Universal Music Operations Limited -v- Flairnote Limited & Others
The building contract was entered into between the employer and the contractor, and not between the project manager and the contractor
24 August, 2000
The employer sought a declaration from the court that the Construction Act 1996 did not apply to its dispute with the contractor on the ground that there was no contract between it and the contractor by reason of the contract having been between it and the project manager. Judge Wilcox held that the building contract was entered into between the employer and the contractor with the result that the adjudication begun by the contractor against the employer could therefore validly proceed. This was on the basis that the project manager was the employer's agent (with express written authority), that this agency was modified and confirmed in the contract of engagement between the employer and the project manager and that there was a concluded building contract between the project manager (acting on the employer's behalf) and the contractor. In particular the effects of the contract of engagement between the employer and the project manager were that it provided for and governed the appointment of a project manager, presupposed that the carrying out of the building works would be governed by a building contract between the employer and the contractor, was administratively convenient and did not insulate the employer from any liability for contracts placed on its behalf by the project manager. The employer's company secretary's e-mail to the project manager in which he set out his view that the project manager's fees would have to be reconsidered on the basis that the project was "no longer going down the construction management route" was doubtless coloured by an argument for therefore reducing the project manager's fees but he (1) knew that it was intended that the employer would act in that capacity and the provision in the (at that time proposed) contract of engagement whereby the project manager was to arrange for the execution of the building contract between the employer and the contractor was not a mere oversight on his part (despite his evidence to the country) and (2) Had given the project manager authority to enter into the building contract as the employer's agent. Advice Note The courts are prepared to investigate and determine whether a construction contract was concluded between specified parties so that the adjudicator's jurisdiction to decide the dispute referred to him can be definitively resolved before any (abortive) adjudication takes place.