ART Consultancy Ltd v Navera Trading Ltd

A construction contract need not comprise a single document or encompass every agreement between the parties. Where the parties have made separate contracts, an adjudicator may have jurisdiction over a construction contract governed by written terms, even if a separate design agreement was unwritten and outside the statutory adjudication regime. The relevant contract must, however, have all its terms in writing. A standard JCT Minor Works form may constitute an all-embracing written construction contract where the parties adopted it and no additional terms are established. Enforcement of an adjudicator’s decision will not be stayed merely because turnover figures are said to mismatch a balance sheet showing net assets; the evidence must provide a proper basis for concluding that repayment would be unlikely.

ART Consultancy Ltd carried out design work and construction work for Navera Trading Ltd. An adjudicator awarded ART £100,369, together with interest and fees. The adjudicator treated the design work as arising under a separate unwritten agreement and excluded design-related claims, while deciding the construction claims under a JCT Minor Works form.

Navera resisted enforcement, arguing that the JCT form had not been agreed, that additional oral terms meant the construction contract was not wholly in writing, and that enforcement should be stayed because ART’s accounts allegedly revealed financial concerns.

1. Enforcement. The adjudicator’s decision was enforced. The evidence established that the parties intended the JCT Agreement for Minor Building Works to govern the construction works. The tender documents required that form, ART tendered on that basis, the form was completed and supplied, and the works were carried out under it.
2. The contention that additional unwritten terms formed part of the construction contract was unsupported. The JCT Minor Works form was intended as an all-encompassing contractual package, and Navera could not identify the alleged additional terms, the discussions said to create them, or evidence of their agreement.
3. The requirement that a construction contract be in writing did not require all dealings between the parties to be contained in one contract. The design package preceded and was separate from the construction contract. The parties were free to make a series of contracts, some within and some outside the statutory adjudication regime. The adjudicator correctly excluded all design-related items and dealt only with claims arising under the written construction contract.
4. The court accepted the approach in RJT Consulting Engineers Ltd v DM Engineering (NI) Ltd [2002] BLR 217 that all terms of the relevant contract must be in writing. The more limited approach expressed by Auld LJ was not the majority’s ratio, consistently with Trustees of Stratfield Saye Estate v AHL Construction Ltd [2004] EWHC 3286 and Bennett (Electrical) Services Ltd v Inviron Ltd [2007] EWHC 49 (TCC).
5. Stay of execution. The application was refused. A stay may be considered where compelling evidence shows that the claimant’s financial difficulties make repayment of the judgment sum likely to be impossible, as illustrated by Hershel Engineering v Breen Property Ltd [2000] BLR 272 and Ashley House PLC v Galliers Southern Ltd [2002] ADJ.LR 02/15. The balance sheet relied upon recorded net assets, not turnover, and therefore did not establish the alleged mismatch or justify a stay.