The claimant started an adjudication in relation to a dispute concerning an invoice. In the notice of adjudication, the claimant referred to the responding party in the defendant’s trading name, rather than the actual company name. The defendant questioned the notice and the adjudicator’s jurisdiction. The adjudicator considered that the trading name could reasonably be construed to be the defendant.
Following the adjudicator finding in favour of the claimant, the defendant questioned the adjudicator’s jurisdiction on the ground that the adjudication had not taken place between the correct parties because the notice contained the wrong name and was invalid. The matter went to court.
In deciding whether the notice identified the responding party correctly, the court concentrated on the substance of the notice (rather than its form) and considered, objectively, how it would have informed a reasonable recipient. This meant that the notice had to be construed as a whole against its contractual setting.
The court held:
1. There is nothing inherently fatal about the commencement, pursuance and issuance of an adjudication decision in the 'trading name' of a legal entity, where the decision is subsequently enforced in the courts against the true legal identity (paragraph 39).
2. A misdescription of a party in a notice of adjudication does not of itself affect the validity of the notice. That may be different if there is a genuine lack of clarity as to the proper parties (paragraph 42).
3. In the present case, the notice was effective and the adjudicator’s decision was enforceable. The use of the trading name could have been a reference to one of a large number of legal entities, however, there was no ambiguity or lack of charity as to the identity of the responding party when the notice was construed properly as a whole in the context of the reasonable recipient (paragraph 43). That was because:
The specific property and project were expressly referred to in the notice.
The property and project were put beyond doubt by other details included in the notice. Those other details included references to the quotation, pre-contract correspondence and the payment notices.
The property was owned by the defendant. No other legal entities using the same trading name as the defendant were involved in the property or the project.
4. It would be surprising if a notice should be deemed ineffective for failing to sufficiently identify the parties in circumstances where the recipient was, in fact, in no doubt as to the correct legal entity to which the trading name was intended to refer (paragraph 45).
5. Any confusion on the part of the claimant during the adjudication as to the correct contracting party was not relevant as the notice was to be determined objectively. In any event, any confusion was caused, at least in part, by the defendant’s opaque initial communication to the adjudicator (paragraph 47).
The judgment in MG Scaffolding (Oxford) Ltd v Palmloch Ltd demonstrates the court’s reluctance to interfere with adjudicators’ decisions. That said, it is advisable for referring parties to identify the identity of the responding party with as much precision as possible so as to avoid unnecessary time and costs being expended in arguing that the adjudicator does not have jurisdiction both before and during the adjudication. Should you wish to discuss who the parties are in a particular contract or the drafting of a notice of adjudication, please contact us and we will be happy to assist.
19/05