Stirling V Westminster Properties Scotland Ltd

The builder's incorporation of a company after the contract had been concluded between himself and the employer and the use of the company's name on letters and invoices subsequently issued by the builder did not mean that no dispute could have arisen for adjudication purposes
 
STIRLING V WESTMINSTER PROPERTIES SCOTLAND LTD

Scotland, Outer House, Court of Session
Lord Drummond Young
9 July 2007
 
The adjudicator awarded the builder the amount certified in an interim payment certificate. The builder brought court enforcement proceedings when the employer refused to pay the amount awarded on the ground that the adjudicator had no jurisdiction. One of the jurisdictional challenges was that no dispute could have arisen for adjudication purposes in relation to the unpaid interim payment certificate by reason of the incorporation by the builder of a company (of which he was the sole director) after the contract had been concluded between himself (in his personal capacity as a sole trader) and the employer and the use of the company's name on letters and invoices subsequently issued by the builder.
 
Lord Drummond Young held that this jurisdictional challenge was wrong on the on the basis that the commercially sensible construction of the post contract documentation which should be adopted was that the company was acting as the builder's ad hoc agent for the purposes of the contract and that if the doctrine of separate corporate identity were to have been applied, the result would probably have been nonsensical. If the doctrine of separate corporate personality was applied with its full vigour, the employer's contention was clearly correct but that approach was too simplistic insofar as (i) in commercial practice it was not unusual to discover that the niceties of the doctrine of separate corporate personality were ignored (ii) it was frequently found that correspondence after a contract had been concluded in the name of an individual trader, who then transferred his business to a company, proceeded in the company's name (rather than in the trader's name) (iii) if in such a case the correspondence was to be construed literally as proceeding in the company's name, the result was likely to be nonsensical and the only sensible inference in accordance with the parties' intention would normally be that the company in conducting the correspondence was acting as an ad hoc agent for the trader (as the contracting party) and (iv) a similar inference could readily be drawn where a contract was made in the name of a company which was a member of a group of companies but correspondence was conducted by another company in the group.
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