Sprunt Ltd v London Borough of Camden

Where a construction contract contains adjudication provisions that materially fail to comply with Housing Grants, Construction and Regeneration Act 1996, the adjudication provisions in Part I of the Scheme for Construction Contracts replace the contractual adjudication provisions in their entirety. A contractual right allowing one party to nominate the adjudicator is contrary to the statutory policy requiring impartial adjudication and cannot operate as a specified nominating authority under the Scheme.

A construction contract may satisfy the writing requirement where the parties agree otherwise than in writing by reference to written terms, including where a written offer incorporating those terms is accepted by conduct. The court enforced the adjudicator’s decision.

Sprunt provided building consultancy services to Camden under a written framework agreement. After the Ampthill Square Estate project was divided into phases, the parties proceeded with Phase B on the basis of a 5.5 per cent fee and the framework agreement. Sprunt referred a fee dispute to adjudication. The RICS appointed the adjudicator.

Camden resisted enforcement, arguing that the Phase B agreement was not wholly in writing for the purposes of section 107 of the Housing Grants, Construction and Regeneration Act 1996, and that Camden, rather than the RICS, was the specified nominating body. The central questions were whether the Phase B agreement satisfied the statutory writing requirement and whether the contractual nomination provision remained effective.

1. Written construction contract. The Phase B agreement was a construction contract within the meaning of the Housing Grants, Construction and Regeneration Act 1996. Oral discussions preceding a written contract do not prevent the contract being in writing. The relevant question is whether the agreement ultimately entered into was wholly oral or partly oral and partly written.
2. The written letter of 12 June 2006 recorded an offer to proceed with Phase B at a 5.5 per cent fee and on the basis of the Framework Agreement. Camden accepted that offer by conduct. The agreement therefore fell within section 107(3), because the parties agreed otherwise than in writing by reference to terms which were in writing. Section 107(5) would also have applied if the agreement had been made partly otherwise than in writing, because Camden’s adjudication response asserted the existence of an agreement made under the Framework Agreement and did not deny it.
3. Effect of non-compliance with section 108. Clause 25.11 made the adjudicator’s decision non-binding while proceedings challenging it were pending. It therefore failed to comply with section 108(3). Under section 108(5), all the adjudication provisions in Part I of the Scheme applied. The statutory wording required wholesale incorporation of the Scheme provisions, rather than a process of combining compliant contractual provisions with selected Scheme provisions.
4. Nominating authority. Even if the contractual nomination clause survived, it was contrary to the statutory policy of impartial adjudication. A fair-minded and informed observer could perceive a real possibility of bias where one contracting party retained the right to nominate the adjudicator. Camden was therefore not a lawful specified nominating authority under paragraph 2(1)(b) of the Scheme. The RICS validly appointed Mr Soudager.
5. Mr Soudager had jurisdiction and his decision was enforceable. Judgment was entered for Sprunt in the sums awarded by the adjudicator.

First-instance enforcement proceedings. No prior appellate decision is stated in the judgment.