Injunction To Prevent Adjudication

The English Technology and Construction Court (TCC) case of Twintec Ltd v Volkerfitzpatrick Ltd (VFL) is a rare instance of an injunction being granted to prevent an adjudication and illustrates the unintended consequences of contracting based on letters of intent.

Facts

VFL was main contractor for the construction of a large warehouse and wine bottling plant for Accolade Wines. Accolade claimed that the warehouse floor was not fit for purpose. They alleged that the piling and floor slab constructed by VFL's subcontractors (Twintec and Keller) were defective. The floor issue is currently the subject of a separate court action in which Accolade are claiming for £170m.

Prior to the court action being raised, VFL had carried out testing of the floor and subsoil at a cost of £850k. They alleged that one reason the tests were required was Twintec's poor workmanship. They applied to the RICS for appointment of an adjudicator on the basis of the DOM/2 standard form of subcontract to deal with their claim for repayment by Twintec of this cost.

Twintec applied to the TCC for an injunction to prevent VFL from pursuing the adjudication. Their main argument was that the adjudicator's appointment was on the basis of a contractual provision which did not exist and therefore the appointment was invalid.

Letter of Intent

The contract Twintec had entered into with VFL was initially based on a letter of intent. The letter of intent requested Twintec "to proceed immediately with all works necessary to enable you to achieve the Design Programme and Construction Programme in accordance with the documents below". The documents referred to included the DOM/2 subcontract.

One of the main problems with the incorporation of DOM/2 in this way was that for certain clauses, there are alternatives, requiring an election to be made by the parties as to which applies. These include the choice of nominating body for the appointment of an adjudicator.

The copy of DOM/2 presented to the court had three of the choices of nominating body struck out, leaving the RICS, but there was no evidence to show that Twintec had agreed to this or even been aware of it. The choice of nominating body was considered to be "just the sort of point that could be the subject of negotiation".

Decision

It was decided that the reference to carrying out works "in accordance with" DOM/2 meant that Twintec would have...