Estor v Multifit (UK) Limited [2009] EWHC 2108

This summary was provided by CMS Cameron McKenna LLP.

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

summary

This case concerned the disputed enforcement of an adjudicator’s decision.  The Court held that: where a jurisdictional challenge is dependent on fact and evidence, the Court is only permitted to give summary judgment against the defendant if it considers that the defendant “has no real prospect of successfully defending the claim or issue”.  However, provided that the adjudicator had jurisdiction under a written construction contract, it did not affect his jurisdiction that he decided that the contract contained more terms than those referred to in the Adjudication or Referral Notices.  The Court also held that the adjudicator’s decision regarding responsibility for his fees would have been severable from the rest of his decision so that the latter could still be enforced.

The Technology and Construction Court, Mr Justice Akenhead

Background

Estor Ltd (“Estor”) was the holding company for a group of companies, the Ginger Group (“Ginger”), which ran a chain of beauty salons.  Estor and Ginger were both owned and run by the same individual, Mr Warner.  Hub Design Ltd (“Hub”) was employed to do fitting out works at one of the salons.  The contract with Hub was signed by Mr Warner of “the Ginger Group” and the “Ginger Group” was identified in the contract as the employer.  Hub subcontracted a sizeable part but not all of the works to Multifit (UK) Ltd (“Multifit”).  The works did not proceed smoothly.  Matters came to a head at a meeting where Mr Warner indicated that he had lost faith in Hub.  Hub offered to leave site.  Multifit indicated that it was prepared to finish the job, but it was common ground that no agreement to this effect was reached at the meeting.  Multifit was never provided with a copy of the contract between Ginger and Hub.  A few days after the meeting, Multifit emailed a quotation to Mr Warner.  There followed a meeting between Mr Warner and Multifit, at which Mr Warner undertook to have Estor’s bankers provide a credit reference to Multifit.  After some further communication between Mr Warner and Multifit, Multifit carried out the works.  The parties subsequently fell into dispute and Multifit referred the matter to adjudication.  That adjudication was aborted, however, when the adjudicator resigned because of doubts about whether the Notice of Adjudication was served.  Multifit therefore commenced a second adjudication, in which the same adjudicator was appointed. Two of the issues that the adjudicator was asked to decide were whether or not there had been a contract between Multifit, Estor and Ginger, and, if so, was this a contract in writing for the purposes of s.107 the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”).  The adjudicator found that there was a contract between Multifit and Estor, and that this was evidenced in writing.  He went on to find in favour of Multifit in relation to the other referred issues, and ordered Estor to pay a sum to Multifit, in addition to the lion’s share of the costs and his own fees, which included an element in respect of time he had spent in the abortive adjudication.  
    
Issues

Estor sought declarations that there was no contract in writing between Estor and Multifit.  Multifit sought summary judgment for the enforcement of the adjudicator’s decision.  Estor made five submissions:

  • There was no contract between Estor and Multifit.
  • There was no contract in writing as required under s.107 of the Construction Act.
  • The adjudicator decided that there was a different contract from that identified by Multifit in the Notice of Adjudication or Referral Notice.
  • The adjudicator decided that Multifit’s terms and conditions were applicable and there were unwritten terms in relation to an item of work which Estor had alleged was shoddy.
  • The adjudicator had no jurisdiction to decide that Estor should pay any part of his fee for the abortive adjudication.

Decision

The Court found:

  • Where a jurisdictional challenge is dependant on fact and evidence, the Court is only permitted to give summary judgment against the defendant if it considers that the defendant “has no real prospect of successfully defending the claim or issue”.  In the case at hand there was a realistic prospect of Estor establishing that it was not the company which entered into the contract with Multifit.  The issue could only be resolved by the hearing of oral evidence.  Accordingly, the Court could not give summary judgment in favour of Multifit.
  • Despite Estor’s submission, there was no evidence before the Court that there were matters agreed orally, as opposed to in writing.  As such it was not for the Court to find that there was no written contract for the purposed of s.107 of the Construction Act.
  • As for the next two points argued by Estor, namely that the adjudicator decided that there was a different contract from that identified by Multifit in the Notice of Adjudication or Referral Notice and that Multifit's terms and conditions were applicable, these did not assist Estor.  Provided that the adjudicator had jurisdiction under a written construction contract, it did not affect his jurisdiction that he decided that the contract contained more terms than those referred to in the Adjudication or Referral Notices.  Nor did the mere fact that the adjudicator “got it wrong” in finding that other documents also evidenced the contract undermine his jurisdiction. 
  • In support of his argument that Estor had no real prospect of successfully showing that there was no contract between Estor and Multifit, Counsel for Multifit had tried to rely on Assicurazione Generali SpA v Arab Insurance Group [2003] 1 WLR as authority for the submission that particular weight should be given to the adjudicator’s factual findings as to what the contract was.  The Court rejected this submission, as Assicurazione Generali only set down the approach that the Court of Appeal should take to the factual findings of lower courts.
  • As to the adjudicator’s ruling on his fees, the adjudicator was saying that some of the time he expended on the abortive adjudication was time which he did not have to spend a second time round but which he would have had to do for the purposes of the second adjudication.  This was not an issue of jurisdiction at all. The adjudicator was exercising a discretion under the jurisdiction which he had to decide the issues of costs and fees.  Even if the Court were wrong on this issue then, applying the principle in Cantillon v Urvasco [2008] EWHC 282 (TCC), that part of the decision which dealt with his fee would be severable from the remainder of the decision, and the latter could be enforced.

Having found as above, the Court refused to grant summary judgment as sought by Multifit, on the basis that oral evidence was necessary to deal with the question whether or not the construction contract was between Estor and Multifit.  The Court also refused to grant the declarations sought by Estor and, in the light of the relative weakness of Estor’s evidence, made it a condition of Estor being permitted to defend Multifit’s claim for enforcement that Estor should pay into court the sum of £35,000, which was just over half the amount claimed by Multifit.  Directions for a quick trial were to be given in order for the matter to be resolved at the earliest proper opportunity.

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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