In AM Construction Limited v The Darul Amaan Trust [2022] EWHC 1478 (TCC), the Technology and Construction Court found that a notice of adjudication had not been validly served, rendering an adjudication decision a nullity.
Background
The Defendant, the Darul Amaan Trust (DAT), is a charitable trust who engaged the Claimant, AM Construction Limited (AMC), to carry out the construction of a three-storey mosque pursuant to a contract entered into on or about 7 July 2015 (the Contract). The Contract was a "construction contract" for the purposes of the Housing Grants, Construction and Regeneration Act 1996.
The Contract provided a "Date for Completion" of 14 October 2016, but the building remains incomplete.
AMC sought declarations in respect of an adjudication decision issued on 19 November 2021 (the Adjudication Decision); for its part, DAT sought enforcement of the Adjudication Decision. The underlying adjudication concerned AMC's entitlement to payment and right to suspend works. The primary issue for the Court to consider was whether the notice of adjudication had been validly served (though, with the agreement of the parties, it also separately considered the validity and effect of AMC's payment notices).
On the service issue, there were two key questions:
- Did the envelope served on AMC contain the notice of adjudication?
- Was there "effective service" of the notice of adjudication of the Contract in any event?
First issue: What was in the envelope?
AMC contended that the adjudicator lacked the jurisdiction to make the Adjudication Decision because the notice of adjudication was not validly served. The Court drew attention to previous case law for the authority that the notice of adjudication is of "central importance" because it sets the "scope and limits of the dispute". Therefore, to the extent that the notice of adjudication is materially defective, the adjudication process is a nullity.
The factual basis of AMC's contention was that it never received the notice of adjudication. However, DAT claimed that on 4 October 2021 a process server posted the notice of adjudication through the letter box at AMC's registered office (the Property), which was also the home of the two directors of AMC.
The parties did not dispute that an envelope was posted through the Property's letter box; the real question was whether this contained the notice of adjudication.
Email correspondence showed that the notice of adjudication had been sent to the process server to print, place in an envelope and serve. In his witness evidence, the process server claimed that the envelope did contain the requisite notice of adjudication. This contradicted the evidence of the director of AMC who was at the Property when the envelope was delivered. She opened the envelope immediately and found a copy of the contract, the Scheme for Construction Contracts, but no notice.
The Court preferred the evidence of AMC.
Second issue: Was there "effective service" in any event?
Clause 1.7.3 of the Contract provided: "any notice, communication or document may be given or served by any effective means and shall be duly given or served if delivered by hand or sent by pre-paid post". DAT contended that the notice of adjudication was duly served because it was "sent" by pre-paid post when it was provided to the process server for delivery. In other words, DAT contended that the act of providing the documents to the process server was "equivalent to putting the documents in a Royal Mail post box".
Mr Roger Ter Haar KC (sitting as a Deputy High Court Judge) rejected AMC's argument because there was no reason to depart from the ordinary meaning of "post". He agreed with AMC that clause 1.7.3 allowed for three methods of service:
- by any effective means
- by delivery by hand, or
- if sent by pre-paid post.
On the basis of the finding that the notice of adjudication was not in the envelope, there was no service by "effective means" or "delivery by hand". Mr Ter Haar KC considered that the method of service intended by DAT was delivery by hand because that "is what process servers do"; accordingly, the absence of the notice of adjudication was fatal to effective service of the same pursuant to clause 1.7.3 of the Contract.
Key takeaway points
The valid service of claim documents is essential for commencing any formal proceedings. In the case of adjudications, the consequences can be draconian, rendering the entire decision a nullity. Parties should therefore take care to make notice provisions in construction contracts sufficiently clear and scrutinise them carefully when it comes to relying on them.
It should also be noted that the adjudicator in the underlying adjudication reached a contrary decision to the Court on the validity of the notice of adjudication. As such, this case is another important reminder that parties should weigh up whether to contest jurisdiction or if it is safer just to restart the adjudication process to avoid a successful challenge on enforcement.
