Dacy Building Services Ltd v IDM Properties LLP

An oral construction contract is sufficient to engage the statutory adjudication regime. Whether a contract was concluded, and the identity of the contracting parties, are questions of fact determined objectively from the evidence, including documents, surrounding circumstances and the parties’ understanding of the relevant discussion. A short or informal meeting may create a binding contract where the essential terms and an intention to create legal relations are established.

Adjudication enforcement applications should ordinarily be dealt with summarily. A trial involving contested oral evidence will be justified only very rarely. Where late evidence is challenged, the court must apply the three-stage test concerning seriousness, explanation and all the circumstances.

Dacy Building Services Ltd sought to enforce an adjudicator’s decision requiring IDM Properties LLP to pay £247,250 plus interest for construction works. IDM resisted enforcement, contending that it had no contract with Dacy and that the adjudicator therefore lacked jurisdiction.

On an earlier summary judgment application, Jefford J directed an expedited trial of whether Dacy and IDM had concluded an oral contract. The alleged agreement arose at a short meeting on 3 December 2015, against the background of the main contractor’s financial difficulties and the direct payment of Dacy by an IDM company. The central issue was whether Dacy contracted with IDM Properties, with HOC, or with nobody.

1. Late evidence. The court admitted a witness statement served after the ordered deadline. Applying Denton v TH White Ltd [2014] EWCA Civ 906, the breach was serious, the explanation was partly understandable, and consideration of all the circumstances favoured admission. The opposing party had adequate time to address the evidence and would not require an adjournment.
2. Assessment of oral evidence. Recollection should not be treated as the paramount source of authenticity. The court should draw inferences from documentary evidence and known or probable facts, while using oral evidence and cross-examination to test the documentary record and assess witnesses. Confidence does not establish accuracy.
3. Contract formation. The identity of the contracting parties was a question of fact going to the existence of the contract, applying Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715. The court accepted the evidence that IDM Properties’ representative agreed that Dacy would contract directly with IDM Properties, while HOC would direct the works. The surrounding circumstances, payment arrangements, direct involvement in Dacy’s rates and due diligence, and contemporaneous documents supported that conclusion. The case was materially different from and distinguished Badgerhill Properties Ltd v Beverley Ann Cottrell (1990) 54 BLR 23.
4. The meeting created an intention to create legal relations. Its brief duration and location in a bus shelter were immaterial. The circumstances were commercial and the essential points were agreed face to face. This was unlike the banter considered in Blue v Ashley [2017] EWHC 1928.
5. Adjudication. Section 139 of the Local Democracy, Economic Development and Construction Act 2009 had removed the former writing requirement in section 107 of the Housing Grants, Construction and Regeneration Act 1996. The oral contract therefore fell within the statutory regime. The adjudicator had jurisdiction, and his decision was enforceable. Dacy was entitled to judgment for the sum awarded.

This was a first-instance trial following an earlier enforcement application. Jefford J’s judgment is reported at [2016] EWHC 3007 (TCC); she directed a trial of the issue whether Dacy and IDM Properties had concluded a contract. The present court determined that issue and entered judgment for Dacy on the adjudicator’s decision.