Enterprise Managed Services Limited v East Midland Contracting Limited
Case reference:
[2008] EWHC 727 (TCC)
Thursday, 27 March 2008
Key terms: Reversal of decision - declaration - summary judgment - strike-out
On 11 December 2007 the Claimant, Enterprise Managed Services Ltd, issued proceedings seeking to reverse an adjudicator's decision given on 7 September 2007. East Midland issued an application, seeking a declaration under CPR 11 that the court had no jurisdiction to decide the claim, or if it did, that it should not exercise its jurisdiction to do so. It also sought the following orders: (1) under CPR Part 3.4 striking out the claim as disclosing no cause of action; or, (2) under Part 24 for summary judgment against Enterprise.
East Midland relied on Clause 15 of the Sub-Contract. This clause provided that the parties shall not commence any action or proceeding other than adjudication arising out of or in connection with the Sub-Contract until such time as the Main Contract Works have been certified substantially or practically complete.
Judge Davies held that the Sub-Contract required a certificate of project completion under the main contract, so that the certificate would relate only to a particular project, rather than to the whole of the main contract works. Clause 15 did not prevent either party from litigating disputes where, even though the individual project is complete, or even though the sub-contract as a whole has come to an end (as have all main contract projects in respect of which works were preformed under that sub-contract), the main contract continues with the main contractor performing all works himself or using new sub-contractors.
Further if the parties to the main contract extend the main contract, and if parties to the sub-contract also choose to continue to perform the sub-contract, the main contractor by placing orders for, and the sub-contractor by undertaking, work the subject of main contract projects, then clause 15 continues to operate.
The sub-contract did not require any particular form of certificate and the critical requirement was the authorisation by the Manager (defined in Clause 8.4.1 as being the Contracts Operation Manager employed by the Employer) rather than the issue of the certificate. The certification requirements were not set in stone as at the date of the subcontract. The requirements of Clause 15 were satisfied as there was evidence of authorisation of track sheets. Therefore the main contract works had been certified as substantially or practically complete. East Midland's challenge of the court's jurisdiction under Part 11 failed.
As such, the claim had a reasonable prospect of success and it should not be struck out nor should East Midland have summary judgement.
East Midland relied on Clause 15 of the Sub-Contract. This clause provided that the parties shall not commence any action or proceeding other than adjudication arising out of or in connection with the Sub-Contract until such time as the Main Contract Works have been certified substantially or practically complete.
Judge Davies held that the Sub-Contract required a certificate of project completion under the main contract, so that the certificate would relate only to a particular project, rather than to the whole of the main contract works. Clause 15 did not prevent either party from litigating disputes where, even though the individual project is complete, or even though the sub-contract as a whole has come to an end (as have all main contract projects in respect of which works were preformed under that sub-contract), the main contract continues with the main contractor performing all works himself or using new sub-contractors.
Further if the parties to the main contract extend the main contract, and if parties to the sub-contract also choose to continue to perform the sub-contract, the main contractor by placing orders for, and the sub-contractor by undertaking, work the subject of main contract projects, then clause 15 continues to operate.
The sub-contract did not require any particular form of certificate and the critical requirement was the authorisation by the Manager (defined in Clause 8.4.1 as being the Contracts Operation Manager employed by the Employer) rather than the issue of the certificate. The certification requirements were not set in stone as at the date of the subcontract. The requirements of Clause 15 were satisfied as there was evidence of authorisation of track sheets. Therefore the main contract works had been certified as substantially or practically complete. East Midland's challenge of the court's jurisdiction under Part 11 failed.
As such, the claim had a reasonable prospect of success and it should not be struck out nor should East Midland have summary judgement.