Estor Ltd v Multifit (UK) Ltd

Hearing dates: 13 October 2009

Mr Justice Akenhead:

Introduction

This case follows the judgement given by the Court on 12 August 2009, [2009] EWHC 2108 (TCC). That judgement related to the competing applications of the parties relating to an adjudicator's decision made on 1 July 2009. The issues between the parties leading up to that judgement related to whether or not all the terms of the contract between the relevant parties were in writing; this included the primary issue which was who the employing party was to this shop fitting contract. I decided that there was in fact only one triable issue, namely who the contract was with. This trial has lasted only one day and was brought on within two months of the earlier judgement. The parties agree that there was a contract but there is an issue as to whether the employing party was Estor, Ginger Group Ltd (“GGL”) or Ginger Westfield Ltd (“Ginger Westfield”).

The history

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. The salons are actually called “Ginger Group”. Mr Keith Warner (“Mr Warner”) effectively owns and runs Estor and the other Ginger companies. The group currently owns or franchises a number or hairdressing 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 substantial Westfield White City complex in London which was being developed up to and including 2008. Estor acquired the lease to the premises albeit that Ginger Westfield was to run the premises. Ginger Westfield although corporately set up before was not operating as an entity in practice until late October or early November 2008; for instance, it did not have and was not operating any bank account. GGL was a company which was mostly involved in the design aspects of new salons.

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 the 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. At least one of the group companies was to receive a bonus or incentive of some £40,000 if the salon was open and running by 30 October 2008. Accordingly work started in late September 2008. Hub subcontracted a sizeable part but not all of the works to Multifit (UK) Ltd (“Multifit”), the Defendant in these proceedings. 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 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 at 2 personal email addresses its quotation, the material parts of which were:

“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.

Summary of Works:

Main contract Value £82,635 plus Vat

Extras:

1. Plying floor areas £2660.00…

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:…”

There was then a meeting between Mr Warner and Mr Khan of Multifit representatives on either 21 or 22 October 2008 in Birmingham at Multifit's offices and workshop. I will return below to this meeting and the immediate period beforehand.

Estor or Mr Warner had paid Hub beforehand some £100,000. On 22 October 2008, Estor paid by direct bank transfer some £17,500 to Multifit.

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. It is accepted that this was in contractual terms the acceptance.

Thereafter, Multifit carried out the work or at least that which it was employed to do, by about the end of October 2008, although some works were done afterwards. The formal opening did take place, attended by various dignitaries and celebrities, albeit that the works were not wholly complete. Only a fraction of the incentive or bonus payment was made.

All the payments made to Multifit were by Estor albeit that they were made on 24, 28 and 29 October 2008, doubtless to reflect the fact that works were proceeding apace. A Summary Statement was produced by Multifit dated November 2008 which was addressed to Mr Warner or “The Ginger Group Ltd”. That indicated that a total inclusive of VAT of £37,624.05 was said to be due and identified that all the four payments made in late October 2008 had been “from Estor Ltd/The Ginger Grp”

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. Mr Warner was reluctant to pay Multifit primarily by reason of the defects which he said were present in the work carried out by Multifit or for which Multifit was responsible.

On 12 December 2008, Mr Warner wrote apparently on behalf of “ Ginger Group”, to Multifit by e-mail complaining that there were 11 areas of defect which he wished to discuss “before we settle your invoice”; this probably referred to the statement dated November 2008 which may well have been submitted either in late November or in early December. Mr Khan replied personally to Mr Warner on 16 December 2008 addressing the alleged defects. On 18 December 2008, Mr Khan wrote by e-mail to Mr Warner and his accountants in the following terms:

“The total amount due must be paid to multifit uk ltd within the next 48 hrs or we will instruct our legal team to take immediate action. Please note that the ginger group and Keith Warner will incur all legal costs and interest due.

Total amount well over due: Invoice 000121 £37,624.08.”

Multifit instructed a debt collection agent, Global Debt Collection, to pursue the recovery of the sum which they had claimed. On 12 January 2009, on what looks like a standard form letter, that agent sought payment on behalf of Multifit. It was addressed to “Keith Warner The Ginger Group” and sent by e-mail to one of Mr Warner's e-mail addresses. Mr Warner “for and on behalf of Ginger Group Westfield” replied in some detail explaining that there were a large number of snagging and defect items. The letter was prefaced as follows:

“I refer to your e-mail letter dated the 12 January 2009 regarding outstanding amounts allegedly owing to your clients by The Ginger Group Limited.

You are claiming an amount of £37,624.08, which I would refute. I have not yet received a fully itemised invoice for this amount and, as it is part of an extensive building programme, I would expect to see a breakdown of exactly how this is made up.”

There is little evidence as to what happened over the next two months until, on 3 April 2009, Multifit issued a Notice of Adjudication against Estor. For various immaterial reasons, this was not pursued and a second effective Notice of Adjudication was issued by Multifit against Estor and on 12 May 2009, Multifit served on Estor its Notice of Adjudication in which it claimed £37,624.05 inclusive of VAT. A Mr Slegg was the adjudicator. Multifit's Referral to Adjudication was dated 21 May 2009. The issues included related to whether the contract was between Multifit and Estor, Ginger Group Ltd and Westfield and if so, whether it was in writing for the purposes of the Housing Grants Construction and Regeneration Act 1996.

In his decision dated 1 July 2009, the adjudicator decided, amongst other things, that there was a contract between Multifit and Estor; in this context, he provided some detailed reasoning. He formed the view that the contract was evidenced by the emails of 20 and 23 October 2009, Multifit's quotation of 23...