Dacy Building Services Limited v Idm Properties LLP [2016] EWHC 3007 (TCC)

Published 14 febrero 2017

Executive Summary

Jefford J declined to grant summary judgment to enforce an Adjudicator's award because there was a substantive dispute of fact regarding the alleged oral contract between the parties that was not appropriate for determination on a summary basis.

There are two useful reminders from this case (i) that parties should be clear about who they were in contract with before embarking on (potentially expensive) adjudication proceedings which may ultimately be ineffective (ii) the effect of the amendments to the Construction Act mean that "oral construction contracts" fall within the right to adjudicate.

The Facts

The case concerned a mixed use development on Camberwell New Road in London ("the Project").

The Employer under the Main Contract was O'Loughlin Leisure (Jersey) Limited ("O'Loughlin"). The Contractor was HOC (UK) Limited ("HOC"). O'Loughlin was a Joint Venture involving a subsidiary of IDM Investment Holdings Limited.

HOC suffered cash flow issues. Consequently, in or around November 2015, the parties entered into two arrangements with IDM that:

• IDM Construction London Limited would assist with site management; and
• IDM Investment Holdings Limited would pay any sub-contractors direct.

In December 2015, Dacy became involved in the Project.

There was a dispute on fact as to the terms of a conversation held on this date which was said to form the basis of the oral contract. In summary:

• Dacy's position was that it met with Mr McLoughlin who confirmed that Dacy would be working for IDM and IDM would pay.
• IDM's position was that Dacy was already working on site at this juncture and that, whilst it had mentioned concerns about being paid, Mr McLoughlin had re-iterated that on this Project he was working for HOC, not IDM.

There was no dispute that Dacy supplied labour, plant and materials to the Project.

Dacy's initial invoices (1 – 3) were paid in full. The later invoices (4 – 6) were not paid.

Dacy therefore referred the dispute to Adjudication. IDM objected on the grounds that there was "no contract between the parties" and, therefore, there was "no dispute".

The Adjudicator came to a (non-binding) decision that there was a contract between Dacy and IDM and proceeded to award Dacy the sums claimed. IDM did not pay.

The Decision

Jefford J took some time setting out the background facts to the matter and considering the evidence of (1) what occurred on 3 December 2015; and (2) how the alleged contract was operated thereafter.

Ultimately, her conclusion was that it was "…not at all clear who Dacy contracted with if anyone…". The application for summary judgment was therefore declined.

A couple of points of interest arise from the Judgment:

• Jefford J has no problem finding that the fact a party has agreed the identity of an Adjudicator in advance does not, without more, amount to a waiver of its jurisdictional rights. This seems eminently sensible as a party may often want to retain control over the individual to be appointed whilst maintaining its right to raise a jurisdictional challenge in due course.
• It was recognised that Adjudicators are now often asked to deal with any contractual issues and the substantive dispute within a very short timeframe. Whilst the Court will allow the "latitude" necessary to account for this, it does not mean that the Adjudicator has jurisdiction to come to a binding decision such issues (unless the parties agree otherwise).
• It seems there remains a distinction between:
  • The "contract / no contract" cases – in which the Court will almost inevitably find that a contract has been concluded if the services have been provided; and
  • Those which involve a dispute as to "who is the correct contracting party" – which will necessarily be dependent on the facts and evidence in each case.

The decision in Dacy v IDM gives a good example of the latter where the facts and evidence presented were too complex for the Court to come to a decision on a summary basis.

In practical terms, the message is clear – take care to clarify who you are in contract with before embarking on (potentially expensive) adjudication proceedings which may ultimately be ineffective.