Before I go on let me mention a few things. Lots of people think that this 28-day binding adjudication process is all about quarrels over QS-type problems. What I mean is that the builder says he is due XYZ in his interim account but the employers says tish tosh, then the referee decides who is right. And yes, much of it is that sort of stuff. But it is not so well known that some adjudications start as easy-peasy issues and become heavyweight points of law. This one did. It is called Nolan Davis Limited vs Steven P Catton. It is case number 22 in our adjudication series. Here is the story.
Catton is managing director of Hazel Green Village Management Limited. There are another 10 similarly named companies at the resort. There is nothing odd or doubtful about that. Snag was that you have to somehow keep track of which hat is on which head when it comes to everyday trading.
Anyway, Catton decided he wanted Nolan Davis to carry out some demolition to nine holiday units and also do some new-build work. The Small Works Form, published by the Architects & Surveyors Institute, was used. The appendix described the employer as Hazel Green. That was a mistake. None of the numerous companies have that name. This was discovered when the builder and employer fell out and the builder went to Pye Consulting, which checked out the employer. It found all the other companies but none as names in the appendix of the contract. So, who does it adjudicate with?
Pye Consulting took counsel’s opinion for the builder. The advice pointed to the Companies Act 1985. In essence, it meant that since no company existed by the name in the document, the contract may well be entered into by Catton in person. In part the act says “where a contract purports to be made by a company … at a time when the company has not been formed … then … the contract has the effect as one entered into by the person purporting to act for the company . . . and he is personally liable”. In response Catton said that everyone knew that it was one of the companies and not him.
My guess is that he was a tad disappointed to find that he was liable in person for that whopping sum …
Ordinarily an adjudicator can’t decide his or her own jurisdiction, but in this case the two parties had enough confidence in theirs (the experienced Don Smith) to give him the power to decide who the employer was. I suspect that the 28-day clock on the actual building dispute was stopped while the parties compiled submissions on the intricacies of the Companies Act 1985.
This is not easy stuff, and that’s what I meant when I explain that not all adjudications are mere valuation quarrels. The upshot was that Smith found that he could not slot one of the companies into the frame as the employer. He would need pretty clear evidence to do this, and since there were 11 to choose from I suppose he couldn’t choose. So the outcome was that Catton was liable. That done, the parties got on with the ordinary adjudication on the £203 878.
Catton didn’t want to pay and resisted enforcement in the High Court. His barrister argued a new point. He said that there was no jurisdiction to adjudicate because no contract arose at all. The judge wouldn’t have it. The parties had agreed to be bound by the adjudicator's decision as to jurisdiction and it was therefore open to him to review arguments on the point that no agreement had in fact been concluded. The court gave immediate judgment to the builder since there was no arguable case that the parties were in error as to the identity of whom they were contracting with.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or e-mail him on firstname.lastname@example.org.