Construction contract — Project to install CCTV systems — No written acceptance of tender — Verbal instruction to carry out project — Alleged repudiation of contract — Reference to adjudicator — Whether contract in writing — Whether adjudication clause surviving repudiation — Whether notice of adjudication abuse of process — Application dismissed
The defendant was a building contractor experienced in installing closed circuit television (CCTV) systems. In 2000, the claimant held a franchise for the operation of train services in Kent. SC, a company in the same group held a similar franchise in Sussex. Both companies were engaged in a project to install CCTV at their stations. In February 2000, Condes, an architect acting on behalf of the claimant and of SC invited the defendant to tender for the project and enclosed a draft agreement. Minutes of a meeting between Condes and the defendant recorded that the claimant and SC had given Condes a verbal instruction that the project was to be carried out immediately. No written order was issued by the claimant and no contract was signed.
When SC was acquired by another company, the claimant instructed the defendant to stop work on the project until further notice. The defendant claimed against Connex in respect of materials it had purchased for the project, arguing that Connex had repudiated the contract and that it had accepted that repudiation. It subsequently served a notice of adjudication. However, both the claimant and SC applied to the court for declarations under CPR, Part 8 that: (i) there was no agreement in writing within the meaning of section 107 of the Housing Grants, Construction and Regeneration Act 1996; (ii) the defendant had no right to refer a dispute to adjudication under section 108 of the Act; and (iii) the notice of adjudication was an abuse of process. SC settled its claim before the hearing.
Held: The application was dismissed.
The original contract was a single contract involving the claimant, SC and the defendant. It was manifestly not parliament’s intention to exclude an agreement from the jurisdiction of an adjudicator solely because it contained implied terms. The fact that there was no written acceptance of the defendant’s tender was irrelevant. An oral acceptance containing terms had not been suggested. In any case, there was a brief reference in the minutes of the meeting to the effect that the project was to be carried out immediately: RTJ Consulting Engineers v DM Engineering (Northern Ireland) Ltd; [2002] EWCA Civ 270; [2002] 1 WLR 2344 considered.
It was well established that an arbitration clause survived the discharge of a contract by acceptance of a repudiation and the same was equally applicable to an adjudication provision. Moreover, adjudication could take place after the works under a contract had been completed: Heyman v Darwins Ltd [1942] AC 356 applied.
It was not an abuse of process for the defendant to start adjudication proceedings so long after it had purported to accept repudiation of the contract on the part of the claimant. Under section 108(2)(a) of the Act, a party was entitled to give notice of its intention to refer a dispute to adjudication “at any time”. Whilst no limitation period was laid down for instituting an adjudication, a limitation defence had to be taken into account by the adjudicator. If it failed to do so, any payment made pursuant to its award would give rise to a claim for restitution.
David Ashton (instructed by Courts & Co) appeared for the claimant; Anthony Speaight QC (instructed by Fenwick Elliott) appeared for the defendant.
Eileen O’Grady, barrister
