Gibson v Imperial Homes [2002] FWHC 676 QBAT 1353

This summary was provided by CMS Cameron McKenna LLP.

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A person may sue on a contract entered into in the pre-formation stage of a company on his own behalf and on the part of the company under s.36C(1) of the Companies Act 1985. The Adjudicator's jurisdiction therefore extends to cover circumstances where an adjudication is commenced by such a person.

John Toulmin QC, Technology and Construction Court

27 February 2002

A company, CD, applied for planning permission to develop a property in London. A further company, CN, wrote to I at the same address as CD to confirm that it would be acting for the employer's agent on the development project. A reply sent on I's headed paper, confirmed CD's appointment, but asked that invoices or accounts be made out in the name of CD as the property was in that name.

CN wrote to G, pre-supposing that G had traded as the limited company "Gibson Construction Limited", to confirm on his client, I's, behalf that he could go ahead with the works as principal contractor. G was in fact trading as a sole trader under the name "Gibson Construction". Work started almost immediately.

3 months later, G registered a company in the name of "Gibson Construction (UK) Ltd". A dispute arose as to payment and G, as an individual, referred it to adjudication under s.108 of the HGCR Act 1996 and the Scheme for Construction Contracts.

I reserved its position on the merits of the case, but argued that the Adjudicator lacked jurisdiction in that the parties before the adjudicator were not parties to any contract. The adjudicator rejected that argument and made an award in favour of G.

G sought to enforce the adjudicator's decision by way of an application for summary judgment. I argued that it had a real prospect of establishing that G was not party to any underlying contract and that there was a question as to whether CN had believed it was or had intended to contract on behalf of I or CD. This could not be resolved on a summary judgment application.

The judge referred to s.36C(1) of the Companies Act 1985 which allows a person to sue on a contract entered into in the pre-formation stage of a company on his own behalf and on the part of the company. Furthermore, the ostensible authority of CN was a matter of merit which should be left to the adjudicator. The defendant therefore had no real prospect of successfully defending the claim, and therefore summary judgment was granted.

A person may sue on a contract entered into in the pre-formation stage of a company on his own behalf and on the part of the company under s.36C(1) of the Companies Act 1985. The Adjudicator's jurisdiction therefore extends to cover circumstances where an adjudication is commenced by such a person.

This summary was provided by CMS Cameron McKenna LLP.

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

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