This was an application for summary judgment pursuant to CPR 24, in relation to an adjudicator’s decision.

In or around June 2003 Roselodge Ltd (RL) carried on business buying properties and redeveloping them before renting them to tenants. Westdawn Properties Ltd (WPL) was in the business of refurbishing properties. RL engaged WPL to carry out works of refurbishment and repair at numerous properties owned by RL, over the following 12 months. These works included the works which were the subject of this claim.These works were described as the Summerwood contract. The Summerwood contract between RL and WPL was entered into on or around 27 January 2004 and under this contract WPL agreed to carry out refurbishment works at the Summerwood property.

WPL went into voluntary liquidation on 9 August 2004, and it was alleged that, prior to this, on 25 May 2004 WPL assigned the benefits of its contracts, including the one with RL to Westdawn Refurbishments Ltd (WRL).

RL resisted the application on that basis that the adjudicator lacked jurisdiction. The grounds contended were that the contract between the parties was not in writing and that the contract was not a construction contract. A further consideration of the court was whether there was merely an assignment of the benefit of the contract or a novation between WPL and WRL. This however, was recognised as only being an issue to be determined if there the two jurisdictional challenges were unsuccessful.

In additional to these two jurisdictional arguments, at the hearing RL sought to advance two new additional jurisdictional arguments. The first being that the reference to the adjudicator was flawed from the outset because WRL was not a party to the contract and was an assignee. The second was that under the Scheme the notice of adjudication had to be given to every other party to the contract and as there has been an assignment (not a novation) this had not occurred as WPL, which was in voluntary liquidation at the time, had now been struck off the register and dissolved.

Reference

In relation to the question of whether there was a contract capable of being referred to adjudication the court reviewed the following sections of the Construction Act:

  • The definition of a construction contract in Section 104. The court determined there was no doubt that this was a construction contract.
  • Section 106 which states that the provisions are not applicable to a contract with residential occupier. While this did not apply in the current case the court noted it was an interesting provision in the context of whether an assignee of a party to a contract has the right to invoke the adjudication process under the 1996 Act, as this section appears to refer to some personal characteristics that relate to the original party to the contract.
  • Section 107 which states that the provisions are only applicable to agreements in writing. This was the critical provision for the court to consider.
The court considered the evidence in relation to the negotiations and dealings between the parties prior to commencing works on the Summerwood property in relation to these sections and held that the materials terms as to payment, being the trigger event that marked completion, the time for payment of invoices and variations to the invoice payment procedure, were agreed between the parties. This agreement was via expressly agreed oral terms that were not recorded or evidenced in writing, and as such they did not satisfy the requirements of Section 107 of the Construction Act. Therefore the decision was not enforced.

* Full case details: WESTDAWN REFURBISHMENTS LTD VS ROSELODGE LTD, 25 APRIL 2006, TCC, BIRMINGHAM, HHJ MCCAHILL QC (SITTING AS A HIGH COURT JUDGE)

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Postscript

This case reinforces that for an adjudicator’s decision to be enforced it is essential that it is in writing in accordance with the requirements of Section 107 of the Construction Act.

In relation to assignment this case highlighted a potential issue as to whether the references within Section 106 of the Construction Act to personal characteristics, such as to an occupier, “Operations on a dwelling which one of the parties to the contract occupies or intends to occupy as his residence”, which do not contain a reference to the past tense “has occupied” may lead to the assignee being unable to rely on this exclusion.