Lead Technical Services Ltd v CMS Medical Ltd [2007] EWCA Civ 316

This summary was provided by CMS Cameron McKenna LLP.

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

There are exceptional cases where adjudicators’ decisions are not readily enforced by the courts. These include where it is appears that the wrong body appointed the adjudicator, or the adjudicator decided a dispute under the wrong construction contract.

In Lead Technical Services Ltd v CMS Medical Ltd a consulting engineer brought an adjudication to recover around £84K in fees that were allegedly owing. The engineer was successful in the adjudication, and sought to enforce the adjudicator’s decision by way of a summary judgment application.

Summary judgment (which is the usual vehicle for enforcing adjudicators’ decisions) will be granted where the court is of the view that the defendant has no real prospect of defending the relevant claim or issue. As adjudicators’ decisions are not susceptible to challenge on the basis of error of law, fact or procedure (with the exception of failure to afford natural justice), a defendant will not usually have any real prospect of defending summary judgment proceedings. In the limited circumstances in which there is a real prospect of defending an application to enforce an adjudicator’s decision, summary judgment will be refused, but the case will then go to a full hearing (i.e. with evidence, cross-examination etc) as to whether the adjudicator’s decision should be enforced.

Summary judgment refused

Although in Lead Technical Services summary judgment was initially granted by the trial judge (i.e. the adjudicator’s decision was enforced), the Court of Appeal reversed this decision. Why was this?

Wrong contract and wrong appointing body: the adjudicator decided that the “construction contract” which applied between the parties was an agreement entered into in November or December 2002. The adjudication procedure under this contract contemplated the ICE appointing the adjudicator, as actually happened in this case. However, the parties had also signed a Deed of Appointment in September 2003, which applied different adjudication rules (the TeCSA rules). Both the adjudicator and the trial judge thought that the Deed of Appointment was not binding between the parties, on the basis that it was not a concluded agreement. But the Court of Appeal suggested the evidence strongly pointed the other way. In other words, it appeared that the adjudicator had applied the wrong contract and that the wrong body appointed the adjudicator.

Oral agreement: there was credible evidence that the parties had entered into an oral agreement that the consulting engineer’s fees be capped at £20K. If there was such an oral agreement, the contractual relationship of the parties would be partly written and partly oral, thus falling outside the definition of “construction contract” for the purposes of the Housing Grants, Construction and Regeneration Act. It might be added, however, that even if parties to a project have entered into a contract to which the Act does not apply, but the contract expressly contemplates there being an adjudication, the parties will nevertheless be bound by that adjudication procedure.

What this case demonstrates is that if, in summary enforcement proceedings, there is credible evidence which throws doubt on the jurisdictional foundation of an adjudication, the court will refuse to grant summary judgment. This does not mean, however, that the adjudicator’s decision is unenforceable. It simply means that the enforceability of the adjudicator’s decision will be left for another day – when all of the evidence is before the court.

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