Neutral citation: Sitol UK Ltd v Finegold and another [2018] EWHC 3969 (TCC).

NEC contract topics: notification of disputes, clause 93.3.

Form of contract: NEC3 Short Contract.

Main areas of law: enforcement of adjudication decisions, Part 24 of the Civil Procedure Rules, contract formation and agency.

 

The dispute arose out of a residential refurbishment project at the property of Mr and Mrs Finegold in Hampstead. Sitol UK Ltd, a specialist tiling and ceramic company, was engaged to carry out the works. Proman UK Limited, which entered voluntary liquidation in 2017, was central to the arrangement and described itself as a project manager.

Sitol’s role was defined through a contract that named Mr and Mrs Finegold as the employer and Sitol as the contractor. The form of contract was NEC3 Short Contract. The contract was signed by Sitol and returned to Proman. However, the Finegolds did not sign the contract and in court it was unclear whether they even received a copy.

Among its provisions, clause 93.3 of the NEC3 contract stipulated that a party may refer a dispute to adjudication only if it notified the other party of the dispute within four weeks of becoming aware of it. The contract was for a domestic client so the Housing Grants Construction and Regeneration Act 1996 (Construction Act) and the right to adjudicate ‘at any time” did not apply.

Following Proman’s liquidation, Sitol issued demands for unpaid sums to the Finegolds directly. The Finegolds denied liability, asserting there was no contract between them and Sitol, and that Proman had acted as the main contractor. Sitol initiated adjudication proceedings, resulting in an award by the adjudicator to Sitol for the claimed outstanding sums for works done of £44,838.38. Notably, the adjudicator’s fees of £41,534.18 were paid in their entirety by Sitol. The case addressed Sitol’s application to enforce that award.

 

The court was required to resolve two core issues. First, whether there was a direct contractual relationship between Sitol and the Finegolds, or whether the contract was with Proman alone. This was referred to as the “contract point.” Second, whether Sitol had referred the dispute to adjudication in accordance with clause 93.3 of the NEC3 contract, the “timing point.”

The claimant contended that the NEC3 contract was entered into with the Finegolds via Proman acting as agent and that the adjudication referral was timely. The defendants maintained there was no such contract and that Sitol’s referral to adjudication was out of time under the contract.

 

Mr Justice Waksman concluded that Sitol had contracted with the Finegolds through Proman acting as agent. He reviewed extensive correspondence, including a 21 March 2015 email in which Proman stated that it would act as “project managers” for the Finegolds and would charge a fee for that service. The judge noted this description was never disputed contemporaneously by the Finegolds and found that the email, along with other documents and Proman’s own evidence, demonstrated the true nature of Proman’s role. He concluded, “It is clear that this contract was between Sitol Limited, on the one hand, and the Finegolds on the other, through Proman as agent.”

However, in relation to the timing point, the judge found against Sitol. He referred to the notification clause in the NEC3 contract and relied on legal principles drawn from Amec v Secretary of State for Transport (2004).  He found that a dispute had crystallised by 19 February 2018, following a letter from the Finegolds’ solicitors expressly rejecting Sitol’s claim and asserting that the contractual relationship was with Proman, not the Finegolds. The judge rejected the argument that the request for further evidence delayed crystallisation of the dispute He stated: “This is, on any analysis, a case of an express rejection of the claim... the dispute had crystallised once DLA had written its letter of 19 February.”

Sitol’s adjudication notice was issued no earlier than 25 April. As such, the court found Sitol had failed to comply with the four week notification requirement in clause 93.3. The court, while noting it did so “with no great enthusiasm,” dismissed the application to enforce the adjudicator’s decision.

 

This case emphasises the significance of contractual clarity regarding the identity of parties and the nature of agency relationships. Even where an intermediary is deeply involved in managing and administering the project, the underlying contractual intent and documentary evidence will be decisive.

For NEC contract users, the case highlights the enforceability of clause 93.3. The clause requiring notification of a dispute within four weeks of becoming aware of it was upheld by the court. The judge made it clear that express rejections in correspondence are sufficient to trigger the notification period, even where a party is still invited to provide supporting evidence or seek legal advice. The court treated the clause as a condition precedent.

This outcome illustrates that procedural missteps, even where a party has substantive entitlement, can render adjudication proceedings unenforceable. NEC contract users should take particular care in documenting when a dispute has arisen and ensure that notifications are issued promptly to preserve their right to adjudicate.

The decision serves as a caution to contractors and consultants not to assume that informal correspondence or ambiguity about timing will delay the start of a notification period. Determining when a dispute arises is a matter of objective assessment, and failure to comply with clear contractual deadlines may lead to otherwise valid claims being struck out.