Viridis UK Limited v Mulalley and Company Limited [2014] EWHC 268 (TCC)

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Viridis UK Limited v Mulalley and Company Limited [2014] EWHC 268 (TCC)

Published 1 junio 2017

HHJ Stephen Davies held that work was carried out under several different contracts and not one overarching contract which meant that the adjudicator lacked jurisdiction and his decision was unenforceable.

Executive Summary

This is a useful case in relation to how many contracts the parties had entered into and whether subsequent orders could be deemed to be variations to an original order. This leads to what is known as the "substance and jurisdiction overlap" issue. That is, whether the adjudicator has jurisdiction to decide matters that affect his appointment. This decision also demonstrates that it is possible to enforce an adjudicator's decision by proceeding to a full trial of the issues (as opposed to making an application for summary judgment in the usual way).

The Facts

The claimant, "Viridis", a specialist window sub-contractor, was employed by the defendant, "Mulalley", the main contractor on a project for external and internal refurbishment to a number of housing association properties in London.

The main contract works included the supply and installation of replacement windows and doors, for which Mulalley invited Viridis to tender. Viridis tendered for the works and following various negotiations and discussions, Mulalley issued a number of separate orders to Viridis to carry out certain elements of the tendered works.

On 7 March 2013, Mulalley purported to terminate the sub-contract(s) for breach. Viridis referred a final account claim to adjudication. Mulalley challenged the adjudicator's jurisdiction on the ground that the dispute encompassed claims arising under six separate contracts. The adjudicator enquired as to whether or not he had jurisdiction, concluded that he did in fact have jurisdiction and decided that Mulalley should pay Viridis the sum of £213,844.99 plus a share of his fees. Mulalley did not comply and so Viridis subsequently issued enforcement proceedings. Mulalley argued that Viridis never accepted Order 24 which is why subsequent orders were issued with the result that there were six separate contracts and not one contract. As witness evidence was required to determine the issue, Viridis agreed to withdraw its application for summary judgment and the parties proceeded to a full trial instead.

At trial Mulalley maintained its 'multiple contract argument'. Viridis argued that in fact Order 24 represented the sub-contract and that the other orders were either works orders issued under Order 24 (which was overarching) or alternatively were variations of Order 24.

Other issues also arose including whether, even if the dispute arose under more than one contract, the adjudicator had jurisdiction to decide that issue as part of his jurisdiction so that if he was wrong, his decision should be enforced.

Summary

On the multiple contract issue, HHJ Stephen Davies held that the orders from Mulalley amounted to separate contracts containing materially different terms. It was not the case that they could be deemed to be 'sub-orders' under an overarching framework of one contract. A party may only refer one dispute to adjudication and cannot refer disputes arising under multiple contracts, therefore the adjudicator did not have jurisdiction to decide the dispute.

On the substantive jurisdiction issue, the court considered various cases (Air Design included) in relation to the proposition that an adjudicator can decide jurisdictional issues that are part of the substantive dispute only if there is no dispute about the contract under which he is appointed. In this decision the court decided that Viridis never accepted Order 24 and so the contract under which the adjudicator was supposedly appointed was in dispute. This was not a case where substance and jurisdiction overlapped; the adjudicator could not decide on points that went to the issue of whether or not he had jurisdiction.

 

Authors

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

Key Contacts

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

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