Michael John Construction Ltd v Richard Henry Golledge and Others

Hearing date: 20 January 2006

A. INTRODUCTION

By a claim form dated 8.12.05, the Claimant company seeks to recover from the Defendants a maximum of £134,343.84, together with interest, arising out of two decisions by an Adjudicator, Mr Christopher Smart, dated 6 June 2005 and 16 November 2005 respectively. Notwithstanding the relatively modest sums at stake, the bundle for the enforcement hearing comprised two lever arch files of documents, and the skeleton submissions prepared by both Counsel referred to a further two files of authorities. The enforcement hearing took place at 2 pm on Friday 20 January. Because the oral argument did not finish until 5 pm that day, I reserved this judgment.

I propose to deal with the issues that arise for my decision in the following way:

a) to set out the factual background, much of which is agreed ( Section B below);

b) to summarise the general principles that apply to the enforcement of an Adjudicator's decision by the TCC ( Section C below);

c) to outline briefly the voluminous evidence before me, and to identify what material is important in accordance with those principles ( Section D below);

d) to analyse and set out my conclusions as to the central legal issue between the parties ( Section E below);

e) to consider the first decision of 6 June 2005 and to determine whether there is any reason why that decision should not be enforced against the Fourth Defendant ( Section F below);

f) to consider the second decision of 16 November 2005 and to determine whether there is any reason why that should not be enforced against either the First, Second and Third Defendants or alternatively the Fourth Defendant ( Sections G and H) below;

g) to determine the application for a stay of execution ( Section I below);

h) to set out my conclusions and to give judgment accordingly ( Section J below).

However, before embarking on this rather extensive exercise, it is appropriate at the outset to identify, and provide my answer to, the key point in issue. In essence, the Claimant's only difficulty is that its contact was made with a Club, an unincorporated association of individuals. Who, then, were the right individuals for the Claimant to pursue in the adjudications and in these enforcement proceedings? The Claimant has one adjudication decision (6 June 2005) against the Fourth Defendant, who was, at the time of that adjudication, a Trustee of the Club, but who was not a Trustee at the time that the contract was made. The Claimant has another adjudication decision (16 November 2005) against the First, Second and Third Defendants, as the Trustees of the Club at the time that the contract was made, or alternatively against the Fourth Defendant, who actually signed the contract, as the agent of those Trustees. The Defendants say that the Adjudicator did not have the jurisdiction to reach either decision because the proper responding parties in any proceedings were not the named Defendants, but each and every Member of the Club.

This is, on any view, a singularly unattractive argument. However, jurisdiction arguments can often be unmeritorious, sometimes unashamedly so. That does not make them any the less right. I should say that Mr Burr, who appeared on behalf of the Defendants, made his submissions with considerable skill and candour. The result was a much more intelligible position than the one advanced by the Defendants' advisor, Mr Fitzgibbon, to the Adjudicator during the second adjudication. However, despite Mr Burr's clarity, for all the reasons given below, I have concluded that the Adjudicator did have the jurisdiction to reach both of his decisions, and that the second of those should be enforced. As I have said, the precise formulation of my judgment is dealt with in Section J below.

B. FACTUAL BACKGROUND

The Claimant is a building contractor. Pursuant to a contract dated 15 October 2003, it was engaged to construct "a bespoke sports complex including external works" at St Peter's Rugby Football Club at Roath, in Cardiff. The contract incorporated the JCT Intermediate Form. The contract sum was £678,543. The Architect named in the contract was The Design Practice.

The Employer was named in the contract as "St Peter's RFC" whom I shall call "the Club". It is agreed that the Club is an unincorporated association of individuals, with no separate legal identity or status. The contract was signed by the Fourth Defendant, who was then the Director of Development, and subsequently became a Trustee of the Club. As I have said, he was not a Trustee at the time that he signed the contract. It subsequently emerged that the Trustees of the Club when the contract was signed were the First, Second and Third Defendants. They were replaced as Trustees by the Fourth Defendant and a Mr Norman in late 2003/ early 2004.

It was at this time that the building works started. Practical completion was achieved on 23 August 2004. It appears that, at about that time, there were problems with the payments to the Claimant company, and in September 2004, the Claimant issued a statutory demand against the Fourth Defendant. The Fourth Defendant instructed O'Keefe & Co, the solicitors now acting for all four Defendants in these proceedings, to set aside the statutory demand.

In his affidavit of 7 October 2004, in support of that application, the Fourth Defendant's solicitor said:

"… It is admitted that the Applicant (the Fourth Defendant) entered into a contract on behalf of St Peter's RFC with Michael John Construction Ltd wherein the Applicant acted upon the authority of the Trustees of St Peter's RFC who constitute that unincorporated association …"

The solicitor did not, at that stage, reveal that the identity of the Trustees at the time that the contract was signed was different to the identity of the Trustees in October 2004.

This acceptance that the Fourth Defendant was acting on behalf of the First, Second and Third Defendants, as the Trustees of the Club at the time he signed the contract, is important. The proposition is confirmed by the Defendants, in unequivocal terms, in a letter written much later, during the second adjudication. That letter, dated 7 November 2005, was written by Mr Terence Fitzgibbon, a Quantity Surveyor and construction claims advisor, who was then acting for and advising the Defendants. He said:

"The parties are specifically agreed that when Mr Matthews [the Fourth Defendant] signed the contract he acted as the agent for Messrs Childs, Colledge & Carpanini [the First, Second and Third Defendants] in their position of Trustees (see, for example, paragraph 8.1.2 of the Referral). There being no dispute about that matter, you cannot find otherwise."

Returning to the chronology, it is not clear to me what happened to the bankruptcy proceedings. I have pointed out elsewhere that, in an ordinary case, such proceedings are not the best way of enforcing an adjudicator's decision: see Harlow & Milner v Linda Teasdale[2006] EWHC 54 (TCC). Be that as it may, by early 2005, certain interim certificates issued by the Architect had still not been paid by the Club and, pursuant to the express provisions of the JCT Form, the disputes were referred to adjudication ("the first adjudication").

The First Adjudication

The notice of adjudication was given on 26 April 2005. The responding parties were named as the Fourth Defendant and Mr C Norman. The notice of adjudication made plain that they were pursued because they were the Trustees, and because the Fourth Defendant had acted on behalf of himself and Mr C Norman when signing the contract. Mr Smart was appointed to act as Adjudicator on 29 April 2005. The Claimant, the Fourth Defendant and the Adjudicator signed the JCT Adjudication Agreement on 5 May 2005.

Throughout the first adjudication, the Fourth Defendant took no point that he was not a proper party to those proceedings. All of his arguments in the first adjudication were as to the detail of the financial claims being made by the Claimant. However, on 17 May 2005, the Fourth Defendant did make plain, for the very first time, that he had not been a Trustee at the time that the contract was signed. He made no point at all about the relevance or significance of this aspect of the chronology: he said it was "mere fact".

It appears that the Fourth Defendant's letter was triggered by a request from the Adjudicator, who wanted to satisfy himself as to the correct status of the Fourth Defendant and Mr Norman. That the adjudicator was doing this off his own bat is apparent from Section 5 of his first decision, dated 6 June 2005. That states:

"Although this particular issue has not been raised by the responding party, I consider it necessary for me to establish for myself that there was a reasonable basis for the adjudication proceedings."

He then explains the status of Mr Matthews and Mr Norman, before concluding that:

"… I consider that the Trustees and the Club are one and the same for the purpose of this adjudication and I have proceeded accordingly."

The first decision of Mr Smart found the Fourth Defendant and Mr Norman liable for the following sums:

a) £108,771.13 by way of principal;

b) £12,738.07 by way of contractual interest;

c) £2,013.74 by way of interest due to late certification.

This...