Happy New Year to one and all! It has been a very interesting year that has just passed, and in many ways, I think we are all glad to see the back of it! There are still a lot of issues still occurring as we write, scandal, intrigue, bonuses, everything in the melting pot and then laterally the terrible Haitian disaster. It puts things into perspective!
But back to the life and times of Courts and Construction! Often times we hear of words like ‘novation’ creeping in to contracts. This is similar to letters of intent. In fact the reality is that there has to be a proper test in place to establish that a novation has taken place. A little known case came right the whole way through to the Technology and Construction Court in the name of Camillin Denny Architects Ltd v Adelaide Jones & Company Ltd (2009) EWHC 2110 (TCC).
In essence, the Claimant, who was Camillin (“CDA”) was contracted by Adelaide (“AJ”), the Defendant, to provide architectural services for a project in Mayfair. During the tenure and near the end of the work, discussion happened about a different company called Euro Constructions to be proposed in place of Adelaide Jones. On or around July 2008, Camillin submitted two alternative proposals which were back dated to February 2008 for expediency basis, and forwarded to Euro Constructions. On or around the 24th July 2008, Adelaide Jones confirmed that the contract would require signature by the Director of Euro Constructions in order for entirety and acceptance to have taken place. A Notice of Adjudication was issued by Camillin to Adelaide Jones in April 2009 which was relating to unpaid invoices.
An adjudicator was nominated by the RIBA, the matter being of Architectural interest. Adelaide Jones reserved their position as to jurisdiction and confirmed that they had been replaced by novation by Euro Constructions. The adjudicator pressed on and issued a decision on June 2009 which was found in his decision that the Camillin and Adelaide Jones contract had not been removed or taken over by the contract between Camillin and Euro Constructions. Furthermore, he decided that Adelaide Jones should pay Camillin a total of £111,478.14. As a result of this decision, Camillin issued proceedings in July 2009 to enforce the Adjudicator’s decision. Adelaide Jones in the normal way resisted, relying on their stated original position saying that the Adjudicator, with respect, had no jurisdiction since they believed that the contract was novated to Euro Constructions.
They said such novation took place in July 2008. Adelaide Jones also alleged that the adjudicator had a degree of bias as they had also been punished on costs. Mr Justice Akenhead heard the matter, and gave a decision which is of interest. He decided that Adelaide Jones had no prospect of establishing there was an effective novation, there was no evidence as to whether Camillin’s July 2008 proposals were accepted by the other party, Euro Construction (remember the need for a signed document), and that the minutes of a meeting of September 2008 indicated that Euro Constructions had not decided what proposal from Camillin, to accept as there was two alternative proposals at that time, there was continuing discussion about the price and finally there was no evidence that Euro Constructions was ever incorporated in to the contracts. On a second head he found that Adelaide Jones had not in any way established bias or a breach of the natural justice that is required in Adjudication. He found that the adjudicator was both fair and reasonable, acting within his jurisdiction and discretion.
It is interesting to note that this case got so far, when the very basis of novation requires certainty and clarity. To get to the TCC and for the Judge to discover that in September 2008, there were two proposals and that there was no agreement as to price was surprising to say the least. This establishes the basic contract law which we all read in University and of interest, that there must be certainty, there must be a bargain and an act of forebearing and giving to complete the contract in the around. The simple issues at this stage were lost in the correspondence which is often the case. It forewarns us to check the detail and do not lose sight of the principles during negotiation. Those principles are simple contractual principles.
I have been examining recently a number of cases with the very same issues where people believe something to have happened but when the case is read, and you give a view, they are somewhat baffled to discover what they had thought had been cast in stone, actually had never come into being. So on with the New Year - check the paperwork, check the fine print and follow the matter through to conclusion. That is what is necessary in the current environment. Companies cannot afford to take risks, don’t take risks - take advice if you are unsure. That’s my New Year resolution for you.
By Adrian Kearney Director
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