Estor Ltd v Multifit (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 12 August 2009 |
| Neutral Citation | [2009] EWHC 2108 (TCC) |
| Docket Number | Case No: HT-09–284 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 12 August 2009 |
[2009] EWHC 2108 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: Mr Justice Akenhead
Case No: HT-09–284
Alexander Hickey (instructed by Fenwick Elliott) for the Claimant
Paul Stafford (instructed by Blakemores) for the Defendant
Hearing dates: 7 August 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Akenhead :
Introduction
In these proceedings, there are competing applications between the parties arising out of an adjudicator's decision made on 1 July 2009. The issues which arise all relate to whether or not the adjudicator, Mr Slegg, had jurisdiction to do what he did. The primary issue relates to who the parties to the relevant contract were.
The factual background
From the evidence put before the Court, Estor Ltd (“Estor”) was the holding company for what has been called the Ginger Group, which is a group of companies which operate hair dressing and beauty treatment salons. Mr Keith Warner effectively owns and runs Estor and the other Ginger companies. The group currently owns or franchises 10 salons in the United Kingdom and abroad. In the past, he has set up new companies for new ventures. Thus it is that he set up Ginger Westfield Ltd (“Ginger Westfield”) for the purposes of setting up shop in the Westfield White City complex in London. The premises that were acquired required substantial fitting out works.
By a contract made in late September 2008, a company called Hub Design Ltd (“Hub”) was employed to do these fitting out works. The price was £129,500 plus VAT and a contract ran into some seven pages but it was in a relatively simple form. The contract was signed by Mr Warner “of the Ginger Group” and the front page of the contract identifies “The Ginger Group” in effect as the employer.
There is no doubt that Mr Warner was anxious to ensure that the fitting out works were completed in the last week in October 2008 so that there could be a formal opening at that time. Accordingly work started in late September 2008. Hub subcontracted a sizeable part but not all of the works to Multifit (UK) Ltd (“Multifit”). Multifit's written quotation to Hub for the works was in the sum of £82,635. That quotation was based on drawings received but specifically excluded works to the resin floor and kitchen areas, which were to be done by other contractors.
Matters did not proceed smoothly. At a meeting held on 17 October 2008, attended by Mr Warner, four other Ginger Company employees, four Hub representatives and Messrs Khan and Singh of Multifit, Mr Warner outlined what he thought was wrong and indicated that he had lost all faith in Hub. Hub offered to leave the job; at that stage, as indicated in Mr Warner's statement in the adjudication, Messrs Khan and Singh indicated that they would be prepared to “finish the job for us”. It is common ground that no agreement was reached at this meeting.
Multifit was never provided with a copy of the Ginger Group's contract with Hub. Over the following few days, there was some communication between Hub and Mr Warner about the state of the accounts between them and some talk of a possible novation but Multifit was not made aware of this.
On 20 October 2008, Multifit e-mailed to Mr Warner its quotation:
“Can you please [review] this and send me [an] order confirmation by return e-mail. I have also attached our company account form and my first quote to hub design.
I have also given Alan a cheque for £7850 plus vat (Total £9223.75p inc) for his payment for the manufacturing.
We still owe him £7050 plus Vat just to make sure that he can complete on time (originally not in our contract)
Summary of Works:
Main contract Value £82,635 plus Vat
Extras:
1. Plying floor areas £2660.00
2. Main shop £1200.00
3. Fire alarm £7000.00
4. Safety Beacon on back fire doors £500.00
5. Armour colour to visual wall areas only £5200.00
6. Plumbing costs to form changes and fit extra back wash and additional chemical pump £1265.00
7. Extra shot fitting costs due to changes in existing fire lobby £1450.00
8. Extra cost to move location of the fire alarm panel £250.00
9. Total costs of the bling ceiling feature £14,900.00 (excluding payment made by hub design
10. Specialist fittings required to the bling feature supplied by multifit £96.00
Total cost £117,156+ VAT
Balance paid so far from Hub design to Multifit UK Ltd £46,545.00 + Vat
Total remaining £70,611.00 plus VAT
Items Not allowed for:
• payment of Air conditioning.
•cost of the resin flooring.
•Cost of armour colour if applied on all wall areas.
•Any final connection charges for any services supplying unit 2025
•Supplying Chelsea Artisan specialist glass.”
There was then a meeting between Mr Warner and the Multifit representatives on either 20, 21 or 22 October 2008 (the date probably does not matter). There had clearly been some concern as to the creditworthiness of the Ginger Group company. Mr Warner was asked and agreed to have Estor's bankers provide a credit reference. Although the form provided by Multifit is headed “Application for Credit Facilities”, it is clear that the purpose of it was to enable Multifit to obtain a credit reference. The form identifies the VAT and company registration numbers of Estor. There are two arguably relevant entries:
“I/We consent to My/Our Bankers providing a Credit Reference on me/us on an ongoing basis
I/We hereby apply for credit facilities to be granted to me/us and confirmed that we will comply with your Trading Terms and agreed to be bound by your standard terms and conditions of sale”
It was accepted by Multifit's Counsel that the second of these two entries was immaterial as both parties knew that Mr Warner did not want credit facilities.
There is some issue between the parties as to what was said or understood at this meeting as to who Multifit's contract was to be with. Messrs Khan and Singh say that they had done a credit check on Ginger Group Ltd and that it was adverse. This was, they say, raised with Mr Warner who rang his accountant and passed on his advice that the contract and credit facilities had to go through Estor. Later, they found that Estor had acceptable credit. Mr Warner however says that at the meeting Multifit wanted some comfort that he could pay for the work and he said that he told them that the creditworthiness of the Ginger Group as a whole would be clear from a search of Estor; he said that it was never the intention that a contract would be entered into between Estor and Multifit. He said also that he made it clear that he needed them to complete all of the remaining works. There was no discussion about the resin flooring.
By email of 23 October 2008, Mr Warner replied to Multifit's email of 20 October 2008 (see above):
“…that's fine can you carry the work out from the [revised] quote. thank you. if have any problems just call me”
There was no hint or indication in that email as to which company was accepting Multifit's quote.
Thereafter, Multifit carried out the work or at least that which it was employed to do, by the end of October 2008.
Multifit was paid money for the work which it did. It remains somewhat unclear as to which company paid Multifit. In November 2008, Multifit prepared a Statement of Account addressed to “The Ginger Group Ltd” which identified 5 payments from “Estor/The Ginger Grp”. Estor's Bank statements identify Chaps transfers which are ambiguously represented as being to “Ginger Westfield…Multifit…” which could mean that the payments went direct to Multifit or through Westfield. A later bank statement of Westfield showed a payment being made to Multifit by Westfield in December 2008.
There was an issue as to defects in particular about the resin flooring which had been done by one of Hub's subcontractors, CT Flooring, but Mr Warner believed that Multifit had assumed responsibility for this work. Multifit had paid this subcontractor but, it was said, simply at Mr Warner's direction.
On 3 April 2009, Multifit produced a Notice of Adjudication addressed to Estor and on 9 April 2009 purported to serve its Referral to Adjudication. Mr Slegg was duly appointed adjudicator but, due to doubts about whether the Notice of Adjudication was served, Mr Slegg resigned.
The Adjudication
On 12 May 2009, Multifit served on Estor its Notice of Adjudication in which it claimed £37,624.05 inclusive of VAT. Mr Slegg was again appointed as adjudicator. Multifit's Referral to Adjudication was dated 21 May 2009. The issues were broadly:
(i) Was the contract between Multifit and Estor, Ginger Group Ltd and Westfield? If so, was it in writing for the purposes of the Housing Grants and Regeneration Act 1996 (“ HGCRA”)?
(ii) Was Multifit responsible for the resin flooring?
(iii) Were there defects in the resin flooring and elsewhere for which Multifit was liable?
(iv) Costs.
The first issue was obviously a jurisdictional issue. It is accepted that Estor reserved its position about the adjudicator's jurisdiction.
In his decision dated 1 July 2009, the adjudicator decided as follows:
(i) There was a contract between Multifit and Estor; in this context, he provided some detailed reasoning. He was impressed by the fact that the credit check was agreed to be done on Estor and he believed that no explanation had been offered as to why someone should “obtain a credit check on another and then contract with a different party that it knew had a poor credit rating”. He formed the view that the contract was evidenced by the emails of 20 and 23 October...
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