Maftoon (t/a Fm Construction Services) v Sayed & Anor

Key legal principles: The court applied the objective test for identifying the contracting party, following the approach in Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 430: extrinsic evidence is admissible; the question is what a reasonable person, furnished with the relevant information, would conclude; a person who signs becomes a contracting party unless the document or admissible extrinsic evidence makes clear he signed as agent or as an officer of an identified company.

Material grounds for decision: The judge evaluated contemporary communications, quotations and invoices, the timing of company incorporation, payments made, the insertion of a manuscript acceptance stating "Accepted by Lebaneat (Yarm) Limited", the company's dormant accounts and correspondence with the District Valuation Office. None of the contemporaneous documents clearly notified the claimant that he was contracting with a company rather than with Mr Sayed personally. The court found that the communications and conduct prior to and at the time of agreement supported the conclusion that the contract was made with Mr Sayed in his personal capacity.

The claimant, Mr Farad Maftoon trading as FM Construction Services, brought Part 8 proceedings to determine whether a contract for building and fit-out works at 48 High Street, Yarm was made with the first defendant, Mr Ahmed Sayed, personally, or with the second defendant, Lebaneat (Yarm) Limited, acting by its director Mr Sayed. The issue arose after an adjudicator resigned, concluding on the balance of probabilities that the company was the contracting party and that he therefore lacked jurisdiction.

The claimant sought a binding judicial declaration of the identity of the contracting party. The court directed that the matter be decided on written evidence. The first defendant contested that he was acting on behalf of the company and relied on certain invoices addressed to "Lebaneat", payments made by the company, a manuscript acceptance added to the earlier quotation reading "Accepted by Lebaneat (Yarm) Limited", and the company's filed accounts.

The court framed the issues as: (i) what was the identity of the contracting party; (ii) whether, objectively, the claimant was put on notice that the company and not Mr Sayed personally was contracting; and (iii) the admissibility and weight of extrinsic evidence including subsequent invoices, payments and company accounts. The court also considered procedural matters including representation and whether additional oral evidence from a company operations manager should be allowed; that application was refused.

In addressing the central issue the court applied the legal principles set out by the Court of Appeal in Hamid v Francis Bradshaw Partnership: extrinsic evidence is admissible; the inquiry is objective; a signer is a contracting party unless the document or admissible extrinsic evidence shows the signer signed as agent or as an officer of an identified company. The court reviewed contemporaneous emails, the 15 September 2018 estimate and subsequent emails, the timing of the company's incorporation (13 March 2018), the lease dated 17 September 2018 granted to Lebaneat (Yarm) Limited, payments made by the company, invoices prepared by the claimant (some addressed to company names), the manuscript acceptance, correspondence with the District Valuation Office requesting "signed contracts", and the company's filed dormant accounts for the year to 31 March 2019. The court treated the dormant accounts as of limited weight and considered the company accounts suspect in light of payments made during the period and the statutory tests for dormancy (s1169 Companies Act 2006 was noted).

Weighing the evidence, the court concluded that on the balance of probabilities the contract was with Mr Sayed in his personal capacity. The judge invited the parties to agree a form of order to give effect to that determination and directed the parties to fix a further hearing if they could not agree the consequential steps.

The court decided the claim in favour of the claimant: on the balance of probabilities the contract for the works at Yarm was entered into with the first defendant, Mr Ahmed Sayed, in his personal capacity rather than with Lebaneat (Yarm) Limited. The rationale was that contemporaneous communications, quotations and the circumstances at the time of agreement did not objectively make the company's involvement clear to the claimant, and the extrinsic evidence relied upon by the defendants did not establish that the parties knew the contract was with the company.