Dacy Building Services Ltd v IDM Properties LLP

Case reference: 
[2018] EWHC 178 (TCC)
Monday, 5 February 2018

Key terms: 
Adjudication – Oral agreement – Multiple parties – Adjudicator's jurisdiction

Dacy Building Services Ltd (“Dacy”) made a summary judgment application to enforce an adjudicator's decision. The dispute between Dacy and IDM Properties LLP (“IDM Properties”) centred on what had allegedly been agreed during a tripartite meeting held at a bus shelter in Camberwell.

O'Loughlin Leisure (Jersey) Limited (“O’Loughlin”) and HOC (UK) Limited ("HOC") entered into a contract to conduct works for a mixed-use development (residential flats and retail space) in Camberwell, London. O'Loughlin was in a joint venture with Fastmild Limited ("Fastmild"), which was a subsidiary of IDM Investment Holdings Limited. However, Fastmild was not a party to the main building contract. IDM Properties was the employer's agent for the purposes of the main building contract. 

Dacy referred to adjudication a claim for the sum due for its work at the development from IDM Properties. Dacy’s case was that an oral contract was agreed at a meeting on 3 December 2015 attended by three people representing Dacy, HOC and IDM Properties. This was disputed by IDM Properties who argued that there was no contract between the parties and, accordingly, the adjudicator lacked jurisdiction to make an award. However, the adjudicator held that there was an oral agreement between the Dacy and IDM, and not Dacy and HOC (who had subsequently gone into liquidation). IDM Properties was ordered to pay Dacy the sum of £247,250 plus interest. IDM Properties resisted Dacy’s enforcement procedure by continuing to maintain that there was no contract between the parties where the adjudicator lacked jurisdiction to make the award he did. 

Fraser J held that a factual dispute regarding the parties' alleged oral contract was too complex for summary judgment and that IDM had a real prospect of succeeding in its defence. However, the judge conducted the trial of this issue where he upheld the adjudicator’s decision in favour of Dacy. It was emphasised that adjudication enforcement proceedings are in place to facilitate speedy resolution of disputes between the parties under construction contracts. He outlined that adjudication enforcement applications will rarely result in trials of issues relevant to an enforcement issue (referring to Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2108 (TCC)). Fraser J also noted Coulson J’s comments in Penten Group Ltd v Spartafield Ltd [2016] EWHC 317 (TCC) regarding oral contracts that the Court “should and would take a more generous view of the scope of the adjudicator's jurisdiction”.

This case highlights the parties’ need to produce documents to support the existence of agreements for adjudication. If there is a genuine claim that the adjudicator lacks jurisdiction, such objection should be raised promptly and clearly. If such procedure is adopted, a party may then participate in the adjudication without prejudice its right to resist the enforcement of any decision on the grounds of lack of jurisdiction.

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