[2014] CSOH 80, Lord Malcolm

The Facts

Miller Construction (UK) Ltd (‘Miller’) was appointed as the design and build contractor  for a new facility at Motherwell College in Scotland. Building Design Partnership Ltd  (‘BDP’) was the lead consultant and architect for the project and their services included  acoustic and building services engineering.

After completion of the project, complaints were made about stuffy classrooms and it was  discovered that the ventilation system did not comply with the contractual requirement of  a fresh air flow rate of 8 litres per person per second. A new system was installed at a cost  of approximately £450k.

Miller commenced adjudication to recover the cost of the ventilation system from BDP.  The adjudicator found that BDP was not involved in the actual selection of the ventilation  units, but that that both Miller and BDP were involved in the process of managing the  installation of the units. The adjudicator held that BDP had not fallen below the standard  of skill and care expected from a reasonably competent lead consultant, but that they did  retain a degree of accountability for the performance of the ventilation system as a whole  and had an obligation to design a system which complied with the contract specification.

The adjudicator found that as both parties shared responsibility, they should be liable on  a 50-50 basis. He therefore awarded approximately £225k to Miller. BDP failed to pay and  Miller applied to the Court to enforce the adjudicator’s decision.

BDP claimed that the adjudicator’s reasoning was inadequate and incoherent – the decision  made no sense. BDP also submitted that there had been a breach of natural justice as the  adjudicator determined the dispute on a basis which had not been raised by either party  and had not been put to either party. BDP submitted that the adjudicator’s conclusions  were flawed where he had found they had not been professionally negligent but had then  decided liability on the basis of “some notion of responsibility regarding the installation of the  ventilation system” that was “a frolic of his own”.

The Issues

  1. Was the adjudicator’s decision clear and coherent?
  2. Was the adjudicator entitled to decide the dispute on the basis that he did, that is,  exercise his own discretion and find that the parties shared liability on a 50-50 basis? In  other words, was the adjudicator’s decision within the scope of the dispute referred?

The Decision

The Judge held that the adjudicator’s decision and the reasons leading to it were “clear,  coherent and readily understandable”. It was not muddled or confused. Furthermore, the  adjudicator was entitled to decide the dispute on the basis that he did. The Judge held  that the adjudicator had not embarked on a “frolic of his own”. The decision was within  the scope of the dispute referred and there was no unfairness by not giving the parties an  opportunity for further submissions in respect of his intended approach.

The Judge was of the view that BDP took too narrow a view as to the issues in the  adjudication and the scope of the adjudicator’s decision-making powers. The broad issue  before the adjudicator was whether BDP took responsibility for the design of the ventilation system which failed. This was supported by the exact wording used in Miller’s Notice of  Adjudication: Miller alleged that BDP were in breach of contract “and further in any event”  they failed to meet the standard of skill and care required of a competent M&E engineer by  providing a defective design. To succeed, Miller did not have to prove negligence.

Accordingly, the Judge granted a summary decree (the Scottish equivalent to summary  judgment) in favour of Miller as there was no sound basis for challenging the adjudicator’s  decision.

Commentary

This Scottish judgment is a reminder of the well-established authorities that provide an  adjudicator with considerable leeway in terms of their decision-making powers. Specifically,  Lord Malcolm referred to judgment of Chadwick LJ in Carillion Construction Ltd v Devonport  Royal Dockyard Ltd (2006). In Carillion it was confirmed that an adjudicator is not required  to adopt one or other of the parties’ submissions, he can take an intermediate position  without giving notice of his intention to do so, provided his decision is within the scope  of the dispute referred. Accordingly, the referring party must take care when drafting the  Notice of Adjudication. It is this document which is “the cornerstone of both the adjudicator’s  jurisdiction and the scope and limit of the referring party’s claim in adjudication…” (Coulson on  Construction Adjudication, paragraph 3.15).

Lord Malcolm reminded the parties that the Court should be very slow to refuse enforcement  on the grounds of breach of natural justice or that the adjudicator has exceeded his/her  jurisdiction.