Ensuring the Notice of Adjudication and other documents are served in accordance with the contract

This first part in a two-part article by Construction Law solicitor Abbie Grimwood, reviews the case of AM Construction Limited v Darul Amaan Trust and the key takeaways for the construction industry.  

The first part of the article will consider the importance of serving notices correctly and pursuant to contract.

Summary of the case

The Claimant brought proceedings following an adjudicator’s decision in November 2021 on the basis that the adjudicator’s decision was unenforceable as it was made without jurisdiction and/or in breach of public policy.

Mr Roger Ter Haar QC, sitting as a Deputy High Court Judge, determined that the adjudication proceedings had not been validly served and therefore the adjudicator’s decision was invalid. This case is therefore a stark reminder of the importance of ensuring notices are validly served. The case is explored in more detail below.

Background

The Defendant, Darul Amaan Trust (“DAT”) entered into a contract with the Claimant, AM Construction Limited (“AMC”) for the construction of a new mosque in or around July 2015 (the “Contract”).

The Contract was a construction contract pursuant to the Housing, Grants, Construction and Regeneration Act 1996 (“the Act”) and therefore included payment provisions for interim payments and included the right to adjudication. Payment notices were issued throughout the Contract and a dispute arose in relation to payment of the notified sums. DAT started an adjudication to seek payment.

On 4 October 2021, a process server placed an envelope through the letterbox of the registered address of AMC. AMC did not agree that the envelope contained a Notice of Adjudication and therefore did not agree that the notice was validly served. Furthermore, AMC argued that even if the envelope did contain a Notice of Adjudication, this would not be valid as the Contract did not allow for service by process server.

Decision: Was the Notice of Adjudication in the envelope and was the service of the documents by process server compliant with the Contract?

The Judge on hearing the evidence concluded that it was likely that the notice was not placed in the envelope due to errors of the process server. Notwithstanding the errors of the process server, the Judge then considered whether service of the notice (if it had been placed in the envelope) by a process server was valid service under the contract. The Judge reviewed clause 1.7.3 of the Contract which provided that:
“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”
It should be noted that this is different to the statutory provisions of service by the Act as section 115(4) of the Act provides that service may be valid if “a notice or other document is addressed, pre-paid and delivered by post”.

It should be noted that this is different to the statutory provisions of service by the Act as section 115(4) of the Act provides that service may be valid if “a notice or other document is addressed, pre-paid and delivered by post”.

DAT argued that service by process server was effective service as it was equivalent to putting the documents in a Royal Mail post box. AMT argued that it was not effective service as the Contract was not by any effective means, by delivery by hand or by pre-paid post. The Judge agreed with AMT’s position and said that delivery by process server was not valid under the contract as it was not pre-paid post or by hand.

The Judge therefore concluded that the Notice of Adjudication was not served and that accordingly the request to RICS for nomination of an adjudicator was ineffective and accordingly the adjudicator had no jurisdiction. Whilst the result may seem harsh, this case serves as a reminder to check service provisions under your contracts and ensure that notices are served as the contract specifies.

In part 2, we will look at another important part of this case and consider whether a true value adjudication can be commenced before the payment of a notified sum.

If in the interim you have questions relating to Adjudication or the services of notices under your contract, please contact the Construction Team at Holmes & Hills Solicitors who would be more than happy to assist on 01206 593933.