CN Associates (A Firm) v Holbeton Ltd

A party challenging an adjudicator’s jurisdiction must make a clear reservation of its position during the adjudication. A reservation may be established objectively from the party’s words and conduct and need not use prescribed wording. Participation does not, without more, amount to agreement that the adjudicator’s ruling on jurisdiction will be binding.

Where an existing contract is alleged to have been varied by offer and acceptance through conduct, the conduct relied on must be objectively referable only to the variation, rather than being equally consistent with performance of the original contract. On a summary judgment application, genuinely arguable issues of agency, contract formation and variation may justify permission to defend, subject to payment into court.

CN Associates sought summary enforcement of an adjudicator’s decision requiring Holbeton Ltd to pay fees for construction management and quantity surveying services. Holbeton contended that the adjudicator lacked jurisdiction because there was no relevant written construction contract between Holbeton and CN Associates and because the adjudicator had not been given binding authority to determine his own jurisdiction.

The parties’ dealings included an agreement between CN Associates and Bright Services Ltd, invoices addressed to Holbeton c/o Bright, and later correspondence concerning a proposed formal appointment and amendments to the parties’ arrangements. Holbeton maintained that its Response and Rejoinder reserved its jurisdictional objections. The issues were whether there was an effective reservation, whether a binding jurisdictional agreement existed, whether Holbeton was bound by the alleged contract or variation, and whether Holbeton had a real prospect of successfully defending enforcement.

1. Reservation of jurisdiction. Holbeton’s Response and Rejoinder repeatedly asserted that the adjudicator lacked jurisdiction because there was no relevant contract and because Bright lacked authority. Objectively understood, those assertions clearly reserved Holbeton’s position, despite the absence of formulaic words. Under the principles summarised in Allied P & L Ltd v Paradigm Housing Group [2009] EWHC 2890 (TCC) and Aedifice Partnership Ltd v Ashwin Shah [2010] EWHC 2106, a clear reservation prevents participation from constituting waiver.
2. Binding determination of jurisdiction. It was unnecessary to decide whether the parties had agreed to give the adjudicator binding jurisdiction to determine his own jurisdiction. The adjudicator expressly stated that he could not make a binding ruling on jurisdiction and did not make a jurisdictional declaration in the operative part of his decision. His reasoning therefore did not finally determine the jurisdiction issue, which the court had to review.
3. Contract and variation. The court could not finally determine on the evidence whether Bright acted as Holbeton’s agent. Nor could it decide summarily whether the June 2005 correspondence created a contract or varied an existing one. Continued provision of services and invoices referring to the March 2004 fee agreement were not necessarily conduct exclusively referable to acceptance of the June correspondence. Whether that correspondence was a counter-offer or merely a negotiating position, and whether formal execution was contemplated, were genuinely arguable issues. The approach to objective acceptance by conduct in A E Yates Trenchless Solutions v Black and Veatch [2008] EWHC 3183 (TCC) supported that analysis.
4. Summary judgment and condition. Holbeton had established a realistic, though relatively weak, prospect of successfully defending the claim under CPR Part 24. Permission to defend was therefore granted on condition that Holbeton pay £136,759.21 into court within 14 days. Directions were to be given for an expedited trial, and the freezing order could thereby be discharged.

First-instance decision. No prior appellate decision is stated in the judgment.