Manor Co-Living Ltd v RY Construction Ltd
Citation: EWHC 2715 (TCC)
The Claimant made a Part 8 Claim, seeking declarations that i) the Adjudicator had deprived the Claimant of a potential Defence to the Dispute in breach of the requirements of natural justice by declining to consider whether the Claimant had had a lawful entitlement to terminate the contract; and ii) that the Decision was therefore invalid and of no effect.
The Claimant employer had purported to terminate the Defendant contractor’s employment under clause 8.4.2 of the JCT Standard Building Contract 2016. A Default Notice was sent by email on 11 November 2021, and by post on 17 November 2021 (received two days later). By a letter dated 30 November 2021, the Contract Administrator purported to terminate the contract (on behalf of the Claimant) under the contractual power, and notified the Defendant that they were barred from the site. On 2 December 2021, the Defendant sent a letter to the Claimant asserting that the Claimant’s contractual power to terminate had not been properly exercised – it was both premature and had not been sent by the employer – and that the purported termination and denial of access to the site therefore amounted to repudiatory breaches of contract.
The Defendant referred this dispute to an Adjudicator and limited its application to the question of whether the Claimant had properly exercised its contractual power to terminate; the Defendant expressly excluded the question of whether the Claimant had substantive grounds for termination. The Claimant responded that, at the time of the purported contractual termination, it had had a parallel right to terminate the contract at common law, which, by the letter dated 30 November 2021, it had validly exercised. The Claimant argued that this purported common law termination amounted to a defence to the Defendant’s claim of repudiation, and that the Adjudicator could not be confined in the way sought by the Defendant’s referral. The Adjudicator found that the Claimant had failed to properly exercise its contractual power of termination by the letter of 30 November 2021, and that letter had also not amounted to an acceptance of repudiatory breach at common law; the Claimant was therefore in repudiatory breach when it denied the Defendant access to the site, and this had been validly accepted by the Defendant.
The Present Case
The Claimant argued that the Adjudicator had accepted in his decision that barring the Defendant from the site could amount to acceptance at common law, and that, therefore, his failure to consider whether the Claimant had a substantive claim for repudiation at common law amounted to a serious and material breach of natural justice.
Held – Adam Constable KC
The Part 8 Claim for declarations failed.
The proper starting point was to consider the case actually advanced in the adjudication. The Claimant’s case was that the Termination Notice constituted a valid contractual termination notice, and in the alternative the same letter constituted a valid communication which brought to an end the contract by common law termination, accepting the Defendant’s repudiatory breach. No part of the case suggested that the conduct in refusing access to the Defendant itself constituted a valid communication of acceptance of a repudiatory breach (para 55). The Adjudicator had rejected the contention that the Termination Letter constituted an acceptance of repudiatory breach for the purposes of a common law termination, and in these circumstances, it was unnecessary for the Adjudicator to consider the substantive question of repudiatory conduct (para 56). Nowhere had the Adjudicator said that the Claimant’s conduct in denying access to the site had amounted to an acceptance of a repudiatory breach (para 61).