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

Where an individual contracts with another party, the individual is the contracting party unless the document or admissible extrinsic evidence makes clear that the individual acted as agent or as an officer of a sufficiently identified company. The inquiry is objective and depends on what a reasonable person with the relevant information would conclude. Private assumptions, information that could have been discovered by independent inquiry, ambiguous use of words such as “we”, and post-contract documents will not ordinarily establish agency retrospectively. The court may consider the parties’ prior dealings and surrounding correspondence, but the company’s undisclosed involvement must have been communicated before or when the contract was made.

The claimant, a building contractor trading as FM Construction Services, sought a declaration concerning the identity of the contracting party for works at a restaurant in Yarm. The works had been the subject of adjudication proceedings, but the adjudicator resigned after concluding that he lacked jurisdiction to determine whether the contract was with the first defendant personally or with the second defendant company.

The issue before the High Court was whether the contract was formed with Ahmed Sayed in his personal capacity or with Lebaneat (Yarm) Limited acting through him. The court determined the issue on written evidence.

1. Contracting capacity. The court applied the objective principles stated in Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 430. The question was whether Mr Sayed contracted personally or made it clear that he was acting as director or agent for the Company.
2. The September estimate was addressed to Mr Sayed personally. His subsequent email confirming that the works could proceed did not state that he acted for the Company. The word “we” was ambiguous and did not establish corporate capacity.
3. The negotiations began before the Company was incorporated and there was no evidence that Mr Sayed communicated to the claimant, before contract formation, that he was negotiating or contracting on the Company’s behalf. Earlier invoices, payments by the Company, and later documents did not alter the position because the contract was already on foot and the claimant’s knowledge at formation remained unproved.
4. The court did not rely on the dormant company accounts. Although the Company had treated itself as dormant, its payments were at least “significant accounting transactions” within section 1169 of the Companies Act 2006, making the accounts suspect whichever case was accepted.
5. The court also noted that the relevant documents failed to contain the company details required by regulation 24 of the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015. The material point was that the claimant had not been told of the Company’s existence or of Mr Sayed’s alleged representative capacity.
6. On the balance of probabilities, the contract was between the claimant and Mr Sayed personally. The parties were invited to agree an order giving effect to the judgment.