispute that after this meeting, Dacy supplied labour plant and materials to the Camberwell project. The parties disagreed as to whether Dacy had been working as a subcontractor of HOC, or directly for IDM
  • IDM did not pay several of Dacy’s invoices, and Dacy commenced adjudication for payment
  • the adjudicator found that there had been an oral contract between Dacy and IDM and ordered that IDM make payment to Dacy of the full sums invoiced
  • IDM did not pay and Dacy commenced enforcement proceedings in the TCC
  • IDM resisted enforcement on the basis that the adjudicator lacked jurisdiction. IDM’s position was that there was no contract between it and Dacy and there could therefore be no dispute between it and Dacy capable of being referred to adjudication.

The TCC’s Decision

The TCC said that the key issue to be decided was whether IDM had a realistic prospect of success in its defence that it had no contract with Dacy.

If there was no contract, then the adjudicator did not have jurisdiction to determine the dispute.

The Court commented that if all contractual exchanges have been between parties A and B, it may be difficult to say the least, for party B to then contend that the contract was between party A and party C.

However, there was a direct conflict of factual evidence here between Mr Keran and Mr McLoughlin.

The Court considered the contemporaneous correspondence between the parties during December 2015 and found that there was no consistency in the issuing of instructions to Dacy. Dacy appeared to have been instructed to carry out works by both IDM and HOC.

These ambiguities in the available evidence meant that it was simply not clear which parties had entered into the Contract. The case would turn on the facts and evidence. For this reason it was not the kind of dispute which could be resolved on a summary basis. The Court made clear that it was not making any findings of fact, but simply could not decide the dispute in the limited context of adjudication enforcement proceedings.

The adjudicator’s decision was therefore not enforced, and IDM was not required to make payment to Dacy.

Comment

This case is a reminder of the need to make clear which parties are entering into a contract. If there is any scope for dispute as to the identity of the parties, then adjudication might not be an appropriate forum to resolve the dispute, and court proceedings or arbitration should be considered instead.

Contacts