Connex South Eastern Ltd v MJ Building Services Group Plc

For the purposes of statutory adjudication, a construction agreement may be in writing even though it contains implied terms. Written evidence of acceptance may satisfy the statutory requirement. An adjudication clause survives discharge of the underlying contract following acceptance of a repudiation. The statutory right to adjudicate may be exercised at any time, although limitation issues remain matters for the adjudicator. Concurrent court and adjudication proceedings are not, without more, an abuse of process. Where joint contractors agree with the other contracting party to alter or settle the performance, the agreement may release all joint contractors from obligations within its scope, but the extent of the release depends on the agreement and the evidence.

The claimant sought declarations concerning the defendant’s proposed adjudication under the Housing Grants, Construction and Regeneration Act 1996. The dispute concerned alleged CCTV installation works at stations operated by two related franchise companies, Connex South Eastern and Connex South Central.

The court had to decide whether the parties had made an agreement in writing under section 107; whether the defendant retained a right to adjudicate after accepting the claimant’s alleged repudiation; whether a later agreement with South Central affected that right; and whether the notice of adjudication was an abuse of process. A related claim by South Central had been settled.

1. The declarations were refused. The court answered the first three agreed questions yes, subject to the limitation on the third answer, and held that the notice of adjudication was not an abuse of process.
2. The phase 9 arrangement was a single contract involving both Connex companies and MJ. Although no formal written order or signed contract existed, the tender and the written minutes of the 15 September 2000 meeting recorded an instruction that the project was to proceed immediately. In context, that instruction amounted to acceptance of MJ’s tender. The minutes were evidence authorised by the parties within section 107(4). The agreement was therefore in writing for section 107 purposes. Implied terms did not prevent that conclusion.
3. An adjudication provision survives discharge of the underlying contract following acceptance of a repudiation. The reasoning in Heyman v Darwins Limited [1942] AC 356 applied equally to adjudication. The fact that adjudication provides a speedy interim remedy did not alter that conclusion, since adjudication may occur after completion of the works.
4. The two Connex companies were joint contractors. The February 2002 agreement between South Central and MJ could therefore release South Eastern as well as South Central, because it contained no reservation of rights and its terms indicated that the listed works represented the full extent of the phase 9 contract. The release extended to future access and performance obligations, including loss of profits for withdrawn stations, but did not, on the unsatisfactory evidence, release claims for expenditure or work already undertaken.
5. The words “at any time” in section 108(2)(a) were given their plain meaning. No statutory limitation period for commencing adjudication was laid down, although limitation defences had to be considered by the adjudicator. Following Herschel Engineering Ltd v Breen Property Limited [2000] BLR 272, court and adjudication proceedings could run concurrently without that alone constituting abuse of process.