Construction dispute — Adjudication — Partnership entering into contract with defendant to carry out construction works — Claimant company subsequently incorporated — Dispute arising between parties — Whether adjudicator having jurisdiction to determine dispute when contract with partnership — Whether contract in writing — Claim allowed
In 1998, a plant hire and civil engineering contracting partnership entered into a contract to lay water pipes and water service apparatus at various sites on behalf of the defendant. The contract was governed by the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) (the scheme). In 1999, the partnership incorporated to form the claimant company, which continued to carry out the work under the contract.
A dispute arose between the parties, and the defendant referred the matter to adjudication, naming the claimant as the other party to the contract. The defendant failed to reply to the adjudicator’s query regarding the claimant’s precise status and the adjudicator proceeded to award to the claimant the sum of £381,217, plus VAT and interest. The defendant refused to pay and the claimant brought an action for payment. At this point, the defendant contended that the adjudicator had no jurisdiction to determine the dispute since the contract had been with the partnership.
A question also arose as to whether: (i) the defendant was estopped from denying that the claimant company was the other party; and (ii) the contract could be said to be in writing for the purposes of section 107 of the Housing, Grants, Construction and Regeneration Act 1996.
Held: The claim was allowed.
The defendant was estopped by convention and representation from denying that the contract was with the claimant company. No formal contract between the parties had been executed, but there was a clear common understanding that the benefits and burdens of the contract were those of the claimant. The estoppel was mutual, since both parties had acted to their detriment on the basis of their common understanding and had incurred considerable expenditure in dealing with the adjudication.
An estoppel could not normally be based on silence; the defendants had failed to reply to the enquiry as to the claimant’s precise status. If the defendant wished to contend that the true contracting party was the partnership, there was a duty to speak up, not only in the general context but also in order to give efficacy to the initial words of paras 13 and 15 of Part 1 of the scheme, under which the adjudicator was entitled to take the initiative in ascertaining the facts and to continue in the absence of requested information.
The facts giving rise to the cause of action existed independently of the estoppel. Because estoppel worked, inter alia, as a rule of evidence, the claimant was not obliged to prove the legal route or analysis by which such matter of fact (or mixed fact and law) was sustained, provided that it was sustainable: Amalgamated Investment & Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd [1982] QB 84 and Furness Whithy (Australia) Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 238 considered.
Furthermore, the common understanding between the parties was something upon which “the parties agree otherwise than in writing by reference to terms which are in writing” for the purposes of section 107(3) of the 1996 Act, and they were therefore deemed to have made an agreement in writing. Similarly, there was evidence in writing of the agreement in accordance with the common understanding of the parties for the purposes of section 107(2)(c): Thomas-Fredric’s (Construction) Ltd v Keith Wilson [2003] EWCA Civ 1494; [2004] BLR 23 considered. Accordingly the claimant was entitled to the adjudicator’s award.
Justin Mort (instructed by Robert Davies Partnership, of Newport) appeared for the claimant; Nicholas Collings (instructed by Lane & Partners) appeared for the defendant.
Eileen O’Grady, barrister
