Primus Build Ltd v Pompey Centre Ltd & Anor
Case reference:
[2009] EWHC 1487 (TCC)
Tuesday, 16 June 2009
Key terms: Service of Notice - Natural Justice - Adjudicator's Jurisdiction
Pompey engaged Primus to provide construction management services in relation to the construction of a hotel and an office building in Portsmouth. Primus submitted a Notice of Adjudication claiming loss of profit in the sum of £107,253.73 relating to works that were omitted from the contract. The Adjudicator decided that the sum of £47,870.91 plus VAT and interest should be paid by Pompey to Primus. This sum was not paid.
Pompey claimed that the Notice of Adjudication was not served in accordance with clause 26 of the CIC Model Adjudication Procedure which was incorporated into the contract.
The Notice of Adjudication was served by post, and was actually received by Pompey the following day. In addition, this Notice was seen by Pompey's solicitor on the day it was received. Pompey argued that the Notice should have been served by personal delivery, which in their view was akin to personal service, and this breach of clause 26 went to the root of the adjudicator's decision. Primus argued that although service was by way of post, it was clear that actual receipt had been established and that there was no breach of clause 26.
The Judge remarked that technical points regarding the service of documents in adjudications have not normally found favour with the Courts. The term "personal delivery" was interpreted by the Judge to mean "the actual delivery by an appropriate individual within Primus to a similarly appropriate individual within Pompey". It was concluded that the actual method of delivery did not matter, and that since actual personal delivery to Pompey's solicitor was achieved, there was no breach of clause 26.
Secondly, Pompey took issue with the manner in which the adjudicator had decided the loss of profit claim. It was argued that the decision was made without jurisdiction and/or in breach of natural justice because it was based on an approach which neither side had raised. The adjudicator had calculated his award by using a figure from Primus' accounts, however both parties had agreed that these accounts should be ignored. The adjudicator had thus gone beyond the parties' agreement and did not have jurisdiction.
In considering whether there was a breach of natural justice, the Judge had to decide if the adjudicator should have obtained the parties' submissions on how he calculated his award. This is always a matter of fact and degree as it is not possible for the adjudicator to consult the parties at every step leading to the award. However, the Judge considered that this case was similar to that of Balfour Beatty Construction Ltd -v- London Borough of Lambeth and Shimizu Europe Ltd -v- LBJ Fabrications Ltd, and that the parties should have been consulted. In addition, because the entire award was based on the calculation it was held to be a material breach of natural justice. Therefore the decision was not enforced.
Pompey claimed that the Notice of Adjudication was not served in accordance with clause 26 of the CIC Model Adjudication Procedure which was incorporated into the contract.
The Notice of Adjudication was served by post, and was actually received by Pompey the following day. In addition, this Notice was seen by Pompey's solicitor on the day it was received. Pompey argued that the Notice should have been served by personal delivery, which in their view was akin to personal service, and this breach of clause 26 went to the root of the adjudicator's decision. Primus argued that although service was by way of post, it was clear that actual receipt had been established and that there was no breach of clause 26.
The Judge remarked that technical points regarding the service of documents in adjudications have not normally found favour with the Courts. The term "personal delivery" was interpreted by the Judge to mean "the actual delivery by an appropriate individual within Primus to a similarly appropriate individual within Pompey". It was concluded that the actual method of delivery did not matter, and that since actual personal delivery to Pompey's solicitor was achieved, there was no breach of clause 26.
Secondly, Pompey took issue with the manner in which the adjudicator had decided the loss of profit claim. It was argued that the decision was made without jurisdiction and/or in breach of natural justice because it was based on an approach which neither side had raised. The adjudicator had calculated his award by using a figure from Primus' accounts, however both parties had agreed that these accounts should be ignored. The adjudicator had thus gone beyond the parties' agreement and did not have jurisdiction.
In considering whether there was a breach of natural justice, the Judge had to decide if the adjudicator should have obtained the parties' submissions on how he calculated his award. This is always a matter of fact and degree as it is not possible for the adjudicator to consult the parties at every step leading to the award. However, the Judge considered that this case was similar to that of Balfour Beatty Construction Ltd -v- London Borough of Lambeth and Shimizu Europe Ltd -v- LBJ Fabrications Ltd, and that the parties should have been consulted. In addition, because the entire award was based on the calculation it was held to be a material breach of natural justice. Therefore the decision was not enforced.