Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 12
CA101/11	OPINION OF LORD MENZIES in the cause HIGHLANDS AND ISLANDS AIRPORTS LIMITED Pursuer; against SHETLAND ISLANDS COUNCIL Defender: ­­­­­­­­­­­­­­­­­________________

Pursuer: Howie, Q.C.; Burness LLP

Defender: MacColl; Brodies LLP

20 January 2012

Introduction
[1] In 2005 the defender contracted with the pursuer to provide the pursuer with design, consultancy, planning services, project management and construction supervision for the construction of an extension to runways at Sumburgh Airport on the southern tip of Shetland. The contract was a construction contract within the meaning of section 104 of the Housing Grants, Construction and Regeneration Act 1996. The pursuer had the right to refer any dispute with the defender under the contract to adjudication; the Scheme for Construction Contracts (Scotland) Regulations 1998 applied in relation to such adjudication.

[2] The runway extension was built, and thereafter a dispute arose between the parties as to whether or not the defender had caused the pursuer losses by way of a defective runway as a result of its breach of contract. By notice dated 14 April 2011 the pursuer intimated its intention to refer that dispute to adjudication. The pursuer sought the nomination of an adjudicator from the Institute of Civil Engineers, which nominated Mr George Ross as Adjudicator. On about 20 April 2011 the pursuer served an Adjudication Referral with supporting documents. On 24 June 2011 Mr Ross issued a decision letter determining the dispute which had been referred to him. After this decision was issued, the defender's solicitors discovered by chance that before reaching his decision Mr Ross had taken advice from senior counsel in relation to the proper construction of Clause 41.3 of the NEC Professional Services Contract, which formed part of the contract between the parties. Mr Ross did not tell either of the parties that he had taken advice from counsel on this matter. He did not tell either of the parties what were the terms of this advice, nor did he give either of the parties any opportunity to address him on the proper construction of Clause 41.3.

[3] In terms of the decision dated 24 June 2011 Mr Ross determined and ordered that the defender made payment to the pursuer of a sum in excess of £2 million in respect of the defender's breaches of contract and the resultant requirement for remedial measures and additional costs, such payment to be made within fourteen days of the decision, and finding the defender liable for the Adjudicator's whole fees and expenses. By letter dated 7 July 2011 the defender's solicitors wrote to the pursuer's solicitors. This letter contained the following:

"In accordance with the Contract, SIC hereby gives HIAL notice that SIC is dissatisfied with the decision of the Adjudicator dated 24 June 2011. SIC hereby notifies you of its intention to refer the subject matter of the dispute to arbitration.

In light of the above, SIC does not intend to make any further payment to HIAL, or to the Adjudicator, in respect of the Adjudicator's decision."

On the following day a letter in substantially the same terms was sent by the defender to the pursuer.

[4] In the present action the pursuer seeks payment of the principal sum awarded by Mr Ross in favour of the pursuer, and the fees which the pursuer had paid to Mr Ross. In answer, the defender claims that the decision was reached in breach of natural justice, and should be set aside ope exceptionis and the defender assoilzied. The pursuer denies that the decision was tainted by a material breach of natural justice, but in the event that there was such a breach, it affected only the quantification of the Future Remedial Works Cost, which was severable from the remainder of the decision, so only that part of the decision should be set aside ope exceptionis. Furthermore, the pursuer avers that the defender has, by the terms of the letters of 7 and 8 July 2011, approbated and homologated the decision and is not entitled to reprobate it now.

[5] For completeness, it should be noted that the defender in the present action raised a petition for judicial review of the Adjudicator's decision dated 24 June 2011, seeking reduction and interim suspension of that decision. The issues raised in the petition and answers were the same as those raised in the present action. Both forms of process were initiated within days of each other, in July 2011.

[6] I heard evidence from Mr George Ross, who was called as a witness for the defender. In addition, an affidavit of Mr Manus Quigg, a partner with Brodies LLP, was lodged, and an affidavit and supplementary affidavit of Mr Ross McGinness, a senior solicitor with Brodies LLP, were lodged. These affidavits formed numbers 19, 20 and 26 of process; it was agreed in terms of the Joint Minutes (numbers 28 and 29 of process) that they were to be taken as the evidence of Mr Quigg and Mr McGinness respectively. It was further agreed, in the second of these joint minutes, that during the course of the adjudication neither the pursuer nor the defender was aware of the particular issues in relation to Clause 41.3 of the NEC Professional Services Contract upon which Mr Ross sought advice from counsel or the particular terms of any advice received by him in response. It was agreed that Mr Ross did not tell the parties that he had taken legal advice in relation to Clause 41.3, and during the course of the adjudication Mr Ross did not disclose the terms of the advice that he received in relation to Clause 41.3 to either party.

The evidence
[7] Mr George Ross confirmed that he accepted appointment to act as Adjudicator in the dispute between the parties; number 6/4 of process was the Notice of Adjudication, and number 6/6 of process was his decision letter issued on 24 June 2011. Part 20 of the decision letter summarised his conclusions, the sum shown at paragraph 20.5 being the sum to be paid by the defender to the pursuer in respect of Future Remedial Works Costs, which sum was included in the total figure which Mr Ross ordered the defender to make payment to the pursuer in paragraph 20.7. His more detained reasoning and assessment of the quantum of Future Remedial Works Costs was contained in paragraphs 17.4 to 17.12 of the decision letter. He applied Clause 41.3 of the NEC Professional Services Contract because this was the only clause which dealt with this issue. He quoted this clause directly at paragraph 17.4, as follows:

"If, after completion, the Consultant does not correct a Defect within the time required by this contract, the Employer assesses the cost of having the Defect corrected by other people and the Consultant pays this amount."

Mr Ross confirmed that he received an e-mail from Ross McGinness of Brodies on 28 June 2011, in the following terms:

"Mr Ross,

We have been in touch with the Faculty of Advocates and understand that you have taken counsel's opinion in this adjudication. Please clarify what questions were asked of counsel and what advice was given.

We are not suggesting that you have acted inappropriately but now that this information has come to our attention you will understand that we must ask the question."

Mr Ross replied to this by e-mail and post dated 29 June 2011, addressed to the solicitors for both parties, in the following terms:

"I acknowledge receipt of Brodies e-mail dated 28 June 2011 in connection with some purported counsel's opinion and believe that there has been a misunderstanding.

I have not drafted any instructions to counsel to obtain counsel's opinion.

I have not received any written counsel's opinion and consequently I have not used such in this adjudication."

Mr Ross received a further e-mail from Brodies LLP, also dated 29 June 2011, in the following terms:

"Mr Ross,

The information that we received was not in relation to a written opinion but an oral opinion. This came to light when we sought to instruct counsel for an opinion and were advised of a conflict. We look forward to hearing from you in this regard. Again no disrespect is intended but we must ask the question."

Mr Ross replied by letter and e-mail of the same date as follows:

"It is my stated belief that I did not seek or was given a formal oral opinion by counsel but was merely seeking confirmation of a view I held on a particular matter.

The telephone call to counsel was based on my understanding, formed in my own mind, of the meaning of Clause 41.3 of NEC Professional Services Contract.

I would repeat that I already had my own view before telephoning counsel. This view was confirmed by counsel and noting extra or additional was discussed during my short telephone conversation."

[8] Mr Ross stated that he had had formed his own view on the meaning of Clause 41.3, and what he was seeking from counsel was confirmation of the view which he already held. Initially he telephoned Mr Howie, Q.C.; as soon as he mentioned that the subject matter of his question was an adjudication between the pursuer and the defender, Mr Howie told him to say nothing more, because Mr Howie had a conflict of interest. Mr Ross then telephoned Mr Currie, Q.C.; his purpose again was to confirm the view which he had formed as to the meaning of Clause 41.3. Mr Ross had never come across this clause before. The provision that the employer should assess the cost of having the defect corrected by other people was in his view different from the concept of actual costs incurred, and he was seeking confirmation of this. He knew how to operate this clause. When he telephoned Mr Currie, Q.C. he read out the whole clause to Mr Currie and said, "My view is that that means 'assess the costs', not the actual costs". Mr Currie responded that the words say what they say. The telephone call lasted no more than two to three minutes and nothing else was discussed. Mr Ross emphasised to Mr Currie that he was not seeking a legal opinion or advice and that he was not expecting that any fee would be charged - this was to be a "freebie". Mr Currie never charged Mr Ross a fee; all he did was to give confirmation of a view which Mr Ross already held.

[9] It was put to Mr Ross that in making this telephone call he had formed the view that it was appropriate for him to discuss the meaning of the words in Clause 41.3 with a lawyer; he replied that he wanted "a freebie" - just confirmation of a view which he held. He agreed that he considered that it was appropriate to discuss that view as to the meaning of Clause 41.3 with a lawyer. However, he maintained that he did nothing with Mr Currie's response; he never gave any further consideration to what Mr Currie said to him, and he had already formed his view of the meaning of Clause 41.3 before he telephoned Mr Currie. Mr Currie's advice was simply confirmation of the view which he had already formed. He did not tell either of the parties that he had had any telephone conversation with senior counsel regarding Clause 41.3, nor did he give either party any opportunity to comment on this. Before giving evidence in Court in December 2011 he had not told either party what the nature of the discussion was. He did not believe that he was seeking legal advice; the conversation only lasted two to three minutes, and "virtually very little was discussed".

[10] In cross-examination Mr Ross confirmed that he was a Fellow of both the English and Scottish branches of the Chartered Institute of Arbitrators, and amongst several other professional qualifications he was a Fellow of the Institute of Chartered Engineers and a Fellow of the Royal Institute of Chartered Surveyors. He also held an honours degree in law and at the time of this adjudication he was a trainee solicitor with a firm of English solicitors. He accepted that he may have had more legal knowledge than many adjudicators. By the time of this adjudication he had been appointed as Adjudicator in respect of 151 adjudications, on a wide variety of subject matters, most of which were associated with civil engineering, building contracts, mechanical and electrical engineering, allegations of defective design and all branches of engineering and construction. He was familiar with the standard forms of engineering contracts but this was the first occasion that he had come across Clause 41.3 of this contract.

[11] He agreed that some adjudications raise problems about which he considered he should consult somebody else. In this case, insurance was such a problem. He advised the parties at the hearing, and in writing, that he would require to appoint a legal advisor to give an opinion on the question of insurance. In such a situation he would write to the parties and tell them the proposed name of the individual whom he proposed to consult, and the rate per hour that this individual would charge; if there was no adverse comment, he would invite the parties to make submissions on the insurance issue, and once he received the opinion of the advisor, he would circulate this to parties and give them an opportunity to comment on it. Accordingly there would normally be two opportunities for the parties to comment - (1) on the proposed individual who might give advice, and (2) on the advice received. In such a situation he would usually receive comments on the opinion or advice from one or other party, and he could consider these comments before reaching his own view. He stated that he always gave parties an opportunity to comment on any legal advice which he received, because the rules of natural justice required the parties to be given a fair and equal opportunity to say what they wished to say about this. He always did this, and this remained his practice in 2011 when deciding the present dispute. On the insurance issue he instructed parties to make written submissions, and they did so; during the hearing, Mr Quigg on behalf of the defender dropped his argument in relation to this aspect (see paragraph 13.1 of the decision letter).

[12] Mr Ross was asked, if this was his general practice and the practice which he adopted in the present case on the insurance issue, why he did not give the parties an opportunity to comment on the views expressed by Mr Currie, Q.C.; he replied that it was never an issue - neither party raised the meaning of Clause 41.3. He was asked, if this had not been raised as an issue, why he felt it necessary to consider it; he replied that all the other adjudications with which he had dealt were concerned with actual costs supported by vouchers, and the concept of assessing the costs, in terms of Clause 41.3 was unusual. Moreover, there were two limbs of quantification in the present case, namely historic costs and remedial work costs.

[13] Mr Ross wanted to concentrate on the issue of liability in the present dispute. The parties had instructed experts on the engineering aspects, and also experts on quantum; Mr Ross told them that he wished the assistance of a technical expert on quantum, and both parties agreed to this. He then instructed the technical expert that once parties' reports on quantum had been submitted, he should assess them and provide a report. His report was then sent to the parties, who provided him with their submissions on quantum. Mr Ross then considered these submissions and his technical advisor's report and reached his own view.

[14] Mr Ross telephoned Mr Currie, Q.C. about Clause 41.3 on about 12 or 13 May 2011 - well before the site visit on 6 June, and before the two hearing dates on 8 and 9 June 2011. When drafting that part of his decision letter dealing with future remedial work costs (at paragraphs 17.4-17.12) he did not put his telephone conversation with Mr Currie to use at all. He was asked why he had asked anything of Mr Currie; he replied that he had thought about this, and he wished he had never telephoned him. Mr Ross had formed the view before he telephoned Mr Currie that the exercise which was required by Clause 41.3 had nothing to do with actual costs. This was also what Mr Currie told him.

[15] After the hearings on 8 and 9 June 2011 both parties provided written submissions on Future Remedial Works Costs. Mr Ross's technical advisor appraised Future Remedial Works Costs and prepared a report for Mr Ross, which he passed to parties for their comment. Both parties commented on this, and he formed his own conclusions as to what was fair and reasonable, and issued his decision on 24 June 2011. He accepted that the original expert reports were appended to the Referral Notice dated 20 April 2011 and the response dated 5 May 2011, but these reports were amended at the hearing, and (as described in paragraph 17.1 of the decision letter) he received parties' comments on his technical advisor's report on 16 June 2011. Neither party referred to Clause 41.3 during the hearing on 8 and 9 June 2011; this clause was touched on in the referral notice (number 6/5 of process) but was not discussed thereafter. After his telephone conversation with Mr Currie Mr Ross said that he probably never thought about that telephone conversation again - "It had no impact on the situation". Mr Currie told him that the words say what they say, and this confirmed the view which Mr Ross held. There was no mention of Clause 41.3 in the submissions for either party in relation to Future Remedial Works Costs, nor in their expert reports, nor in the technical advisor's report. Mr Ross only mentioned it in his decision letter because it was raised in the referral notice, with common law damages as an alternative; Mr Ross was not awarding common law damages, but rather was proceeding under Clause 41.3. He did not consider an ordinary award of damages, but conceded that an award of damages may have been the same as an award under Clause 41.3. After Mr Currie told him in the telephone conversation that the words of Clause 41.3 say what they say, Mr Ross never thought about this again.

[16] In re-examination Mr Ross accepted that in none of the other 150 adjudications in which he had acted as Adjudicator had he telephoned an Advocate - this was the only time he did this. He observed that "if I had to seek legal advice, I would have told the parties". It was the unusual wording of Clause 41.3 which caused him to telephone Mr Currie on this occasion; Mr Currie's view was confirmation of the view which Mr Ross already held. It was put to him that his purpose in telephoning Mr Currie was to obtain confirmation or otherwise; Mr Ross explained that he had just finished an adjudication in which Mr Currie had acted as his legal advisor, and his number was on Mr Ross's mobile phone. He asked the question of Mr Currie "as a kind of freebie" - he said that he was not seeking legal advice, and no fee was ever sought. He agreed that the purpose behind the call was either for Mr Currie to agree with the view which he had formed, or to tell him that the clause meant something else.

[17] Mr Manus Quigg explained in his affidavit (number 19 of process) how the solicitors for the defender came to discover that Mr Ross had telephoned senior counsel, and the e-mail correspondence between Brodies LLP and Mr Ross on 28 and 29 June 2011.

[18] Mr Ross McGinness also dealt with this in his affidavit (number 20 of process). In his supplementary affidavit (number 26 of process) Mr McGinness explained the background to the sending of the letters dated 7 and 8 July 2011 (numbers 6/12 and 6/13 of process). He explained that by 7 July 2011 his firm was instructed to notify the pursuer that the defender did not intend to make payment and to give notice that the defender was dissatisfied with the decision, to reserve its right to raise arbitration proceedings with regard to the dispute. His firm was also instructed to raise judicial review proceedings to review the Adjudicator's decision. He had in mind Clause 93.1 of the contract, which required a party dissatisfied with an Adjudicator's decision to notify his intention to refer the matter to the tribunal within four weeks of the notification of the Adjudicator's decision. The wording of the letter of 7 July 2011 was chosen in order to preserve the defender's ability to challenge the Adjudicator's decision, without binding the defender to raise arbitration proceedings as these would not be required if the judicial review proceedings were successful. By the time of writing this letter Mr McGinness knew that Brodies would have to raise judicial review proceedings. On 12 July Mr McGinness had a telephone conversation with Mr Farndale of Burness LLP, the pursuer's solicitors. In the course of this conversation Mr McGinness told Mr Farndale that the defender considered that the Adjudicator's decision was unenforceable because Mr Ross had breached the rules of natural justice by seeking to take legal advice and not giving the parties an opportunity to comment thereon, and he told Mr Farndale that the defender would, in all probability, raise judicial review proceedings to overturn the Adjudicator's decision. The petition for judicial review was presented on 13 July 2011 and e-mailed to Burness on the same day.

The Issues
[19] Three issues arise from the evidence and were addressed in submissions, which may be briefly put as follows:

(1) Did the Adjudicator breach the rules of natural justice?
(2) Severability.

(3) Approbate and reprobate.

I address each of these issues in turn.

Did the Adjudicator breach the rules of natural justice?

Submissions for the defender

[20] Counsel for the defender drew attention to the evidence of Mr Ross that, having acted as adjudicator in about 150 adjudications before this, this was the first time that he decided to take "informal legal advice". Plainly he had concerns about the proper application of Clause 41.3, and wished to discuss these concerns with senior counsel. He obtained legal advice from senior counsel; the fact that it was "a freebie" was neither here nor there. This was advice which would normally be paid for, but for which no payment was sought on this occasion. Mr MacColl accepted that Mr Ross had previously addressed his mind to the test which should be applied in Clause 41.3, but clearly he had not reached a finalised view on this - had he done so, there would have been no purpose in his taking the extraordinary step of approaching senior counsel and asking his views. Mr Ross stated in evidence that neither party had raised any issue about Clause 41.3, but clearly he thought that there was an issue. That is why he telephoned Mr Currie, Q.C. Moreover, in paragraph 17.4 of his decision letter Mr Ross expressly relies upon the provision of Clause 41.3 as the basis of assessment of Future Remedial Works Costs, which formed a considerable percentage of his eventual award. Despite his regarding this as an issue, he did not mention this to the parties nor did he ask for their views as to the meaning of Clause 41.3. Counsel accepted that if Mr Ross had aired his concern to the parties about how Clause 41.3 should be interpreted, and given them an opportunity to comment on this, this would have cured the problem. However, his failure to do so resulted in a breach of natural justice.

[21] Counsel relied on the authorities and arguments contained in Part 3 of his Note of Argument (No.25 of process). In particular he relied on Costain Ltd v Strathclyde Builders Ltd 2004 SLT 102; Carillion Utility Services Ltd v SP Power Systems Ltd [2011] CSOH 139; Barrs v British Wool Marketing Board 1957 SC 72; Inland Revenue v Barrs 1961 SC (HL) 22; and Balfour Beatty Construction Ltd v London Borough of Lambeth [2002] BLR 288. The present case was a fortiori of Costain - at least in that case the parties were aware that the adjudicator proposed to discuss a matter with his legal adviser, although they were not told what the matter was nor what the advice was. In the present case the adjudicator did not have an appointed legal adviser, and he did not inform the parties that he was intending to seek legal advice from an independent party. Counsel relied on Lord Drummond Young's resume of the law at paragraphs [10] to [24] of Costain, and in particular adopted the nine propositions advanced in paragraph [20] regarding the application of the principles of natural justice to adjudication. He submitted that if an adjudicator is uncertain in relation to a material issue and has taken advice from an independent source, he must tell the parties that he has done this and give them an opportunity to make submissions to him on this point. If an adjudicator has a secret concern about the meaning of a term of the contract, this is a fortiori of the situation where parties have raised the issue and made submissions on it. In the present case Mr Ross had a concern about the interpretation and application of Clause 41.3 - this was the only explanation for his approaching two Queen's Counsel in order to discuss it. Neither of the parties knew that he had a concern about the interpretation or application of this clause; if they had known this, they might well have wanted to make submissions about it. At the least, this was an opportunity for injustice to be done. It was not relevant to ask whether the defender would have argued for a different interpretation of Clause 41.3; the failure to inform the parties that the adjudicator had consulted an independent person, and the denial of an opportunity to comment on the advice given, amounts to a breach of natural justice. Mr Ross clearly took the view that the proper construction of Clause 41.3 was a substantial and relevant factor in his determination, and he used it as the basis for his calculation of sums due by the defender. He issued his decision without informing the parties that he had sought advice on a matter which he clearly considered to be central. An objective observer would regard this as an opportunity for injustice to be done. On the reasoning of Barrs v British Wool Marketing Board, if there was such an opportunity, the decision cannot stand. Counsel obtained further support for this proposition from Balfour Beatty v London Borough of Lambeth, particularly at paragraph 37 and the authorities cited therein, and from Carillion Utility Services Ltd, particularly at paragraph [25].

Submissions for the pursuer

[22] Senior counsel for the pursuer did not dispute the proposition that the rules of natural justice apply to adjudications, and in particular that the maxim audi alteram partem applied in this case. Where an adjudicator obtains legal advice from elsewhere, this means that he will have to disclose the content of that advice and allow parties to comment on it if the rule is to be complied with. He drew my attention to the remarks of HHJ Lloyd Q.C. in Balfour Beatty at paragraph 29, to the effect that the provisional nature of an adjudication decision justifies ignoring non-material breaches, and to Lord Drummond Young's observation when prefacing his nine propositions applying the principles of natural justice to adjudication, at paragraph [20] of Costain, that "the application of the relevant principles must depend on the circumstances of the individual case". He also drew my attention to the comment which Lord Drummond Young made (at paragraph [16]) in relation to Judge Lloyd's reference to non-material breaches of the principles of natural justice that in his view it will only be proper to ignore such breaches if there is a positive indication that the breach has not been material.

[23] The Scottish view as to materiality may be less forgiving than the English. Senior counsel referred me to Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC), [2008] BLR 250, where at paragraph 57 Akenhead J listed several propositions relating to breaches of natural justice in adjudication cases. The present case was not one in which the adjudicator had gone off "on a frolic of his own" - Clause 41.3 was put in issue by the pursuer in its referral document, and the defender cannot complain if it did not put forward a contrary argument. There was discussion about this point in Paton, Petitioners [2011] CSOH 40. That was a case in which an adjudicator relied on his own knowledge and experience in order to determine an issue, without giving the parties an opportunity to comment on it. It was argued (at paragraph [57]) that it was only where an adjudicator had gone off on a forensic frolic of his own without the defending party having an opportunity to address the frolic that it could be said that the adjudicator had breached the rules of natural justice; at paragraph [72] Lord Bannatyne held that an adjudicator may use his own knowledge and experience in deciding disputed matters before him, and if he uses such knowledge and experience to decide a contention placed before him by the parties, he does not require to obtain their further comments thereon. Senior counsel accepted that there was a distinction between cases in which an adjudicator relied on his own knowledge and experience and cases in which an adjudicator consulted a third party, but this distinction fell away in the present case because the adjudicator was himself legally qualified, and he had already formed a view of the meaning of Clause 41.3 before he spoke to Mr Currie, Q.C. Senior counsel acknowledged, however, that the adjudicator must have had sufficient doubts to justify his telephoning first Mr Howie and then Mr Currie to raise the point. He conceded that this was not an ideal model of how an adjudicator should conduct himself, but it fell short of the requirements for a breach of natural justice. It should be remembered that this conduct occurred in the context of an adjudication, in which a speedy determination was a central factor, rather than in a litigation before a judge. Moreover, the point was clearly not sufficiently important to Mr Ross that he felt it appropriate to pay for any advice - it was clear that he was seeking a "freebie".

[24] Counsel for the defender was wrong to suggest that the meaning of Clause 41.3 was not raised by either party. It was referred to, and an interpretation placed on it, by the pursuer in its referral document (No.6/5 of process) at paragraphs 5.2.3 and 5.2.4. It was for the defender to challenge this interpretation; it cannot complain if it chose not to do so. The question was whether the defender has been deprived of the opportunity to make whatever case it wishes to make on the meaning of Clause 41.3 relating to assessment of costs. The Court was not concerned with technical breaches of natural justice, but only with breaches which actually caused injustice, or the possibility of injustice in relation to a matter of importance to the decision of this dispute. The Court will seek to ensure that the opportunity is not removed from a party to say what it wants to say about the issue in question. This did not happen in the present case; the defender was not deprived of the opportunity to make comments. The defender had the opportunity to respond to any issue (including the interpretation of Clause 41.3) raised in the referral document. This was not something new, and the adjudicator was not obliged to disclose to parties his telephone conversation with Mr Currie.

[25] Senior counsel submitted that it was necessary to look to the Costain decision with some caution. It was a decision on a motion for summary decree, heard on the motion roll without the advantage of any evidence having been led. The Court in that case did not know what the adjudicator had discussed with his legal adviser or the advice tendered by the legal adviser - see paragraphs [27] and [29]. In the present case, the issue of the correct approach to Clause 41.3 had been adequately canvassed by the pursuer in its referral document, and the Court has the benefit of having heard Mr Ross's evidence. Moreover, the issue must be material to the determination of the dispute. In the present case, it was not material, because whether costs are assessed in terms of Clause 41.3, or damages are awarded in respect of the pursuer's whole loss arising from the defects, the result is the same.

[26] In summary, senior counsel submitted that the decision was not tainted by any breach of natural justice. The tests set out in Costain and Cantillon are not met in the present case. Any breach was not material; it was not relevant; it related to material already canvassed by the pursuer in its referral document; it did not amount to a frolic by Mr Ross; and the defender was not deprived of the opportunity to make an argument about the correct interpretation of Clause 41.3.

Discussion
[27] The rules of natural justice are designed to prevent the possibility of injustice. The application of those rules to the circumstances of an adjudication has been the subject of relatively recent consideration and determination in Scotland, by Lord Drummond Young in Costain and by Lord Hodge in Carillion Utility Services Ltd. I am in complete agreement with the statement of the law in each of these cases, and I do not consider that it is necessary for me to address the authorities in similar detail in the present case. There are however some statements of principle which are sufficiently important and apposite to the present circumstances that they bear repeating here.

[28] In Barrs v British Wool Marketing Board the Lord President (Clyde) made the following remarks:

"Although quasi-judicial bodies such as this Tribunal are not Courts of law in the full sense, it has always been the law of Scotland that they must conform to certain standards of fair play, and their failure to do so entitles a Court of law to reduce their decisions. Were this not so, such Tribunals would soon fall into public disrepute, and confidence in them would evaporate. Fair and equal opportunity afforded to all interests before the Tribunal is the fundamental basis upon which the Tribunal must operate, and, in the absence of such fair play to all, it is right and proper that a Court of law should reduce the Tribunal's decision. .... It is not a question of whether the Tribunal has arrived at a fair result; for in most cases that would involve an examination into the merits of the case, upon which the Tribunal is final. The question is whether the Tribunal has dealt fairly and equally with the parties before it in arriving at that result. The test is not 'Has an unjust result been reached?' but 'Was there an opportunity afforded for injustice to be done?'. If there was such an opportunity, the decision cannot stand".

[29] As Lord Reid observed in Inland Revenue v Barrs, "no Tribunal, however informal, can be entitled to reach a decision against any person without giving to him some proper opportunity to put forward his case. It may well be that these Commissioners acted in good faith and with the best intentions, but that is not enough".

[30] I am in complete agreement with the nine propositions enunciated by Lord Drummond Young in Costain (at paragraph [20]) in applying the principles of natural justice to adjudication. Three of these propositions are of particular relevance in the present case, namely Nos.6, 8 and 9. The following excerpts are important:

"If the adjudicator merely applies his own knowledge and experience in assessing the contentions, factual and legal, made by the parties, I do not think that there is any requirement to obtain further comments. If, however, the adjudicator uses his own knowledge and experience in such a way as to advance and apply propositions of fact or law that have not been canvassed by the parties, it will normally be appropriate to make those propositions known to the parties and call for their comments ....

An adjudicator may be given power to obtain from other persons such information and advice as he considers necessary on technical or legal matters.... If such a power is exercised, the position is similar to that outlined in para 6 above. If the information or advice raises any matter that has not been canvassed by the parties in their submissions or otherwise, it will normally be appropriate to make such matter known to the parties and call for their comments ....

I cannot see any distinction for present purposes between information and advice about the law obtained in that way and information and advice about questions of fact".

In Carillion Utility Services Ltd Lord Hodge (at paragraph [25]) made the following observations:

"Thus, while the Courts have warned parties against raising technical arguments and searching for breaches of natural justice to challenge an adjudicator's decision, the judges in the cases to which I have referred have been consistent in their approach. They have required an adjudicator to disclose to the parties information, which he has obtained from his own experience or from sources other than the parties' submissions, if that information is material to the decision which he intended to make. Whether the information is of sufficient potential importance to the decision is a question of degree which must be assessed on the facts of the particular case".

[31] In the present case, it is clear from Mr Ross's evidence that he had a concern about the proper interpretation of Clause 41.3. He stated in evidence that he had formed his own view on the meaning of this provision before he telephoned senior counsel, and I accept his evidence in this regard. However, he was still sufficiently concerned about the point that he telephoned first Mr Howie, Q.C., and then Mr Currie, Q.C. in order to obtain confirmation of the view which he had formed. Despite his assertion that he was not seeking a legal opinion or advice, and despite his repeated description of what Mr Currie, Q.C. told him as a "freebie", I consider that the confirmation (or otherwise) that Mr Ross was seeking falls to be categorised as advice. It was given informally, it did not take long to impart, and no fee was to be paid for it, but nonetheless it was legal advice. It was legal advice which was sufficiently important to Mr Ross that when Mr Howie declined to speak to him because of a conflict of interest, Mr Ross went on to telephone another senior counsel to obtain advice on the point. It was on a matter which was central to the exercise which Mr Ross had to carry out; it was the foundation for any award in favour of the pursuer for Future Remedial Works Costs.

[32] Although senior counsel for the pursuer submitted that the proper interpretation of Clause 41.3 had been adequately canvassed in the referral document, it was not a matter on which the pursuer's submissions were focused. Although it was touched on in passing, it was not a central issue in the pursuer's case, and the pursuer did not develop any argument as to how the adjudicator should approach the task of assessment of costs. Mr Ross gave no indication to the parties that this was a matter which concerned him, nor did he tell them that he was intending to seek legal advice or confirmation of his views on this point. If he had done so, either or both parties might have taken the opportunity of making submissions as to the meaning of Clause 41.3, and the way in which it should be applied.

[33] The view is expressed in some of the English cases that non-material breaches of the principles of natural justice may be ignored - see Balfour Beatty at paragraph 29, and Cantillon v Urvasco at paragraph 57. In this respect I agree with Lord Drummond Young's observation in Costain (at paragraph [16]) that it will only be proper to ignore such breaches if there is a positive indication that the breach has not been material. If there is a significant doubt about the matter, it must be presumed that the breach is material. However, it appears that these authorities equiparate a material breach with a "point or issue which is either decisive or of considerable potential importance to the outcome and not peripheral or irrelevant". I accept that a breach of the rules of natural justice which is peripheral or irrelevant, and not of potential importance, will not be regarded by the Court as tainting the decision of an adjudicator with the result of rendering his decision unenforceable or invalid. Whether the issue is of such importance, or is peripheral or irrelevant, involves a question of degree which must be assessed by the Court. In the present case I consider that the question was indeed of considerable potential importance, and was far from peripheral or irrelevant. It was central to the quantification of the largest part of the award made by the adjudicator.

[34] If Mr Ross had told the parties that he intended to obtain independent legal confirmation of his view as to the meaning of Clause 41.3, or even if he had told them after the event that he had done so, and told them the substance of his conversation with Mr Currie and given them the opportunity to comment on this, the difficulty would not have arisen. However, by seeking Mr Currie's views without telling the parties that he was doing so, and without telling them the terms of the advice given and allowing them an opportunity to comment on this, I consider that he breached the rules of natural justice on an issue which was of considerable potential importance and was not peripheral or irrelevant. I do not suggest that he was being deliberately unfair; however, an opportunity was afforded for injustice to be done. That being so, his decision cannot stand.

Severability
Submissions for the pursuer
[35] Senior counsel for the pursuer accepted that this was a "single dispute case" - there was one dispute between the parties about whether the defender was in breach of its contractual duties, and if so, how much it should pay to the pursuer. However, Clause 41.3 is not mentioned in the decision letter until page 74; this is not surprising, as it relates solely to quantification of future costs. Any breach of natural justice relating to Clause 41.3 only taints the decision relating to future costs, and does not taint the rest of the decision. The adjudicator's determination of future costs was severable from his determination of liability and of historic costs.

[36] Senior counsel recognised that there were authorities to support the proposition that a decision in a single dispute case is not severable, and must stand or fall as a whole. These authorities included Cantillon Ltd v Urvasco Ltd, Carillion Utility Services Ltd, my own decision in CSC Braehead Leisure Ltd v Laing O'Rourke Scotland Ltd [2008] CSOH 119, and Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture [2010] EWHC 1076 (TCC), [2010] BLR 415.

[37] There were authorities, however, to the effect that an adjudicator's decision was severable, with part being enforced and part being reduced. Ardmore Construction Ltd v Taylor Woodrow Construction Ltd [2006] CSOH 3 was an example of this being done in a multiple dispute case; Homer Burgess Ltd v Chirex (Annan) Ltd 2000 SLT 277 was a case involving a single dispute, in which the Court expressed the view that it would be competent to reduce part of the decision and allow the remainder to stand (albeit that in that case the Court decided to reduce the whole decision). In two cases in England Coulson J has expressed (albeit obiter) the view that in an appropriate single dispute case it may be time for the Court to review whether severance could properly be considered - see Amec Group Ltd v Thames Water Utilities Ltd [2010] EWHC 419 (TCC) at paragraphs 99 and 100, and Pilon Ltd v Breyer Group plc [2010] EWHC 837 (TCC) 452, at paragraph 40.

[38] The present state of the law was, senior counsel submitted, unsatisfactory. The law should not prohibit severance in appropriate cases; there is no blanket ban on partial reduction, and the Court should pay more attention to the purpose of the 1996 Act and the facts of the individual case. The 1996 Act was designed to provide a speedy dispute resolution procedure, to provide a prompt cash flow remedy. Partial reduction is competent; it should be used to allow the successful contractor to receive as quickly as possible those damages which were properly awarded in his favour, instead of requiring him to fight the entire dispute afresh. No authority from the Inner House nor the Court of Appeal in England sheds light on this point; there are only authorities at first instance, and some of these suggest that severance should be considered in an appropriate case.

[39] In the present case, the adjudicator has made clear findings with regard to liability and historic costs, and these cannot be regarded as tainted in any way by what he did in relation to Clause 41.3. There are clear findings and figures which can be allowed to stand, and it could not be argued that the Court was substituting its own view for the adjudicator's view. For example, in paragraph 20.2 of his decision letter the adjudicator determines that specified defects arose in consequence of the defender's design failure and arose generally in consequence of the defender's breaches of its contractual obligations. In paragraph 20.3 he determines that certain other defects did not arise in consequence of the defender's breaches of its contractual obligations; in paragraph 20.6 he determines the historic costs figure in the sum of £340,872.26 plus applicable VAT. There is therefore no need for the Court to reach its own view on these matters, nor does it require to substitute its assessment for that of the adjudicator - the findings and determinations are there and should be allowed to stand, and only the potentially tainted part of the decision relating to Clause 41.3 should be reduced. This is the sort of situation contemplated by Lord Hodge at paragraph [40] of Carillion Utility Services Ltd. At the very least, there was no obvious reason why the Court should not allow the adjudicator's determination of liability and past costs to stand. Lord Hodge's concerns about expenses were misplaced - expenses are an independent matter which come on top of a determination of the dispute, but are not part of the dispute itself. Moreover, complexities regarding expenses may arise in multiple dispute cases, yet it is accepted that severance may be applied in multiple dispute cases and no concerns have been expressed about the effect of expenses. In any event, in the present case the adjudicator dealt with expenses in Part 19 of his decision letter; expenses follow success, and the pursuer has been substantially successful on liability and past costs. Mr Howie invited me to allow paragraphs 20.1 to 20.6 and 20.8 to 20.10 of the decision letter to stand, to delete the sum ordered to be paid in paragraph 20.7 and to substitute therefor the sum of £340,872.26 plus applicable VAT.

Submissions for the defender

[40] Mr MacColl emphasised that this was a single dispute case, and there was only one order for payment of a single lump sum, as found in paragraph 20.7 of the decision letter. It would be inappropriate in the circumstances of this case, and not in accordance with authority, for there to be any severance. There was one dispute, namely whether the defender was in breach of contract and if so what sum it should pay to the pursuer. In this regard the present case was on all fours with CSC Braehead Leisure Ltd, Cantillon Ltd v Urvasco Ltd, and Cleveland Bridge (UK) Ltd. If the Court were to accede to the pursuer's submissions, it would need to rewrite the lump sum awarded by the adjudicator. There was no justification for doing so. There was a plain breach of natural justice which rendered Mr Ross's decision invalid, and it fell to be reduced in its entirety. In none of the cases referred to by Mr Howie did the Court sever a single dispute decision. The views of Coulson J in Amec Group Ltd v Thames Water Utilities Ltd and in Pilon Ltd v Breyer Group plc were obiter and were made without detailed citation of authorities or analysis. There are good reasons why the Courts have set themselves against the severing of a unitary decision - as was observed in Cleveland Bridge (UK) Ltd, it is not the job of the Courts to rewrite the decision of an adjudicator. What the parties have contracted to be bound by is the decision of the adjudicator - not a part of that decision, nor the decision after the Court has rewritten it. The concerns about expenses which Lord Hodge expressed at paragraph [41] of Carillion Utility Services Ltd apply with equal force to the present case. By far the greater part of the sum awarded by the adjudicator (i.e £1,849,322.09 plus VAT, out of a total award of £2,190,194.35 plus VAT) cannot stand; in light of this, the Court should not be satisfied that the adjudicator's determination as to expenses holds good. For all these reasons this decision is not severable.

Discussion

[41] It is not disputed that partial reduction is a competent remedy in an appropriate case. Lord Macfadyen's remarks in Homer Burgess Ltd v Cirex (Annan) Ltd support this proposition, and I do not suggest that partial reduction is an incompetent remedy. However, it is worthy of note that no Court has granted this remedy in relation to the decision of an adjudicator in a single dispute case. It is not disputed that the present case is a single dispute case.

[42] Akenhead J carried out a full review of the authorities on severability in relation to an adjudicator's decision in Cantillon Ltd v Urvasco Ltd (at paragraphs 58 to 65). He referred to Keating on Construction Contracts (8^th ed) at 17-045:

"It seems probable that if there is a breach of natural justice, the whole decision is unenforceable, and it is not possible to sever the good from the bad".

[43] He goes on to review a number of authorities, including Homer Burgess Ltd. One of these was KNS Industrial Services (Birmingham) Ltd v Sindall Ltd (2001) 75 Con LR 71, in which HHJ Lloyd Q.C. made the following observation:

"There may be instances where an adjudicator's jurisdiction is in question and the decision can be severed so that the authorised can be saved and the unauthorised set aside. This is not such a case. There was only one dispute even though it embraced a number of claims or issues. KNS's present case is based on severing parts of the adjudicator's apparent conclusions from others. It is not entitled to do so. ....Furthermore I do not consider that it is right to try to dismantle and reconstruct this decision in the way suggested by KNS for that intrudes on the adjudicator's area of decision-making".

Having reviewed all of the authorities, Akenhead J observed at paragraph 65 of his decision in Cantillon Ltd v Urvasco Ltd:

"On the severability issue, I conclude, albeit obiter in the result, as follows:

....

(f) in all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction or in breach of the rules of the natural justice, the decision will not be enforced by the court".

[44] Ramsey J also reviewed the authorities on severability at paragraphs 107 to 124 of Cleveland Bridge (UK) Ltd. He disagreed with Lord Macfadyen's view in Homer Burgess, and observed that

"the whole of the decision is not enforceable and the contractual agreement to be bound by that decision does not apply. I do not think that in the context of the agreement to be bound by a temporary decision, the decision can be dissected to impose a separate and severable obligation to be bound by the adjudicator's decision on each of the component issues on which the adjudicator based that decision".

[45] Paragraph 119 of the judgment in Cleveland Bridge (UK) Ltd bears repeating here:

"I agree with the observations of HHJ Lloyd, Q.C. in KNS Industrial that the parties have to accept the decision 'warts and all' and cannot come to the Court to have a decision revised and replaced with what is or was thought to be right, unless the Court is the ultimate Tribunal. Similarly I agree with HHJ Gilliland, Q.C. that it is not right for the Court to try and dismantle or reconstruct a decision. Again, HHJ Seymour, Q.C. in RSL v Stansell said, and I agree, that once the decision as to the total amount to be paid has been successfully attacked, it cannot be said that any other amount has been determined by the adjudicator to be due in a way which is binding".

[46] I find the reasoning above to be persuasive. It is also consistent with the views which I expressed in CSC Braehead Leisure Ltd (at paragraphs [38] to [40]). No authority has been put before me to suggest that any Court has taken a different view in a single dispute case. While I have some sympathy with the views expressed by Coulson J in Pilon Ltd v Breyer Group plc and Amec Group Ltd v Thames Water Utilities Ltd that, in light of the intention of the 1996 Act, it may be appropriate to review whether severance could properly be considered in an appropriate single dispute case. However, I do not consider that this is such a case. As Mr MacColl observed, what the parties have contracted to be bound by is the adjudicator's decision, not a part of that decision nor the decision after the Court has rewritten it. The concerns expressed by Lord Hodge in Carillion Utility Services Ltd with regard to expenses also apply in the present case. It is far from clear to me that the adjudicator would have found the pursuer substantially successful in a situation in which the large majority of the adjudicator's award was tainted, and the pursuer only received a sum which was less than one-sixth of the total awarded.

[47] For these reasons I do not consider that the adjudicator's decision in this case is severable.

Approbate and reprobate
Submissions for the pursuer
[48] Senior counsel submitted that the letters of 7 and 8 July 201l constituted approbation by the defender of the adjudicator's decision, and it was not open to the defender to seek to reprobate now. The letters reflected the wording of Clause 93.1 of the NEC Professional Services Contract. The letters are clearly intended to be a Clause 93.1 Notice; there was a limited window of opportunity for a dissatisfied party to notify the other party of his intention to refer the matter to the Arbitration Tribunal, namely within four weeks of notification of the adjudicator's decision. The defender had to make an election - did it refer the matter to the Arbitration Tribunal, in which case it accepted that the decision was valid (if wrong), or did it treat the decision as invalid and seek reduction on the basis of a breach of natural justice. The defender clearly made that election and decided that the decision was valid. The defender had the benefit of legal advice at that time. Having made that election, it was not open to the defender thereafter to challenge the validity of the decision.

[49] In support of this argument, senior counsel relied on my decision in Redding Park Development Company Limited v Falkirk Council [2011] CSOH 202, and in particular paragraphs [54] to [61]. This applied the doctrine of approbate and reprobate to the decision of an adjudicator, and it is unnecessary for the application of the doctrine that the approbating party should obtain a benefit. Senior counsel accepted that the circumstances in the Redding Park case were more strongly indicative of approbation than the circumstances in the present case, but it was clear that the defender had to make an election in the present case, and it did so. It would require a very carefully drawn letter by a dissatisfied contracting party, including an esto basis, for that party to maintain that the decision was invalid because of breach of natural justice but that, in any event, if this argument was wrong the party wished to go to the Tribunal. Indeed, senior counsel was of the view that even such a careful letter would not work - the contract forces the party to make an election. In the present case the defender has adopted or approbated the decision, and so has cured any defect such as a breach of natural justice.

[50] Senior counsel obtained further support from Erskine's Institutes, III, 3, Chapters 48 and 49. He accepted, under reference to the second point raised in Chapter 48, that for homologation to be inferred, it is necessary to have something which is unequivocally referable to the document itself, and proceeding on the basis of the document. He also referred to Bell's Commentaries, Book II, Part II, at pages 139/142. He submitted that this was a doctrine which stood on its own terms, and was quite separate from personal bar. It is entirely based on election, and a change of position is not required. He also referred to Macob Civil Engineering Limited v Morrison Construction Limited [1999] CLC 739, and in particular paragraphs 28 and 29 of the judgment of Dyson J. (as he then was). These principles apply in the present case; the defender has approbated the decision by electing to go to arbitration, and it is no longer open to it to argue that the decision is a nullity.

Submissions for the defender
[51] Counsel for the defender submitted that, on a fair reading of either of the letters of 7 or 8 July 2011, together with Clause 93.1 of the contract, it cannot be said that the defender has stated in clear terms that the adjudicator's decision was binding and enforceable on it. The circumstances of the present case are quite different from those in Redding Park, where money was paid over in compliance with the decision, and the party's solicitors stated that they did not have any option but for this money to be handed over. Neither of the letters of 7 or 8 July 2011 came close to this. Very clear words or deeds were required to constitute approbation - so much was clear from the passages in Erskine and Bell referred to. The approbatory act must be an act that can be fairly ascribed no other purpose than that of giving sanction to the deed or contract in question. The language of the letters of 7 and 8 July 2011 fall far short of stating that the defender is bound by the adjudicator's decision. They did not amount to the clear and indisputable assent requited by Bell, nor are they so strong and express that no reasonable construction can be put on them other than that they were approbatory of the decision.

[52] Counsel observed that it was not necessary, in order for a party to go to the Arbitration Tribunal, that it accepted that there was a valid enforceable decision - Clause 93.1 of the contract entitles a party to go to arbitration even where there is no decision. There were very significant differences between Clause 93 in the present case and the clause in Macob Civil Engineering, and moreover there was no timebar constraint in the Macob clause. It would be an unlikely commercial result that a party who has a good case on breach of natural justice is required to forego that case in order to argue substantive objections to an adjudicator's decision. It is unlikely that a commercial contract would force a party to abandon one route, and there was no reason, in the language of this contract or in commercial logic, why the defender should be forced to elect one remedy to the exclusion of the other.

[53] The pursuer had never offered to prove that it took the letters of 7 or 8 July as approbation of the decision. This was unsurprising, given the terms of the letters. The argument appeared for the first time on the day before the proof. If the letters were so clearly and strongly indicative of an election and of approbation of the decision, one might have expected the argument to have emerged earlier. The correct view was that these letters were written in order to preserve the right to arbitrate. That accords with common sense and commercial logic, but even if it is only a plausible construction of the letters, that is sufficient, on the basis of Erskine and Bell, for the defender's purposes. The tests set out therein are not met in the present case.

Discussion
[54] There was no hint in the pursuer's pleadings or written submissions of an argument based on approbate and reprobate until a Minute of Amendment for the pursuer was intimated on 12 December 2011. This was eight days before the Proof before Answer in this action, and four days after the issuing of my Opinion in Redding Park Development Company Limited v Falkirk Council. In that case, Mr Howie appeared for the respondent and successfully argued that the petitioner had approbated a decision of an independent expert. However, the circumstances of that case were different from the present case. In that case, the expert issued his determination on 22 October 2010, which was adverse to the petitioners. The petitioners took legal advice, and on 2 December 2010 their solicitors wrote to the solicitors acting for the respondent enclosing a cheque payable to the respondent for the whole of a sum placed on deposit receipt together with interest thereon. The letter continued as follows:

"Whilst, as you know, my clients have accepted that in terms of the recent determination and given the original agreement in respect of the deposit, they do not have any option but for this money to be handed over. I must mention again that my clients remain very concerned about certain aspects of the determination and are reviewing their options."

The petitioners did not raise proceedings for judicial review challenging the validity of the determination on jurisdictional grounds until about six months after the determination, and several months after the letter and cheque were sent to the respondent's solicitors.

[55] In the present case, the defender took no step equivalent to the sending of a cheque which could only be consistent with the decision being valid. The letters contain no statement equivalent to the statement in that case that "my clients have accepted that in terms of the recent determination and given the original agreement in respect of the deposit they do not have any option but for this money to be handed over". In the present case, all that is stated is that:

"in accordance with the contract, SIC hereby gives HIAL notice that SIC is dissatisfied with the decision of the Adjudicator dated 24 June 2011. SIC hereby notifies you of its intention to refer the subject matter of the dispute to arbitration."

Unlike the letter in Redding Park, I do not consider that this letter clearly or unequivocally approbates the decision as being valid. All that is stated is that the defender is dissatisfied with it, and notifies the pursuer of its intention to refer the subject matter of the dispute to arbitration. This is merely a necessary precursor to arbitration proceedings - it is not the commencement of such proceedings.

[56] Moreover, on the unchallenged evidence of Mr McGinness there was a telephone conversation on 12 July 2011 between Mr Farndale of Burness and Mr McGinness, at which time it was clear to Mr McGinness that Mr Farndale was not aware of the letter of 8 July. At that time - ie. before the pursuer's solicitors were aware of the letter - Mr McGinness explained that he was of the view that the adjudicator's decision was unenforceable because of the adjudicator's breach of the rules of natural justice by seeking to take legal advice and not giving the parties an opportunity to comment thereon. He told Mr Farndale that the defender would, in all probability, raise judicial review proceedings and said that he hoped to be in a position to confirm what the defender intended to do shortly. The defender decided to raise proceedings for judicial review of the adjudicator's decision later that day, and the petition for judicial review was presented to Court and forwarded to the pursuer's solicitors on 13 July 2011.

[57] Mr Howie submitted that the contract obliged the defender to make an election, and that it clearly did so. I do not consider that either branch of this submission is well founded. I can find no express provision in the contract requiring a party to make an election at this stage, nor is there anything in commercial logic or business common sense which would justify the inference that the contract required an election to be made at this stage. I see nothing illogical about a party who considers that a decision is vitiated by a breach of natural justice and who is also dissatisfied with the substantive terms of the decision taking steps to protect its position on each argument. In the present contract, the natural justice point could only be determined by a Court, and the substantive dispute on the merits could only be determined by an arbitration tribunal. There is nothing to prevent a dissatisfied party from raising judicial review proceedings on the ground of a breach of natural justice, but seeking to preserve its position in the event that its natural justice argument fails, by giving notice that it intends to refer the dispute to arbitration.

[58] That, it seems to me, is what the defender has sought to do in the present case. Given the four week time limit contained in Clause 93.1 of the contract for giving notice of intention to refer to the tribunal, it is difficult to see what else could have been done. At this stage, it should be noted that all that the letter is doing is giving notice of intention to refer - it is not itself a referral to the tribunal. Moreover, as Mr MacColl observed, a party has a right in terms of Clause 93.1 to refer to the tribunal even if there is no decision by the Adjudicator.

[59] The circumstances in Macob Civil Engineering Limited v Morrison Construction Limited were different from those in the present case. In particular, the terms of the contract were different, and the actings of the party said to have approbated the decision were different. The contract contained no time limit equivalent to the four week time limit imposed by Clause 93.1 of the present contract. There was therefore no need for the party dissatisfied with the substance of a decision to take early steps to protect its ability to present arguments in an arbitration. In that situation, anything done to advance arguments against the substance of the decision before the natural justice point is decided is more easily ascribed to approbation of the original decision. Moreover, the dissatisfied party in that case went beyond the writing of a letter giving notice of an intention to refer to arbitration, and issued a summons to stay the proceedings under Section 9 of the Arbitration Act 1996. Such a step is more clearly approbatory of the decision than the letters in question in the present case. The circumstances in the present case are therefore different in important respects from those in both Redding Park and Macob.

[60] Finally, it must be remembered that the test for approbation is high. As Erskine puts it, "the approbatory acts must be so strong and express, that no reasonable construction can be put on them, other than that they were performed by the party from his approbation of the deed homologated". As Bell puts it:

"In order to give the same effect to the approbatory act as to the full original consent, it is necessary, (1) that the assent be clear and indisputable, applying directly and unequivocally to the contract, conveyance or settlement said to be homologated ... and, (3) it must be an act that can be fairly ascribed to no other purpose than that of giving sanction to the deed or contract in question."

I do not consider that the letters of 7 and 8 July 2011 meet this high test. The pursuer's submissions on approbation must therefore fail.

Decision
[61] For the reasons given above, I consider that the decision dated 24 July 2011 is vitiated by a material breach of natural justice. The dispute which was the subject of that decision was a single issue dispute, and in the circumstances of the present case I am not satisfied that the determination as to Future Remedial Works Costs can be severed from the rest of the decision. I am not persuaded that the defender has approbated and homologated the decision so as to prevent it from reprobating it. I do not consider that the pursuer is entitled to the remedy sought in the summons. In these circumstances I should normally have pronounced an interlocutor repelling the pursuer's pleas-in-law and sustaining some of the defender's pleas-in-law. However, both parties requested that I should delay issuing an interlocutor in this matter until they have had an opportunity of considering this Opinion. Accordingly, the case will be put out By Order in early course, to enable this to be done.