Dacy Building Services Ltd v IDM Properties LLP

An adjudicator cannot ordinarily determine whether a contract exists at all where one party has clearly reserved its jurisdictional objection. Agreement to the adjudicator’s nomination, without more, does not confer that jurisdiction. Although oral construction contracts fall within the adjudication provisions following the deletion of section 107 of the Housing Grants, Construction and Regeneration Act 1996, that change does not remove the distinction between disputes about the terms of an admitted contract and a fundamental dispute about whether any contract exists. At enforcement, where the jurisdictional challenge depends on conflicting evidence about contract formation or identity, summary judgment should be refused if the resisting party has a real prospect of success.

Dacy supplied labour, plant and materials on a construction project after an alleged oral agreement with IDM Properties LLP. An adjudicator decided that the parties had made such a contract and ordered IDM Properties to pay £247,250 plus interest. IDM Properties resisted enforcement, asserting that Dacy had contracted with HOC, or possibly another IDM group company, and that there was no contract between Dacy and IDM Properties.

Dacy applied for summary judgment to enforce the adjudicator’s decision. The central issues were whether IDM Properties had submitted to the adjudicator’s jurisdiction and whether its case that no contract existed between the parties had a realistic prospect of success.

1. Jurisdictional objection. A responding party must raise an objection to an adjudicator’s jurisdiction promptly and clearly. It may then participate in the adjudication while preserving its right to resist enforcement. IDM Properties had repeatedly and clearly maintained that there was no contract and had not submitted to the adjudicator’s jurisdiction.
2. Agreement to nomination. Agreement to the nomination of a particular adjudicator does not, without more, amount to agreement that the adjudicator has jurisdiction over a particular dispute. Parties may agree an adjudicator’s identity while still reserving jurisdictional objections.
3. Contract existence. An adjudicator’s jurisdiction derives from the contract and the adjudication provisions implied by section 108(1) of the Housing Grants, Construction and Regeneration Act 1996. Whether a contract exists at all between the parties is therefore a jurisdictional issue. The statutory removal of section 107 brought oral contracts within the adjudication regime, but did not confer jurisdiction to decide a fundamental no-contract dispute where jurisdiction was objected to and no agreement to determine that issue had been shown.
4. Summary judgment. Under Part 24 of the Civil Procedure Rules 1998, the question was whether IDM Properties had a real prospect of successfully defending enforcement. The evidence concerning the December meeting, subsequent instructions, invoicing and payments was materially conflicting. It did not establish clearly whether Dacy contracted with IDM Properties, HOC, another IDM company, or no party. The issue could not fairly be resolved summarily.
5. The application for summary judgment was dismissed. No findings of fact were made on the disputed evidence.