| Date | 26 September 2001 |
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| Judgment | Barr Limited -v- Law Mining Limited Outer House Court of Session 15 June 2001 |
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| The Issue | Various points concerning the enforceability of adjudicator's decisions. |
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| Implication |
Procedural errors by the adjudicator in respect of the crystallisation of the matters in dispute may give rise to an error of jurisdiction, rendering the decision, in part or in whole, unenforceable. |
printWhen adjudication under the Construction Act was first conceived, it was envisaged that the adjudicator's decision would be generally a "quick fix" to the commercial difficulties faced in the construction industry. Whilst this remains the case, and the effectiveness of adjudication is undisputed, the past three years have increasingly shown that adjudicators need to be highly skilled in conducting the proceedings put before them. The parties and their advisors have become ever more alert to the opportunities and pitfalls presented by the payment provisions of the Construction Act. Similarly, lawyers have devised arguments of increasing subtlety to resist the enforcement of adjudicator's decisions. An example of the latter is contained in the decision of the Outer House of the Court of Session in Scotland in two cases between Barr and Law Mining. Two separate contracts between the parties for road improvement works at different sites gave rise to two separate adjudications, in which two adjudicators had ordered Law Mining to pay Barr some £313,000 and £845,000 in respect of each contract. Law Mining sought to resist the enforcement of these decisions by putting forward a number of grounds of defence. Firstly, Law Mining argued that the disputes between the parties under each contract were in fact several different disputes. The referral notices were for monies due under different interim applications, and for further extensions of time. Paragraph 8(1) of the Scheme for Construction Contracts was cited, which provides; "the adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract". Law Mining argued that it had not consented to the separate disputes covered by the referral being the subject of a single adjudication. It argued it had a legitimate interest to withhold its consent to the several disputes being determined in a single adjudication, since the multiplicity of issues would be incompatible with the speedy and summary nature of the adjudication process. On this point, one of the adjudicators had taken legal advice. That advice had been to the effect that the adjudicator should rely on the judgment of His Honour Judge Thornton in the case of Fastrack Contractors -v- Morrison Construction. In that case, Judge Thornton had said that; "the dispute (referred to in the 1996 Act) is whatever claims, heads of claim, issues, contentions or causes of action that are then in dispute which the referring party has chosen to crystallise into an adjudication reference". Both adjudicators had decided that the claims referred to them all formed part of the same dispute and were capable of being adjudicated at one time. Lord Macfadyen commented that the advice taken from the decision in Fastrack may not be wholly satisfactory, since it did not require the adjudicator to consider whether there was a sufficient connection between the disputed matters to enable them to be treated as a single dispute. Nevertheless, it did not follow that the adjudicators in each case, by dealing with all the matters referred within a single adjudication, had gone beyond the proper scope of their jurisdiction such as to affect the validity or enforceability of the decisions. A second point of contention raised by Law Mining was that it had given an effective notice of rescission of the contract. If the contract had been brought to an end in this way, it argued, a dispute covering work carried out after that date would not be a dispute arising under a "construction contract". It would therefore be beyond the jurisdiction of the adjudicator. On this point, Lord Macfadyen agreed with Law Mining in respect of one of the adjudications. In his opinion, the adjudicator would only have jurisdiction if he had first decided that there had been no rescission of contract. Having made no such decision, in Lord Macfadyen's view the adjudicator had no jurisdiction to determine the part of the dispute affected by that issue. Interestingly, however, Lord Macfadyen was content in such circumstances to separate the part of the decision affected by this question, and order enforcement of the remainder. In a further argument, Law Mining drew attention to a provision within each contract that payment for work would be thirty days after certification. Since there had been no certification, no payment was due. It was argued that the adjudicators in each case had failed to take account of this point, with the result that each had failed to answer a question put to him, and had therefore fallen into jurisdictional error. Lord Macfadyen rejected this contention, holding that in each case the decisions made by the adjudicators were decisions within their jurisdiction. Finally, the case dealt with an interesting point concerning legal advice taken by an adjudicator. It was argued that one of the adjudicators had not applied his own mind to the issues, but had delegated the taking of that decision to his legal advisor. The Scheme called for the adjudicator "to decide the matters in dispute". It was impossible to tell from the adjudicator's decision, to what extent, if any, he had applied his own mind to the matter. Lord Macfadyen rejected that contention, holding that the adjudicator had satisfactorily expressed himself as having made his own decision.
CJ-0138
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