The claimant, Galliford Try Construction Limited, was the contractor for the redevelopment of the Wellesley Hotel in Wellington Road, Leeds, into residential apartments. Michael Heal Associates Limited provided pre-tender structural engineering services to the original developer. The development was completed on a design-and-build basis, and the appointment of Michael Heal Associates was transferred by novation to Galliford. An adjudicator's decision dated 14 October 2002 decided that Michael Heal was negligent and should pay the sum of £722,586 to Galliford. Michael Heal was in voluntary liquidation by the date of the judgment. Michael Heal resisted enforcement on the following grounds:
A number of questions arose, namely, whether:
  • A construction contract had been concluded in respect of the post-tender services
  • The contract was in writing
  • There had been a without reservation submission to adjudication
  • Heal was estopped by representation or convention from denying that the adjudicator had jurisdiction; and
  • There was any significance in Galliford changing its position with regard to the basis of the contract.

    • Reference

    There was a course of correspondence in respect of the agreement between the parties. HHJ Seymour QC held that neither party had had any intention of entering into a binding agreement until they had completed a formal ACE Agreement. Therefore, there was no contract at all. In respect of the disputed items there was a further course of correspondence between solicitors discussing the documents, the potential for adjudication, mediation, and the novation agreement. His Honour held that there was an agreement to adjudicate, without a reservation, and so there was a submission to adjudication. Therefore, there was no need to consider whether there had been an estoppel. In respect of Galliford's change of position, he considered that:

    "Galliford had changed its ground and abandoned the convention that the contract upon which it succeeded in the adjudication was ever made. Galliford thus seemed to be playing fast and loose with the process of adjudication, shifting its ground opportunistically to meet the challenge of the moment."

    This he considered was an abuse of the adjudication process. He went on to refuse enforcement, not on that ground, but on the ground that as there had been no contract (and while there was an agreement to refer the matter to adjudication) the adjudicator's jurisdiction was only binding until finally determined, and His Honour determined that as there was no contract the decision was no longer binding the moment he declined to enforce it.

    *Case details
    Galliford Try Construction Limited vs Michael Heal Associates Limited, 1 December 2003, TCC, HHJ Richard Seymour QC

    For further information, call Tony Francis or Nicholas Gould on 0207 956 9354

    www.fenwick-elliott.co.uk

    Postscript

    It is not unusual in construction disputes to find that some time is needed in order to investigate whether a contract has actually formed. This is one of those cases. The judge concluded that a contract had not formed, and therefore the adjudicator had no jurisdiction because there was no contract. The judge also made it clear that he was not at all happy about one of the parties continuing to change its position, as he saw it, in order to put forward an argument that appeared most favourable to that party regardless of the reality of the situation.