| Date | 5 May 2004 |
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| Judgment | Ritchie Brothers (PWC) Limited v David Philp (Commercials) Limited Court of Session, 14 April 2004 |
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| The Issue | Whether an adjudicator's decision delivered late will remain binding upon the parties. |
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| Implication |
Under the terms of the Scheme an adjudicator's decision delivered late will remain binding upon the parties. Time limits dictated by the Scheme are directory rather than mandatory. |
printThe recent case of Ritchie Brothers (PWC) Limited v David Philp (Commercials) Limited in the Scottish Court of Session has re-examined the timescales set down for adjudication under the statutory Scheme for Construction Contracts and clarified that there is a certain degree of freedom for the adjudicator in meeting those timescales. Lord Eassie had a number of points to consider whilst hearing an application to enforce a decision of an adjudicator in connection with a dispute between the two parties. The first point was to clarify when the time periods for the delivery of the adjudicator's decision would begin to run. The Scheme at paragraph 19(1) states that the adjudicator shall reach his decision not later than 28 days after the date of the referral notice, as extended by the parties' consent or agreement. In this case, however, the date of the referral notice was unclear. The referral notice itself was undated but had been sent with a covering letter dated 18 September 2003. That was immediately prior to a local holiday weekend, with the effect that the adjudicator did not actually receive the referral until 5 days later. Ritchie contended that the starting date should be the date upon which the referral notice first came into the adjudicator's possession. The intention of the Scheme was that the adjudicator should have 28 days at least to carry out his function and it would be illogical for the time period to commencement prior to the adjudicator actually receiving the referral notice. Philp, on the other hand, argued that the Scheme plainly contemplated that the starting date was when the referring party took action by sending off the referral notice. Perhaps surprisingly, Lord Eassie agreed with Philp on this particular point. In his view the starting date for the running of time for the purposes of paragraph 19(1) of the Scheme was the date of the sending of the referral notice. In Lord Eassie's view, had it been the intention of the drafters of the Scheme that time flowed only from the date of receipt of the referral that could readily have been expressed in the statutory instrument. A second point which Lord Eassie was asked to consider concerned the date by which the adjudicator's decision was to be "reached", again, by reference to paragraph 19(1) of the Scheme. The adjudicator had written to the parties requesting payment of his fees and when the referring party had confirmed that it would pay the fees, the adjudicator had delivered his decision some four days later. Philp argued that the decision was not "reached" until it was received by the parties. On any view, therefore, the decision was four days late. In support of this argument, Philp referred to the case of St Andrews Bay Development Limited v HBG Management Limited where Lord Wheatley had held that the adjudicator's decision could not be said to be made until its terms were intimated to the parties. Lord Eassie disagreed with Lord Wheatley on this point, at least in the context of the Scheme. In his view the requirement to reach a decision could be satisfied even if there was a failure to deliver the decision within a particular period of time. The adjudicator had written to the parties saying that he had made his decision which would be published on payment of his fees. In Lord Eassie's view it was clear that the date upon which the adjudicator had reached his decision was the date of that letter. A third point of intricacy which Lord Eassie was required to consider was whether the consent of the referring party to a fourteen day extension under the provisions of the Scheme could be given after the expiry of the initial 28 day period. Philp argued that the adjudicator's powers had already come to an end by that time, and it was too late for him to revive his powers by seeking an extension of time. Lord Eassie was not convinced that in dealing with this point he should be guided by rules of law developed for arbitration. He recognised that the well established rules that govern the judicial control of arbitrators, at least in Scotland, ought properly to apply to adjudicators. Such rules of law were not, however, to be applied in all respects to construction adjudication. There were clear differences. Whereas arbitration was to be regarded as a form of conclusive dispute resolution, adjudication was only a provisional resolution process. Given the provisional nature of adjudication, Lord Eassie concluded that it would not make sense if the procedure was defeated by a strict prescriptive approach to time limits. The Scheme provided that where the adjudicator had not proceeded expeditiously either party could effectively dismiss the adjudicator and substitute another. If the adjudicator's jurisdiction lapsed at the expiry of 28 days the parties would be obliged to go through the process of recommencing the adjudication process with a different adjudicator at additional expense and delay, even although the original adjudicator's decision might become available within a day or so thereafter. Lord Eassie was satisfied that this made little sense and in his view, the provisions within the Scheme relating to the times in which the adjudicator should reach his decision were to be regarded as directory, rather than mandatory provisions which would nullify any late decision.
CJ-0418
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