PRIMUS BUILD LIMITED V POMPEY CENTRE LIMITED

The adjudicators decision should not be enforced on the grounds that the adjudicator acted without jurisdiction and in breach of the rules of natural justice by calculating the construction managers loss of profits based on an approach which neither party had raised before him
 
 

Technology and Construction Court
Coulson J
16 June 2009

 
The adjudicator’s decision should not be enforced on the grounds that the adjudicator acted without jurisdiction and in breach of the rules of natural justice by calculating the construction manager’s loss of profits based on an approach which neither party had raised before him.
 
The employer omitted part of the scope of the services to be performed by the construction manager. A dispute arose in relation to the construction manager’s claim for loss of profits consequent upon this omission which was based on the 3% construction and management fee percentage identified in the construction management agreement. The employer took a variety of points in opposition to the claim, including the submission that the 3% fee did not represent the actual loss of profit, if any, caused by the omission. The adjudicator awarded the loss of profit at a rate of 1.3% of the fee, which was a percentage which was calculated by him from the profit to sales ratio identified in the set of the construction manager’s accounts which had been provided as part of its reply but was not expressly stated in the accounts.
 
Ramsey J held that the adjudicator’s decision should not be enforced on the grounds that the adjudicator acted without jurisdiction and in breach of the rules of natural justice by calculating the construction manager’s loss of profits based on an approach which neither party had raised before him. The employer correctly submitted that the adjudicator acted without jurisdiction because the parties had agreed that the profit figures in the construction manager’s accounts, which ultimately formed the basis of the adjudicator's decision, were irrelevant to the issue which the adjudicator had to decide. If, contrary to the above, the adjudicator was entitled to look at the construction manager’s accounts, the rules of natural justice required him to obtain the parties' submissions on his proposed approach of calculating a profit figure of 1.3% from the figures in the accounts. Whilst these things were always a matter of fact and degree and whilst an adjudicator could not and was not required to consult the parties on every element of his thinking leading up to a decision, where, as in the instant case, an adjudicator considered that the claims as made could not be sustained but identified a possible alternative way in which a claim of some sort could be advanced, he would normally be obliged to raise that point with the parties in advance of his decision.
 
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