Primus Build Ltd v Pompey Centre Ltd & Anor

Factual and Procedural Background

By a written contract dated 12th October 2007, Defendant ("Pompey") engaged Plaintiff ("Primus") to provide construction management services for the construction of a hotel and office building in The City ("the project"). Clause 22 of the contract set out a dispute resolution procedure involving senior representatives and, failing resolution, adjudication under the Model Adjudication Procedure of the Construction Industry Council ("the CIC"). Clause 26 prescribed the manner of service of notices, requiring either personal delivery or fax to specified addresses.

In June 2008, the office building element was removed from Primus's scope of work. Although Primus was entitled to compensation for lost profit, Pompey rejected Primus's profit claims and suggested compensation had been adequate. On 5th March 2009, Primus issued a Notice of Adjudication claiming loss of profit, served by post and received by Pompey on 6th March 2009, including receipt by Pompey's solicitor. The adjudicator issued a decision on 14th April 2009 awarding Primus a reduced sum for loss of profit. This sum remains unpaid, prompting Primus to commence enforcement proceedings on 13th May 2009.

Legal Issues Presented

1. Whether the Notice of Adjudication was properly served in accordance with the contract and the consequences of any invalid service.
2. Whether the adjudicator's decision was valid given that it was based on a critical finding and calculation neither party relied on or had opportunity to address, raising issues of jurisdiction and natural justice.

Arguments of the Parties

Appellant's (Pompey's) Arguments

• The Notice of Adjudication was not served in accordance with clause 26, as it was neither personally delivered nor sent by fax, thus invalidating the adjudicator's jurisdiction.
• The adjudicator's decision was made without jurisdiction and/or in breach of natural justice because it was based on a profit percentage derived by the adjudicator himself from accounts that both parties agreed were irrelevant, and Pompey was not given an opportunity to comment on this approach.
• The 1.3% profit figure used by the adjudicator was unreliable and, if properly analyzed, the accounts indicated a loss rather than a profit.

Appellee's (Primus's) Arguments

• Initially accepted that service was not by fax or personal delivery under clause 26 but argued that actual receipt of the Notice by Pompey on 6th March established compliance with clause 26.
• Argued that the accounts were introduced as part of their reply and implied that the accounts were relevant to the loss of profit claim.
• Offered a three-day extension for the adjudication process, which Pompey did not accept.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93	Court's general approach to enforcing adjudicator decisions despite errors of fact or law.	Confirmed that adjudicator decisions are generally enforced unless jurisdictional or natural justice breaches occur.
Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 522	Similar principle to Macob regarding enforcement of adjudicator decisions.	Supported the enforcement of adjudicator decisions unless exceptional circumstances exist.
Carillion Construction Ltd v Devonport Royal Dockyard [2005] BLR 310	Adjudicator decisions should be enforced unless the adjudicator exceeded jurisdiction or acted unfairly.	Emphasized courts' reluctance to interfere with adjudicator decisions; applied to evaluate jurisdiction and fairness issues.
Cubitt Building & Interiors Limited v Fleetglade Limited [2006] EWHC 3413 TCC	CPR service provisions are not automatically incorporated into adjudication processes.	Supported the court's view that clause 26 governed service, not CPR rules.
Bernuth Lines Ltd v High Seas Shipping Ltd [2006] 1 Lloyd's Rep 537	Similar principle as Cubitt regarding non-incorporation of procedural rules into arbitration/adjudication.	Reinforced the court's approach to service and procedural requirements.
Nageh v Richard Giddings & Anr [2006] EWHC 3240 TCC	Technical defects in service of documents in adjudications generally not favoured by courts.	Supported the court's reluctance to invalidate adjudications on minor service defects.
M Rohde Construction v Nicholas Markham-David [2006] EWHC 814 TCC	Adjudicator's decision will not be enforced if the responding party was deliberately kept unaware of the adjudication.	Illustrated circumstances where invalid service could deprive jurisdiction.
IDE Contracting Ltd v RG Carter Cambridge Ltd [2004] EWHC 36 TCC	Invalid service can go to the root of adjudicator's jurisdiction and lead to refusal of enforcement.	Applied to explain consequences of defective service on jurisdiction.
Von Essen Hotels 5 Ltd v Vaughan & Anor [2007] EWCA Civ 1349	Notice provisions in contracts are mandatory and must be complied with strictly.	Supported the view that failure to serve notice as required invalidates the notice.
Construction Partnership UK Ltd v Leek Developments Ltd [2006] CILL 2357	Interpretation of "actual delivery" in notice provisions.	Used to interpret "delivered personally" as transmission by appropriate means to an appropriate person.
Balfour Beatty Construction Ltd v London Borough of Lambeth [2002] EWHC 597	Adjudicator must not base decision on new evidence or analysis without giving parties opportunity to comment; breach of natural justice.	Applied to assess whether adjudicator breached natural justice by relying on unshared calculations.
Amec Capital Projects Ltd v Whitefriars City Estates Ltd [2005] BLR 1	Alleged breaches of natural justice must be material to affect enforcement.	Used to evaluate materiality of breach of natural justice.
Kier Regional Ltd (t/a Wallis) v City & General (Holborn) Ltd [2006] EWHC 848 TCC	Materiality requirement for natural justice breaches.	Supported court's analysis on significance of breach.
Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 TCC	Materiality and significance of breaches of natural justice.	Used to emphasize importance of breach assessment.
RSL (South West) Ltd v Stansell Ltd [2003] EWHC 1390 TCC	Adjudicator must give parties opportunity to comment on independent reports used in decision.	Applied to find breach of natural justice where parties were not given chance to comment.
Multiplex Constructions (UK) Ltd v West India Quay Development Company (Eastern) Ltd [2006] EWHC 1569 TCC	Adjudicator may rely on parties' own submissions without breach of natural justice.	Distinguished from the present case to show no breach where adjudicator used material properly before him.
Shimizu Europe Ltd v LBJ Fabrications Ltd [2003] BLR 381	Adjudicator exceeded jurisdiction by deciding issues parties agreed were irrelevant without giving opportunity to comment.	Analogous to present case where parties agreed accounts were irrelevant but adjudicator relied on them.

Court's Reasoning and Analysis

The court first considered whether the Notice of Adjudication was validly served under clause 26. Although the notice was not served personally or by fax as expressly stated, the court interpreted "delivered personally" as actual delivery to an appropriate individual at the designated address, rather than the strict legal concept of personal service. Since the Notice was received by Pompey's solicitor at the correct address, the court found no breach of clause 26 and thus no invalidity in service.

Had there been invalid service, the court indicated it would have invalidated the Notice and deprived the adjudicator of jurisdiction, consistent with authorities such as IDE and Von Essen. The court also rejected any waiver of the jurisdiction point by Pompey, as Primus was aware of the objection and chose not to re-serve the Notice.

Regarding the adjudicator's decision, the court found that both parties had agreed the profit figures in Primus's accounts were irrelevant to the loss of profit claim. By relying on a 1.3% profit figure derived from those accounts, the adjudicator exceeded his jurisdiction. Alternatively, if jurisdiction was assumed, the adjudicator breached natural justice by failing to notify the parties or seek their submissions on this new basis for the claim, especially since the accounts had been expressly excluded by agreement.

The breach was held to be material, as the adjudicator's entire award depended on this calculation, and Pompey could have challenged the reliability of the 1.3% figure had they been given the opportunity. Therefore, the court concluded that enforcement of the adjudicator's decision was not possible.

Finally, the court expressed concern about the disproportionate costs incurred in adjudication relative to the sums at stake, noting that this case exemplified a troubling trend where adjudication costs may outweigh the value of the claims themselves, undermining the intended efficiency of the process.

Holding and Implications

The court refused to enforce the adjudicator's decision due to the adjudicator exceeding jurisdiction and breaching natural justice by relying on a basis neither party had submitted or been able to address.

The direct effect is that the Plaintiff's enforcement claim fails, and the Defendant is not presently required to pay the adjudicated sum. No new legal precedent was established, but the decision underscores the necessity for adjudicators to adhere strictly to the issues and evidence presented by the parties and to afford procedural fairness when adopting new approaches in their decisions.