Levolux A T Limited v Ferson Contractors Limited

Permission to appeal should be granted where the proposed grounds raise properly arguable issues concerning the construction and effect of contractual payment, suspension and determination provisions. The Court of Appeal does not resolve the merits when granting permission. An adjudicator’s decision that payment was due, and a first-instance conclusion that suspension was contractually justified, did not prevent argument that the suspension failed to comply with the contractual notice and timing requirements.

Ferson Contractors Ltd applied for permission to appeal against summary judgment entered for Levolux AT Limited in the Technology and Construction Court. The dispute arose from a construction subcontract containing provisions for interim payments, notices withholding payment, suspension for non-payment and contractual determination.

An adjudicator had found that Ferson’s withholding notice was ineffective and had ordered payment. The first-instance judge held that Levolux was entitled to suspend performance and that Ferson’s purported determination had no contractual effect. Permission to appeal had previously been refused on paper. The central issue before the Court of Appeal was whether Ferson’s proposed grounds raised arguable issues warranting permission.

1. Permission granted. Lord Justice Jonathan Parker held that the proposed grounds raised arguable issues, and Lord Justice Pill agreed.
2. Ferson argued that Levolux’s suspension was not authorised by the contractual suspension clause because it began before the adjudicator’s final date for payment and because the notice specified an allegedly premature payment date. Those points had not been addressed expressly by the first-instance judge.
3. Ferson also argued that the adjudicator’s decision that the sum was payable did not determine whether the suspension complied with the contractual requirements. It further challenged the approach in KNS Industrial Services (Birmingham) Ltd v Sindall Ltd, which had been relied on below.
4. The Court considered that these submissions raised arguable issues concerning the interaction between the adjudicator’s decision, the contractual suspension machinery and the contractual right of determination. It therefore concluded that summary judgment might have been wrongly granted.
5. The Court granted permission to appeal. It made no final determination on the merits of the contractual issues.

• Court of Appeal (Civil Division): Permission to appeal granted against the Technology and Construction Court’s summary judgment order of 26 June 2002.
• Permission stage: Permission had previously been refused on paper by Latham LJ on 18 July 2002.
• Technology and Construction Court: Summary judgment was entered for Levolux AT Limited for £57,834.16.