Olympic Village Case: TCC declines to award summary judgment to enforce adjudication awards worth £1.2 million.

Jefford J has handed down judgment in the case of M Hart Construction Limited and another v Ideal Response Group Limited [2018] EWHC 314 (TCC), a construction case concerning the circumstances in which a novation of contracts can be implied from a parties’ dealings with each other. The judgment also arguably reiterates the reluctance of the Technology and Construction Court to award summary judgment in cases based on disputed oral contracts.

The parties were construction companies carrying out work as part of the converting of the old Olympic Athletes Village into residential use. The Defendant entered into a verbal and informal contract with the driving force behind the First Claimant company (MHCL), Mr Hart, who was acting in a personal capacity before MHCL had commenced trading. Two sets of adjudication proceedings were brought MHCL under the Housing Grants Construction and Regeneration Act 1996, which were partially successful and resulted in adjudicators making awards in MHCL’s favour totalling £1.2 million. The problem for MHCL, however, was that the contracts cited in the notices of adjudication were contracts entered into by Mr Hart personally and therefore not with the party bringing the adjudications.

MHCL sought to argue that various factual circumstances existed from which a novation of those contracts could clearly be implied, meaning that by January 2015 the relevant contracts had been novated ab initio (i.e. the original contracts had been extinguished and replaced by a contract to which MHCL was a party). At the heart of the Claimant’s argument was an alleged conversation between Mr Hart and Mr Ibrahim (the driving force behind the Defendant company) in January 2015, a conversation which was hotly disputed between the parties. Jefford J approved of the comments of Coulson J in RCS Contractors Ltd v. Conway [2017] EWHC 715 to the effect that a disputed oral agreement will rarely be the subject of successful summary judgment application. Her ladyship distinguished another Coulson J judgment, Enterprise Managed Services Ltd v Tony McFadden Utilities Ltd [2009] EWHC 3222 (TCC). In that case, much clearer circumstances existing from which a novation could be implied, including the payment of large sums of money by a party whom had purchased the assets of an original contracting party.

In respect of the Hart adjudications, the Defendant had a real prospect of successfully arguing at trial that there had been no novation of the underlying contracts to MHCL. Jefford J therefore declined to enter summary judgment for the First Claimant but did agree to enter summary judgment for a smaller but related third adjudicator’s award in favour of the Second Claimant.

Clifford Darton and Tom Kirk, instructed by Watkins Ryder, represented the successful Defendant.

 

12th March 2018