Stirling t/a M&S Contracts v Westminster Properties Scotland Ltd: An analysis

21 August 2007

Stirling t/a M&S Contracts v Westminster Properties Scotland Limited [2007] CSOH 117

The pursuer entered into a building contract with the defenders in accordance with the JCT standard form for Minor Works, which contained a provision entitling either party to refer their disputes to adjudication. The contract administrator issued an interim certificate that Mr Stirling was due a certain sum of money in respect of works carried out. The defenders having made no payment, and having issued no notice in terms of the contract stating that any other sum was due or any notice of withholding, Mr Stirling served a notice of intention to refer the matter to adjudication. After sundry procedure he was awarded a decision in his favour, which, the debt remaining unpaid, he sought in this case to enforce.

The defenders argued that at the time of serving the notice of intention to refer the matter to adjudication, there was no dispute between the parties and therefore the adjudicator lacked jurisdiction. The pursuer had, shortly after entering into the contract with the defenders, set up a company called M&S Contracts Ltd. Almost all correspondence was sent to and from the company rather than the individual, including an invoice and demands for payment. The company had even raised adjudication proceedings to recover the debt, though these were quickly abandoned once it was realised that the company was not even in existence at the time the contract was constituted. Since the pursuer himself made no effort to crystallise any dispute with the defenders before serving his notice of intention to refer, the defenders argued that this invalidated the adjudicator's decision.

However, agency is the magic dust of commercial law and can make all manner of difficulties disappear, the court in this case accepting the pursuer's submission that the company in its correspondence acted as ad hoc agent for the individual. That was sufficient to create a dispute between the parties. However the interest in the case lies more in the distinction the court drew between ordinary commercial correspondence and formal letters intimating the raising of adjudication proceedings. As it happens, this point was not even a live issue between the parties, the pursuer having accepted that the first adjudication in the name of the company was a mistake. Just for that reason, the author feels able to offer some tentative comments here.

Lord Drummond Young was of the view that the formal aspect of adjudication procedure "inevitably negate[d] the inference that one person [was] acting on behalf of another" (para 20, emphasis supplied), but it is difficult to see why this should be the case once the inference has been raised, as the court accepted it was here, that the company was earlier acting for the individual. Conversely, if the correct inference arising from the fact that a notice of adjudication is sent by the company is that the company acts in its own name, should this not retrospectively invalidate the inference that it was earlier acting on behalf of another? Whatever may have been the position in the past, if the company is said now to be acting on its own behalf, does it not thereby create a dispute between itself and the defenders (albeit that its claim must be ill-founded)? And if so, once its adjudication with the defenders was abandoned, what is it, if anything, that allows us to say that the defenders were as at this point in time in dispute with the pursuer?

Having regard to these difficulties, it is respectfully submitted that it would be better to distinguish the question of agency altogether from the question of what degree of precision is required when intimating proceedings. That allows us to say that while the company may have purported to act as agent for the pursuer when issuing its notice of adjudication, there is a separate rule of law requiring such notices to be issued by the referring party himself - always assuming it is thought desirable to have such a rule: for a contrary view, see the opinion of His Honour Judge Bowsher in Discain Project Services Ltd v Opecprime Development Ltd [2000] 2000 402, in a passage at p414 which was cited to the court.

Article by Sean Smith

Sean Smith and Martin Richardson, both of Axiom Advocates, appeared for the pursuer and defenders respectively.

http://www.scotcourts.gov.uk/opinions/2007CSOH117.html