Air Design (Kent) Ltd v Deerglen (Jersey) Ltd
Citation: [2008] EWHC 3047 (TCC)
Background Facts
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Parties:
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Claimant: Air Design (Kent) Ltd ("Air Design"), a small mechanical services contractor.
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Defendant: Deerglen (Jersey) Ltd ("Deerglen"), the main contractor.
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Project:
Liberty Wharf Phase 3 in Jersey — a six-storey office building. Air Design was subcontracted to carry out mechanical installations.
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Contracts:
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Basebuild Contract: Dated April 2007 for £1.36 million, covering initial mechanical works.
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CPA Arrangement: Additional works for tenant CPA, based on a letter of intent, value £325,000.
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BMS Arrangement: Additional building management system and cooling works for £53,500.
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Supplementary Agreement: November 2007 agreement consolidating the above, specifying final sums and payment milestones.
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Dispute:
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Air Design claimed further sums were due and referred the dispute to adjudication.
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Deerglen argued there were multiple separate contracts and that the adjudicator had no jurisdiction over CPA and BMS arrangements.
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Air Design asserted there was one overall contract varied by these additional works.
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​Judgment
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Jurisdiction issue:
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The court rejected Deerglen’s argument that there were separate contracts.
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Found that CPA and BMS works were variations under the Basebuild Contract, and the Supplementary Agreement consolidated all works into a single main contract.
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Adjudicator’s jurisdiction:
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The adjudicator was entitled to determine whether variations were part of the main contract.
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Even if potentially wrong on whether there was one or more contracts, this was a substantive decision within his jurisdiction, not a jurisdictional error.
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Stay of execution:
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Deerglen applied for a stay, arguing Air Design would not be able to repay if it was later found not entitled.
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Application for stay was refused: Air Design’s financial position was similar to when the contract was formed; insolvency was not proven.
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Outcome:
Judgment granted in Air Design’s favour for £139,964 plus interest. No stay of execution.
General Principles Developed
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Single vs multiple contracts:
When additional works are clearly tied to a base contract and referred back to it in documentation (e.g., CPA and BMS arrangements here), they will often be treated as variations, not separate contracts.
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Scope of adjudicator’s jurisdiction:
Adjudicators can determine questions on the scope of the contract (e.g., whether variations are included), and such findings are binding at enforcement stage, even if arguably incorrect.
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Wide interpretation of adjudication clauses:
Reflecting Fiona Trust principles, courts support a broad, commercial approach to adjudication clauses to avoid fragmented dispute resolution.
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Enforcement approach:
Reinforces that adjudicators’ decisions will be summarily enforced unless clear jurisdictional or natural justice breaches exist.
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Stay of execution guidance:
A stay will generally not be granted merely because of weak financial position if that position was the same at contract formation. Burden is on the defendant to prove insolvency or significant deterioration.