Connex South Eastern Ltd v M J Building Services Group Plc

A contractual description of two companies under a shared misnomer does not establish joint liability where the agreement, read with the parties’ previous dealings and pre-contract communications, shows that each contracted separately for work within its own area.

Under section 108(2) of the Housing Grants, Construction and Regeneration Act 1996, a party may refer a construction dispute to adjudication at any time. No statutory time limit arises merely because the contract has ended or the limitation period has expired. The right may nevertheless be lost through waiver or estoppel, and a limitation defence may determine the adjudication’s outcome.

Two railway franchise companies engaged a building contractor for CCTV installation works. The contractual documents used a non-existent composite company name. The Technology and Construction Court held that the franchise companies contracted jointly and that a later agreement between the contractor and one company released both from certain obligations. It nevertheless declined to grant declarations preventing adjudication.

The contractor appealed against the treatment of the later agreement. The respondent cross-appealed, contending that commencing adjudication long after the purported acceptance of a repudiatory breach was an abuse of process. The central issues were whether the companies had contracted jointly, whether the later agreement affected works in the respondent’s franchise area, and whether section 108 permitted the delayed adjudication.

1. Appeal allowed. The two franchise companies were not joint contractors. The composite name in the contractual documents had also been used in three earlier phases, where it denoted separate employers responsible for their respective stations. That course of dealing was admissible when determining the intended meaning of the same misnomer in the later contract. The pre-contract communication that the contract would be split between the companies supported separate liability: per Dyson LJ, with whom Carnwath and Ward LJJ agreed.

2. Even if the companies had contracted jointly, the agreement of 11 February 2002 concerned only works in the other franchise company’s area. It arose from negotiations between that company and the contractor following a change in ownership. The respondent neither participated in those negotiations nor became a party to the agreement. Read in its factual matrix, references to the Phase 9 contract therefore meant the contract as it related to the other company’s stations. The agreement did not modify or release obligations concerning the respondent’s stations. It was consequently unnecessary to decide whether the agreement constituted accord and satisfaction.

3. Cross-appeal dismissed. The words “at any time” in section 108(2) of the Housing Grants, Construction and Regeneration Act 1996 bear their ordinary, literal meaning. The Act imposes no time limit for referring a dispute to adjudication. Subject to waiver, estoppel or a comparable loss of the right, referral remains possible after contractual performance has ended and even after the applicable limitation period has expired. A respondent may raise limitation before the adjudicator, who may decide the dispute in its favour.

4. The doctrine by which civil courts control abuse of their own process does not impose a temporal restriction on statutory adjudication. Neither the Act nor the Scheme for Construction Contracts (England and Wales) Regulations 1998 gives an adjudicator power to strike out or stay an adjudication for abuse of process. Whether a referral is permitted depends upon the construction of section 108(2), not upon the courts’ abuse-of-process principles.

1. Court of Appeal (Civil Division): By [2005] EWCA Civ 193, unanimously allowed the contractor’s appeal on question (3) and dismissed the respondent’s cross-appeal on question (4).
2. Technology and Construction Court, Queen’s Bench Division: Judge Richard Havery QC held that the companies contracted jointly, that the later agreement released certain obligations, and that the proposed adjudication was not an abuse of process. He declined to grant the declarations sought. No citation is stated in the judgment.