C N Associates v Holbeton Ltd [2011] EWHC 43 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes


 (a) Where it was clear from all the circumstances that the responding party to an adjudication had reserved it rights with regards to the jurisdiction of the adjudicator, then the reservation would be effective notwithstanding the fact that there was no express reservation in terms. (b) If an adjudicator is given the power by the parties to make a decision as to his own jurisdiction, then in order to be effective his decision on that issue must be set out in terms.  

Technology and Construction Court, Akenhead J


In March 2004 the claimant (“CNA”) was engaged by Bright Services Ltd (“BSL”) to act as project manager for works to a substantial domestic property in London pursuant to a contract formed by an exchange of letters.  The defendant (“Holbeton”), a company registered in the Isle of Man, was the owner of the property.  At the request of BSL, CNA’s invoices were addressed to and paid by Holbeton and there was an apparent overlap of personnel between Holbeton and Bright.  In June 2005 solicitors for Holbeton sent CNA a draft formal appointment to be executed as a deed.  CNA responded with a number of comments on the draft appointment, but nothing further happened in relation to the draft and the deed was never signed.  Three years after the project was completed CNA wrote to Holbeton seeking payment of the balance of its fees in the sum of £155k inc. VAT.  Holbeton refused to pay, and CNA referred the matter to adjudication, naming Holbeton (and not BSL) as the responding party.  The Referral proceeded on the basis that BSL had acted as agent of Holbeton with authority to negotiate the terms of the appointment of CNA on Holbeton’s behalf.  It was then asserted that the correspondence in June 2005 in effect varied the agreement between the parties, the alterations being those set out in CNA's letter in response to the draft appointment which were said to have been accepted by Holbeton by conduct.  In its response, Holbeton alleged that it was not in fact party to a contract with CNA and that the adjudicator therefore lacked jurisdiction with respect to the alleged dispute involving Holbeton.  Having considered the issue of jurisdiction, the adjudicator informed the parties that he was continuing with the adjudication and subsequently awarded CNA the sum of £104k plus VAT.  Holbeton refused to pay up.  Before seeking to enforce the adjudicator’s decision by way of summary judgement, CNA first obtained a freezing order, which remained in place at the time that the enforcement proceedings were heard.    


The Court was asked to address the following issues:

  • Whether the parties had agreed that the adjudicator was to be given jurisdiction to decide the issue of his own jurisdiction
  •  If the parties had not so agreed, whether in fact the adjudicator had jurisdiction anyway because Holbeton had failed to reserve its position as to jurisdiction.
  • In the event that a valid reservation had been made, whether or not the adjudicator in fact lacked jurisdiction on the grounds that Holbeton was not a party to a contract with CNA.  This involved answering three questions: (1) Did BSL act as agent for Holbeton in March 2004? (2) Did the June 2005 correspondence create a contract between Holbeton and CNA (if there was not one before)? (3) Was the June 2005 correspondence evidence of a variation of a contract between Holbeton and CNA?   


The Court held:

  • An express agreement to give an adjudicator jurisdiction to decide the issue of his own jurisdiction will fall into the normal category of any agreement; it simply has to be shown that there was an express agreement.
  • For there to be an implied agreement giving the adjudicator such jurisdiction, one needs to look at everything material that was done and said.  One of the principal ways of determining that there was no such implied agreement is if a clear reservation was made by the party objecting to the jurisdiction of the adjudicator.  Although a reservation of rights will generally take the form of express words, this will not always be the case and it will be a matter of interpretation in all the circumstances as to whether a reservation was made.  A waiver will arise where a party who knows or who should have known of grounds for a jurisdictional objection participates in the adjudication without any reservation.
  •  There was no express reservation of rights by Holbeton but it did unequivocally state in its Response and Rejoinder that the adjudicator did not have jurisdiction.  Construed objectively, this constituted an effective reservation of rights.
  • Given this reservation, it was unnecessary to consider the issue of whether the parties had agreed to give the adjudicator jurisdiction to decide on his own jurisdiction.  However, it was not wholly irrelevant to consider how the adjudicator addressed the issue.  He did not actually decide the jurisdictional issue but merely expressed a rationalisation as to why he had previously thought that he had jurisdiction.  The adjudicator had not in fact made a declaration about his jurisdiction in terms, and as such, even if the parties had agreed to give him jurisdiction to decide his own jurisdiction, it could not be said that he had exercised it.
  • It was simply not possible on the basis of the limited evidence available on an application for summary judgment to determine whether or not BSL acted as agent for Holbeton or the contractual status of the 2005 correspondence.  Summary judgment would therefore not be ordered.  However, as Holbeton had only just passed the threshold for securing permission to defend, permission to defend would only be allowed if Holbeton paid the full amount of the claim into court within 14 days.  The payment into court, if made, would also have the effect of enabling the court to discharge the freezing order against Holbeton. 

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes


Click here to read full-screen | Click here to print the case