Enterprise Managed Services Ltd v East Midland Contracting Ltd [2008] EWHC 727 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

A provision preventing any action or proceeding other than adjudication before the project was certified practically complete was supposedly breached when one party brought court proceedings to reverse the decision of an adjudicator.  As well as again showing its aim to give effect to what it sees as the intentions of the parties to an inadequate agreement, the court showed that the failure to provide certificates in line with an agreement need not prevent the satisfaction of an obligation for certification and so did not prevent the proceedings to attempt to reverse the adjudicator’s decision.

His Honour Judge Stephen Davies – Queen’s Bench Division, Technology and Construction Court


The claimant issued proceedings in an attempt to reverse the decision of an adjudicator, given on 7 September 2006, by which the adjudicator decided that the claimant was obliged to pay the sum of £1,131,668.29 as damages for breach of contract.  In an attempt to defend the challenge to the decision of the adjudicator, the defendant issued an application to the court, seeking a declaration that (i) the court has no jurisdiction to hear the claimant’s claim or should not exercise its jurisdiction if it does have the jurisdiction; and (ii) that the claim should be struck out or summary judgment against the claimant should be given.  The basis for this application was a clause in the sub-contract between the parties that:

“The parties shall not commence any action or proceeding other than adjudication arising out of or in connection with [the sub-contract] until such time as the Main Contract Works have been certified substantially or practically complete”.


The defendant claimed that the proceedings had been brought at a time when the Main Contract Works had not been certified substantially or practically complete and so the claimant was in breach of this clause.  HHJ Davies considered two main questions in his decision:

1. What does “Main Contract Works” mean, as it was not defined anywhere in either the main or sub-contracts?

2. What certification is required under the clause that is quoted above, as there is no reference to any particular certification requirements in respect of completion of works?

Further a number of extensions to the contracts needed to be considered as to what the Main Contract Works included.  Guidance to the main contract set out that “work will be issued under a Contract Order, which may be for a set amount of work to be performed or for all works of a particular nature within a set time period”.


HHJ Davies saw both parts of the defendant’s application as relating to the quoted clause.  Upon reviewing a number of documents including the sub-contract, the main contract and various letters amending the main contract, HHJ Davies decided that the court did in fact have jurisdiction to hear the case by the claimant and that the claimant’s claim had a reasonable prospect of success which thus prevented HHJ Davies from striking out the claim or giving summary judgement.

The failure of the various contracts to adequately define (i) the term Main Contract Works and (ii) the requirement of certification, meant that HHJ Davies had to determine the intention of the parties from various other wording in the documentation presented.  The sub-contract did not incorporate the main contract but it was held that the terms of the main contract were an important part of the “relevant factual matrix”.  HHJ Davies concluded that the expression Main Contract Works means work under any project performed by the claimant under a contract order issued under the main contract (whether before or after a contract extension) where work was also ordered by the claimant from the defendant under the terms of the sub-contract.

HHJ Davies then looked to the issue of certification.  The main contract gave a definition of Project Completion Certificate, which was “a certificate authorised by the Manager which shall identify that all the Works comprising a Project and all the Work Documents have been completed”.  No certificates had been issued during the construction, despite requirements for certification under the main contract.  A track-sheet was issued with a job card for each job, which was then checked by the employer’s manager.  HHJ Davies accepted that the contract only envisaged the authorisation by the employer’s manager not the actual issue of a formal certificate.  The fact that the track-sheets were not signed when accepted by the employer’s manager was irrelevant as the failure by both parties to request and provide the necessary certificates effectively meant that they had waived the need for their issue.  The employer’s manager would authorise the track-sheet and pass it for payment, which was then made against these track-sheets.  HHJ Davies felt that this was sufficient certification for the purposes of the quoted clause.  There was, thus, no reason why the claimant could not begin proceedings as the quoted clause no longer had any effect.

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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