Enforcing the adjudication of oral contracts

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M Hart Construction Limited v Ideal (2018) 177 ComLR 228 TCC

Facts

Mr Hart carried out various works for Ideal at the “Athletes Village” on the site of the former London Olympics.  Ideal had oral contracts with him (a) to carry out conversion works to residential user; and (b) for rectification of defects.  Subsequently Mr Hart set up a new limited company called M Hart Construction Limited.  He maintained that there had been a verbal novation so that this new company became the contracting party rather than Mr Hart himself.  Ideal did not accept this

The parties got into dispute over money, and the new company brought two adjudications against Ideal.  Ideal denied that there had been any novation and therefore maintained that the adjudicator did not have jurisdiction.  In each adjudication, the adjudicator decided that there had been a novation from Mr Hart to the new company and ordered Ideal to pay sums under each contract to the new company.  Ideal refused and enforcement proceedings were brought in the TCC.

TCC held:

There was a direct conflict of evidence as to whether there had been any oral novation and “it was not a case in which it was easy to infer a novation”.  The matter would therefore have to go to trial and summary judgment was refused.

Comment

  1. The normal standard of proof in any civil process – including adjudication – is 51:49 (“the balance of probabilities”). The judge was not necessarily disagreeing with the adjudicator’s finding that an oral adjudication had taken place.  Rather, he was bound by the rules which require the courts to refuse an application for “summary judgment” where there is a credible defence with a real prospect of success.
  2. This defeats the main point of adjudication, which is that it is not only fast, but also readily enforceable.  Where an adjudication dispute involves establishing whether or not an oral contract exists, or what those terms were, then there is a very real risk that the case will end up being effectively re-tried in the court.  It may therefore be better just to go to court in the first place if you have an oral contract dispute UNLESS YOU HAVE SOME SOLID CORROBORATING EVIDENCE PREFERABLY IN WRITING.

For more specialist legal advice call Keith Bishop, Head of Construction & Engineering, on 0191 211 7983 or email [email protected]