Aedifice Partnership Ltd v Ashwin Shah
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 10 August 2010 |
| Neutral Citation | [2010] EWHC 2106 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-10-246 |
| Date | 10 August 2010 |
[2010] EWHC 2106 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: Mr Justice Akenhead
Case No: HT-10-246
Jon Miller of Prettys for the Claimant
Stephen Whitaker (instructed by Brindley Twist Tafft and James) for the Defendant
Hearing dates: 6 August 2010
Mr Justice Akenhead:
This is an adjudication enforcement claim where there are issues between the parties as to whether there was a contract at all between them and if so whether all the terms were recorded in writing. Thus, the Defendant challenges the enforcement on the basis that the adjudicator had no jurisdiction. That is met by an assertion that the Defendant agreed to give the adjudicator jurisdiction to decide the contractual issues. The case raises an issue of some importance as to the extent to which and how reservations as to jurisdiction can and should be made by a respondent to an adjudication.
The Facts
This part of the judgement is based on the documentation and witness statements put before the court and should not be taken as making final findings of fact in any later hearing or proceedings.
Mr Shah, the Defendant, is the main shareholder and director of a company, Seighford Hall Nursing Home Ltd (“the Company”) which was incorporated in 1997 and which became the owner of Seighford Nursing Home, Seighford, Staffordshire. The Company and Mr Shah wanted to develop the nursing home and to that end one or other of them had retained an architect, Mr Dudhia, to prepare plans and secure planning consents. By about 2005–6, planning consents had been obtained. Mr Martin, a director of Aedifice Partnership Ltd (“Aedifice”), which carried on business as surveyors and property consultants, was introduced to Mr Shah and they first met on 31 July 2006. Mr Martin e-mailed Mr Shah on 2 August 2006, relevant extracts of which are as follows:
“It was good to see the Hall on Monday. I am confident we can make this work. I had a conversation with the Architect yesterday and he is putting together some more information for me so we can set up a budget plan.
…We basically act as client's agent…we [act] more as Project Managers as you can see we input into all levels not just the basic traditional QS role of cost and contract…
As far as fees are concerned acting as Clients Agent/Contract Administrator from commencement to completion we charge 1.5% of the construction cost and usually act also as Planning Supervisor for which we charge 0.5% as above all subject to VAT. We expect there to be a competent Architect, Engineer and other specialist on the design front in place. We can guide them in terms of care home requirements but we do not expect to design for them.
All the guidance and development advice along with working with the funders etc is all included in the fee…
As I understand it you need the bank funding in place in order to fund the project and our fees [sic] we will therefore refrain from invoicing you until such time as some bank funding is available (hopefully to far in the future[sic]). Please note however we are not working at risk…”
It seems that Mr Martin met Mr Dudhia on 17 August 2006 and joined him at a meeting on 14 September 2006 to meet local planning officers. Mr Martin appears to have had some contact with the bank, RBS, in early September 2006 in connection with funding; Mr Shah was copied in on the e-mails which suggests that Aedifice was about to start programming work for the Seighford Hall project. Aedifice says that it sent to Mr Shah a letter dated 20 September 2006 in the following terms:
“ Care Home Development Project Coordination/Client's Agent-Seighford Hall Site, Staffordshire
Further to our discussions regarding care home development and our role, I set out below a broad outline of our role and fee proposal.
Our fee for project coordination from commencement to completion is 1.5% of the construction contract value which is fixed once a tender price is agreed with the contractor. This becomes a fixed lump sum and does not vary. This figure includes all our expenses, but excludes VAT.
Our project coordination/client's Agent services include the following:—
1. Pre-purchase feasibility on sites and advice at this stage…
10. Preparation of the contract documents…
The above is a general outline of our services in both pre-and post-contract stages…
I hope this provides you with an outline of our services and fees. These general proposals apply to any major nursing home construction or refurbishment project and if you have any further queries regarding this please do not hesitate to contact me.”
Mr Shah says that he never received this letter. Mr Martin has said that he received an e-mail from Mr Shah accepting the contents of this letter but can not produce that e-mail because, he says, it was only on his laptop which has since been stolen. Mr Shah says that no such e-mail was sent.
Thereafter, Aedifice provided a number of services in connection with the project which included visits to the site, liaison with the architect, seeking to secure funding and meetings with Mr Shah. The services included the collation of construction contract documentation including a specification which described the “Employer (Client)” as the Company and Aedifice as the “Employer's Agent”. Mr Martin was involved in securing tenders for the work in the second half of 2007, the lowest of which put forward a price of £5,660,000 in October 2007. Aedifice also prepared a “Financial Tender Review” in December 2007, amended on 17 January 2008 and recommended acceptance of the tender of Thermabuild Construction Ltd. Aedifice's work also included putting together a budget cost for the development and seeking to secure funding; Mr Shah was at least to some extent involved in the funding discussions and communications with RBS, which was prepared in principle to provide a £6 million facility. Mr Martin was also involved in discussions with at least one organisation in connection with a possible lease of the new care at Seighford Hall.
Matters however did not come to fruition. It is not wholly clear why Mr Shah and the Company did not proceed although it may be that the impending recession played a part. By April 2008, Mr Martin was reporting to Mr Shah that RBS was “struggling to hold the terms of the deal due to the credit squeeze”; the date for acceptance of the tenders had expired and the lease proposal was unlikely to be taken forward. Mr Martin in his e-mail of 7 April 2008 was talking about having to bill for fees “if we are unable to proceed with the bank loan arrangement within the next couple of weeks”. On 31 July 2008, he e-mailed Mr Shah indicating that over £60,000's worth of fees were due, plus VAT. On 6 November 2008, Aedifice submitted its bill in the sum of £73,155.50, inclusive of VAT. There is no reference in the invoice or accompanying letter as such to the disputed letter of 20 September 2006 but there is reference to “our 2006 fee agreement as agreed with yourselves”. Mr Shah's response on 12 November 2008 was to say that the invoice should be addressed to the Company and not to him personally and that the invoice was not yet due to be raised. Mr Martin's response on 13 November 2008 was that the invoice had been due to be paid for some considerable time and that the fee agreement was made with him personally; it was said that Aedifice had “no fee agreement with” the Company.
Correspondence, mostly by e-mail, continued with solicitors being involved in 2009. Two main issues appear to have featured in this exchange, first whether there was any contract personally with Mr Shah and secondly whether any fees were due before bank funding was actually in place.
The Adjudication
Aedifice served a “Notice of Intention to Refer Matters to Adjudication” dated 23 March 2010 on Mr Shah in relation to non-payment of sums due; this related to the invoice referred to above. Upon its application, the RIBA appointed Mr E J Mowzer, a Chartered Surveyor, as adjudicator, by letter dated 26 March 2010; on the same day he acknowledged receipt of the nomination and sent to the parties details of his terms. By letter dated the 29 March 2010, received on 30 March 2010, Aedifice served its Referral on Mr Shah and the adjudicator. Mr Shah responded to the adjudicator by letter dated 31 March 2010, copied to Aedifice's claims consultant, in the following terms:
“For the avoidance of any doubt, I do not accept the terms of reference or the standard scale of charges and terms of engagement annexed to your letter dated 26 th March 2010.
Please note, that I Ashwin Shah, have no dealings at all with Aedifice Partnership (“APL”) whether in a personal capacity all on behalf of any corporate entity and had no liability to this company…
I note that your letter asks APL to forward to you the necessary contractual documentation. I am not aware of any such documentation.
With no disrespect to you, in all of the circumstances, I submit that you have no jurisdiction to deal with this matter and I decline to take any further part in this matter. If APL believes that I am in any way personally indebted to it, it has the option of court proceedings.”
The Adjudicator wrote in a letter of 1 April 2010 that, based on the documents delivered with the Referral, there was evidence of dealings between Mr Shah and Aedifice and said that, unless he was persuaded that he lacked jurisdiction (which he was not), then he would continue with the reference.
On 12 April 2010, Mr Shah's solicitors served the Response to the Referral, material parts of which are as follows:
“2…(1) on 15 in August 1997… that Company was incorporated…(2) …On 12 May 1998 the Company was registered as...
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