Viridis UK Ltd v Mulalley & Company Ltd

Contract formation depends objectively on what the parties communicated by words or conduct. The parties determine which terms must be agreed before they are bound. Conduct cannot objectively amount to acceptance while the same party maintains that agreement is conditional on unresolved matters. Where works are performed under separate contracts containing different adjudication provisions, a single adjudication cannot determine disputes arising under all of them without agreement to that effect. An adjudicator may decide a contractual issue as part of the substantive dispute where properly appointed under an undisputed contract, but that principle does not apply where the existence and identity of the relevant contract are themselves substantially disputed. A decision reached within jurisdiction is not ordinarily impeachable for error of law or insufficient reasons.

The claimant sought enforcement of an adjudicator’s decision awarding £213,844.99 plus VAT and fees. The parties disputed whether their window and door works were governed by one overarching order or by six separate orders. The adjudicator accepted the claimant’s jurisdictional case and decided the final account claim.

The court found that no overarching contract had been concluded and that the substantive works were performed under orders 51, 62 and 77. It therefore considered whether the adjudicator had jurisdiction to decide the contractual issue, whether enforcement could nevertheless be ordered, and whether alleged failures concerning certificates, termination and retention invalidated or reduced the decision.

The claim to enforce the adjudicator’s decision was dismissed.

1. Contract formation. Applying the objective approach in RTS v Molkerei Alois and Pagnan v Feed Products, the court held that order 24 had not been accepted. Several commercially important matters remained unresolved, including payment, programme, materials handling, design, pricing and scope. The claimant’s continued communications that matters required agreement were inconsistent with acceptance by conduct.
2. The later orders were freestanding contracts, not sub-orders or variations under order 24. The claimant’s performance, acknowledgements and payment claims were referable to those later orders. The adjudication therefore concerned disputes under three contracts with different terms and, in one case, different adjudication provisions.
3. Jurisdiction. The principle in Air Design (Kent) Limited v Deerglen (Jersey) Limited was confined by its subsequent clarification to cases where the adjudicator was properly appointed under an undisputed initial contract and the contractual issue coincided with the substantive dispute. It did not apply where there was no concluded initial contract and the parties disputed whether one contract or several contracts governed the claim. The adjudicator therefore lacked jurisdiction.
4. Even if the adjudicator had jurisdiction to decide the contractual issue, enforcement could not follow after a full trial had finally established that his answer was wrong.
5. The remaining defences failed. The adjudicator sufficiently addressed the certificate-related contra-charge by stating that he had considered the material and rejected the charges. His failure to give detailed reasons was not a natural justice breach. By raising termination as a defence, the defendant gave the adjudicator jurisdiction to decide the claimant’s response concerning the validity of the termination. Any failure to deduct retention was an error within jurisdiction.