Adjudication Matters – November 2019

1st November 2019

What’s in a name?

In MG Scaffolding (Oxford) Ltd v Palmloch Ltd [2019] EWHC 1787 (TCC), the Technology & Construction Court (TCC) dismissed an adjudication enforcement challenge concerning a potential ambiguity regarding the identity of the Responding Party. The Referring Party had referred to the trading name, rather than the legal name, of the Responding Party within the adjudication proceedings. However, on the facts particular to this case, the court determined that there was sufficient certainty as to the intended parties to the dispute, so that the Adjudicator’s original decision should be enforced.

Background

In 2017, Mr Binfield, of MG Scaffolding (Oxford) Ltd (MGS) was asked by a Mr Lewin, of MCR Property Group (MCR), to provide a quote for scaffolding services. Mr Lewin’s email address ended in ‘@mcrproperty.com’ and a quotation was subsequently emailed to Mr Lewin at ‘MCR Property Group’, as requested. A Purchase Order dated 3 October 2017 was subsequently raised, and was headed ‘Palmloch Limited’ (Palmloch) rather than ‘MCR’.

Upon the completion its services, MGS issued an invoice to Palmloch, as previously requested by Mr Lewin. Palmloch did not issue a pay less notice, and failed to pay the sum requested for the services.

Adjudication

MGS commenced an adjudication against MCR on 7 December 2018 for the unpaid sum. An Adjudicator was appointed on 10 December and the Referral Notice was served on 14 December.

On 17 December, Palmloch sent a letter to the Adjudicator on paper headed with an ‘MCR’ logo and footed with ‘MCR Property Group is a trading name of MCR Management Limited’. The letter stated that MCR did not consider there to be any claim or issue to be determined by Adjudicator. The letter further stated that MCR had no assets of its own, had no outstanding debt with MGS and was simply a brand name. The letter denied any contractual link between MCR and MGS, and concluded that there could be no dispute between the parties as a consequence.

The Adjudicator determined that Palmloch’s letter raised a jurisdictional challenge – although this terminology was not expressly used within the letter – and invited both parties to make further submissions concerning the Adjudicator’s jurisdiction to determine the dispute.

After considering further submissions, the Adjudicator determined that the jurisdictional challenge failed. While the true contracting party was Palmloch, it was reasonable to construe MCR as the Responding Party on the basis that MCR was a trading name for Palmloch.

The Adjudicator ruled in favour of MGS, and ordered that Palmloch make payment to MGS. Palmloch failed to comply with the Adjudicator’s decision, and MGS subsequently commenced enforcement proceedings in the TCC.

Application for summary judgment

By way of a starting principle, the Court confirmed that an Adjudicator’s decision would usually only be enforceable if the parties to the adjudication were also the parties to the relevant contract, and parties to the enforcement proceedings.

The Court recognised as common ground that:

• the true contracting parties were MGS and Palmloch
• the Adjudication was commenced by MGS against MCR – a trading name for Palmloch with no distinct legal existence.

The Court noted that on the basis of the above, MGS did not in fact commence the adjudication against the ‘wrong’ entity’. Rather, MGS had commenced an adjudication against the trading name of the correct legal entity.

The Court referred to legal principles laid down in previous case law.. The relevant test was to objectively consider whether the Notice of Adjudication had identified the correct Responding Party. In order to assist in reaching a conclusion on this point, the Court sought to consider the relevant surrounding circumstances.

The Court determined that on the facts of this case, there could not possibly have been any lack of clarity to the reasonable recipient as to the identity of the legal entity intended to be the responding party on a proper construction of the Notice of Adjudication. Although in theory, use of the trading name could have been a reference to one of a large number of legal entities, when the Notice was construed in the context of the parties’ contractual negotiations as a whole, any reasonable ambiguity was removed.

In particular it was noted that:

• the Notice of Adjudication expressly referred to the specific property and project
• other details within the Notice also put beyond doubt the property and project to which the Notice related
• the relevant property was owned by Palmloch, and there is no suggestion that any other MCR companies were involved in the property or project in any way.

Conclusion

The Court concluded that a reasonable recipient, construing the Notice of Adjudication in the context of the wider circumstances, would have known that the use of MCR as the trading name was unambiguous and actually meant Palmloch.

This decision suggests that the courts may, under certain circumstances, be willing to enforce an adjudicator’s decision where the responding party has been referred to by its trading name. However, to avoid potential ambiguity and uncertainty, parties should nonetheless be aware of the importance of identifying the correct responding party when commencing adjudication proceedings. Had the factual background been different in this case, the Court may have chosen not to enforce the adjudicator’s decision, ultimately causing further costs and delay to the Referring Party. In particular, a company should, insofar as practicable, ensure that it is aware of the precise legal identity of any other company it transacts with. Removing potential ambiguities at the beginning of a trading relationship could save time, cost and uncertainty in the event of future disputes.