The recent decision in CN Associates v Holbeton Limited (TCC - 26 January 2011) serves as a timely reminder as to the importance of knowing the identity of your clients. Holbeton successfully defended an application for summary judgment following an adjudication in which CN Associates ("CNA"), a firm of quantity surveyors, was awarded professional fees of £104,315.81 net.
Holbeton required refurbishment and extension of a substantial house in London. Holbeton purchased the property from a Mr Ahmed who was a director of a company called Bright Services Limited ("BSL"). BSL was a company which specialised in managing high value construction projects. By letter dated 3 March 2004 to BSL, CNA proposed terms for its engagement. The terms were accepted by Mr Ahmed on behalf of BSL. The first invoice was addressed to BSL who then requested that CNA re-issue the invoice to Holbeton Limited c/o Bright Services Limited. Holbeton paid all fees. The next four invoices were similarly addressed marked for the attention of Mr Ahmed and referred to the fee arrangement dated 3 March 2004.
By letter dated 15 June 2005, the solicitors acting for Holbeton wrote to CNA enclosing a standard form appointment in respect of services for works carried out on the project. CNA responded to this by suggesting amendments to the standard form. In the meantime, all further invoices between June 2005 and March 2007 were in identical form to the earlier invoices. CNA continued to provide the services and Holbeton continued to pay CNA. Discussions in relation to the appointment do not appear to have been concluded. The project was completed in spring of 2007. In 2010, CNA wrote to Holbeton seeking payment of the balance of fees. Holbeton refused to pay which triggered the adjudication.
Having obtained an award in their favour, CNA applied to the court to have the decision enforced on the basis that Holbeton had no real prospect of successfully defending the claim. Holbeton claimed that BSL was liable for payment, not them, as the contract relied upon was contained in the exchange of letters between CNA and BSL in March 2004. Holbeton was not party to this contract. In the circumstances, Mr Justice Akenhead formed the view that Holbeton had established a realistic prospect of a successful defence and he had little doubt that a contract was created in March 2004 between BSL and CNA. That meant the case was allowed to continue to the next stage.
The message from this case is the party paying your fees may not always be the client.