The Atlas Ceiling and Partition Company Ltd v Crowngate Estates (Cheltenham) Ltd 2

United Kingdom

The Court may conduct a trial on the issue of jurisdiction in place of a summary judgment application if it wishes to do so. The parties will not be held to have entered into a contract, even if one is signed, where important terms are not agreed and subsequent actions are inconsistent with the existence of an agreed contract. If a contract is entered into after 1 May 1998, even if it has retrospective effect, a right to adjudicate is implied.

HHJ Thornton QC, Technology & Construction Court

18 February 2000

The question in this case was whether the contract had come into existence prior to 1 May 1998. The adjudicator believed that the Act did apply, and A tried to enforce the award.

The Judge took an interesting approach to the question of jurisdiction. There was clearly a triable issue so summary judgment was inappropriate. However, the Judge altered the application into a full hearing on jurisdiction, by hearing the application in open court and allowing cross examination of the parties' witnesses. Once the Judge had heard the evidence, he concluded that the contract did post-date 1 May 1998, and A could enforce the decision.

In this case, a letter of intent had been sent on 18 December 1997, authorising expenditure up to around £1.3 million. This stated that if a contract was entered into, it would have retrospective effect and include works carried out under the letter of intent. A contract document was signed by both parties on 3 April 1998. However, there were matters of importance still to be agreed between the parties, including finalising accurate bills of quantities.

Correspondence continued after 3 April about the terms of the contract. On 15 May 1998, A received a second letter of intent increasing the authorised expenditure.

C argued that the retrospective nature of the contract meant that the right to adjudicate could not be implied. The Court found that the fact that a contract has retrospective effect does not affect the date upon which the contract was entered into.

The Court held that the second letter of intent was inconsistent with C's position that a contract had been formed prior to that date. The Court found on the facts that the contract actually came into existence in April 1999, and therefore the contract was subject to adjudication.

The Court may conduct a trial on the issue of jurisdiction in place of a summary judgment application if it wishes to do so. The parties will not be held to have entered into a contract, even if one is signed, where important terms are not agreed and subsequent actions are inconsistent with the existence of an agreed contract. If a contract is entered into after 1 May 1998, even if it has retrospective effect, a right to adjudicate is implied.