Sprunt Limited v London Borough of Camden [2011] EWHC 3191(TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

Judgment date: 6.12.2011


(1) Where a contract is made by a written offer being accepted by conduct, this may constitute a contract in writing for the purposes of Section 107 of the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA”); (2) non-compliance with s.108 HGCRA will result in contractual dispute resolution provisions being replaced by the Scheme for Construction Contracts (the “Scheme”); and (3) it is inherently unsound and contrary to the policy of the HGCRA for a contract to provide that one of the parties will nominate the adjudicator .

Technology and Construction Court, Mr Justice Akenhead


In 2001, Sprunt Ltd (“Sprunt”) and the London Borough of Camden (“Camden”) entered into a framework agreement (the “Framework Agreement”) for the provision of building consultancy services.  The Agreement provided for time charge rates and percentage fees depending on the value of the projects ranging from 15% down to 5.5%.  Under the Agreement Camden would issue instructions (a “Commission”) and Sprunt would be required to produce a proposal for the work including timescale, method and fee required which Camden could then accept or reject. 

Clause 25 of the Framework Agreement contained provisions for adjudication.  Clause 25.2 nominated Camden as the specified nominating body for the purposes of appointing an adjudicator and Clause 25.11 provided for the suspension of any decision of the adjudicator that required the payment of money until, among other things, a period of 30 days had elapsed during which neither party had referred the dispute to legal proceedings in accordance with another sub-clause of Clause 25.

Pursuant to the Framework Agreement, Camden placed a number of Commissions for projects with Sprunt.  However, in 2003, the parties entered into a separate agreement for two projects, the Ampthill Square Estate and the Godwin & Crowndale Estate.  The terms of this agreement were very similar to the Framework Agreement.  The Ampthill Square Estate project was split into two phases, A and B, and by June 2006 phase A had largely been completed.  In 2005 and 2006 there were discussions and exchanges of correspondence regarding fees.  In June 2006 Sprunt sent a letter to Camden confirming its proposal for a reduction in its basic fee for phase B to 5.5% “subject to your written confirmation”.  Thereafter the parties proceeded on the basis that phase B of the project would be dealt with on the basis of the Framework Agreement and at a reduced fee of 5.5%.

Work on phase B commenced in March 2007 and was completed late.  Disputes arose between the parties over Sprunt’s fee entitlements and in July 2011, Sprunt instituted adjudication proceedings.  The Adjudicator was, at Sprunt’s request, appointed by the Royal Institute of Chartered Surveyors (“RICS”).  Camden disputed the Adjudicator’s jurisdiction on the basis that they, and not RICS, were the specified nominating body and that the contract for Phase B of the Ampthill Square Estate project was not in writing. 

The Adjudicator decided he did have jurisdiction, and on 5 September 2011 he issued his decision, in which he directed that Camden was to pay Sprunt £151,861.25 within seven days of receipt of a valid invoice from Sprunt, £31.88 interest per day from 5 September 2011 until payment and £12,702 in respect of his fees and expenses.  Camden declined to pay and Sprunt issued proceedings to enforce the Adjudicator’s decision.


The Court was asked to address the following issues:

  • Whether the contract for phase B was in writing for the purposes of Section 107 of the HGCRA so as to enable the adjudication provisions of HGCRA to apply.
  • Whether the adjudication provisions in the Framework Agreement failed to comply with the relevant requirements of section 108 HGCRA meaning that the Scheme applied and, if so, whether Sprunt was free to request the nomination of an adjudicator by RICS.


The Court held that:  

  • The agreement between the parties relating to phase B was in writing within the meaning of Section 107(3) HGCRA (which provides: “where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing”). There was an offer capable of acceptance in Sprunt’s letter of June 2006, namely to proceed in relation to the Phase B works on the basis of a fee of 5.5% and on the basis of the Framework Agreement.  That offer was accepted by conduct.  In the context of Section 107(3), that conduct can be taken to refer to written terms, in this case the June letter.  If, contrary to the Court’s view that the June letter expressly incorporated the Framework Agreement, the parties orally agreed that the Framework Agreement would apply, that would similarly fit within Section 107(3).
  • Clause 25.11 of the adjudication provisions offended against Section 108(3) of the HGCRA, (which requires the contract to “provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings ….. or by agreement”) since the clause provided that the adjudicator's decision would not be binding in circumstances in which it was challenged in legal proceedings.
  • Section 108(5) of the HGCRA is to be interpreted such that if there is in the contractual adjudication provisions at least one material non-compliance, they all go and the Scheme adjudication provisions are incorporated in their entirety.  Accordingly, the adjudication provisions as agreed by the parties in this case should be disregarded and the Scheme applied. 
  • Paragraph 2 of Part 1 of the Schedule to the Scheme specifically makes a distinction between a "specified nominating body" and an "adjudicator nominating body". The former is the nominating body specified in the contract between the parties and the latter is the body which nominates when there is no specified nominating body.  However, where the Scheme applies by virtue of Section 108(5) (because the adjudication provisions in the contract do not comply with section 108), one disregards the adjudicator nominating body agreed by the parties.  That is consistent with the overall statutory purpose of incorporating the Scheme as a whole when there are key non-compliances with Section 108. 
  • Even if that view was wrong, it was inherently unsound and contrary to the policy of the HGCRA for one party to be able to nominate the adjudicator, as a fundamental objective of the Act was that adjudicators would be actually and ostensibly impartial and the nomination by one party would indicate a real possibility of bias. 
  • There was no lawful “specified nominating body” within the meaning of the Scheme, RICS was a valid “adjudicator nominating body”and therefore the adjudicator had jurisdiction and his decision was enforceable.
  • Judgment for the sums claimed in favour of Sprunt.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

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