Enterprise Managed Services Ltd v East Midland Contracting Ltd

A contractual restriction preventing proceedings before certification of completion must be construed in its contractual and commercial context, while restricting access to the courts no further than necessary. In a term contract comprising discrete projects, “Main Contract Works” may refer to the individual projects subcontracted under the relevant main contract orders, rather than all work under the continuing main contract. The required certification may be informal where the contract makes authorisation, rather than a particular document, the critical requirement. Payment against an authorised work document may therefore evidence certification. A continuation or extension of the main contract does not automatically terminate the restriction where both main contractor and subcontractor continue performing the relevant work.

The claimant sought to challenge an adjudicator’s decision requiring it to pay the defendant damages for breach of contract. The defendant applied under CPR Part 11 for a declaration that the court lacked jurisdiction or should decline jurisdiction. It also sought strike-out or summary judgment under CPR Parts 3.4 and 24.

The applications depended on clause 15 of the subcontract, which prohibited proceedings other than adjudication until the Main Contract Works had been certified substantially or practically complete. The court had to determine the meaning of “Main Contract Works”, the nature of the required certification, and whether the contractual condition had been satisfied.

1. Construction of clause 15. The expression “Main Contract Works” meant work under any project performed by the claimant under a contract order issued under the main contract, where that work had also been ordered from and undertaken by the defendant under the subcontract. This included projects ordered after the original main contract completion date while the main contract continued by formal extension or informal operation.
2. Meaning of certification. The required certificate was a project completion certificate under the main contract. The relevant contract structure was a term contract involving discrete projects, rather than a single defined construction project. Certification therefore related to each project, not to the main contract works as a whole.
3. Form and authorisation. No particular form of certificate was required. The critical requirement was authorisation by the Manager. The claimant’s submission of the relevant work documents, including the track sheet, followed by the employer’s consideration, authorisation and payment, was sufficient evidence that the project had been certified practically complete. The court rejected the contention that individual formal certificates or further evidence of specific authorisations were required.
4. Continuation of the restriction. Where the main contract and subcontract parties continued to operate their contracts and perform relevant projects after the original completion date, clause 15 continued to operate. For this dispute, the restriction lasted until certification of the last relevant project, which the evidence showed occurred in late 2005 or early 2006.
5. Actual completion and waiver. Clause 15 required certification, not proof that the works were in fact practically complete independently of the certification. In any event, the evidence established practical completion. The court would alternatively have found that any requirement for physical issue of a certificate had been waived or that the employer was estopped from relying on its absence.
6. Disposition. The jurisdiction challenge failed. The claim had a reasonable prospect of success and was neither struck out nor suitable for summary judgment. Both limbs of the defendant’s application failed.

not stated in the judgment.