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ATG Services (Scotland) LTD against Ogilvie Construction LTD (Court of Session) [2024] CSOH 94 (04 October 2024)
URL: http://www.bailii.org/scot/cases/ScotCS/2024/2024csoh94.html
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[2024] CSOH 94
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OUTER HOUSE, COURT OF SESSION
[2024] CSOH 94
CA93/24
OPINION OF LORD SANDISON
In the cause
ATG SERVICES (SCOTLAND) LIMITED
Pursuer
against
OGILVIE CONSTRUCTION LIMITED
Defender
Pursuer: McKenzie, KC; DAC Beachcroft Scotland LLP
Defender: G. Walker, KC; Brodies LLP
4 October 2024
Introduction
[1]
This is an action seeking the court's aid to enforce the decision of an adjudicator
appointed to resolve a dispute which arose under a construction contract falling within the
scope of the Housing Grants, Construction and Regeneration Act 1998. The contract largely
incorporated the terms of the Scheme for Construction Contracts (Scotland)
Regulations 1998. The adjudication was commenced on 21 May 2024 and the adjudicator's
decision in favour of the pursuer and awarding it a sum slightly in excess of £1 million was
issued on 26 June. The defender declined to pay, claiming that the decision was tainted by
breaches of natural justice on the part of the adjudicator. The pursuer raised this
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commercial action to enforce the decision and the matter came before the court for an
accelerated one-day diet of debate to resolve the matter.
Background
[2]
The defender is a construction company and main contractor. It appointed the
pursuer as a sub-contractor for a groundworks package at a project for the construction of a
housing and care facility at Newmills Road, Dalkeith.
[3]
The dispute arose in connection with an interim application which the pursuer had
made to the defender for payment of a sum claimed to be due to it. The adjudicator (who
was appointed by the Scottish Building Federation) received a referral notice from the
pursuer, a response from the defender, and a further round of written submissions from
each party. He decided that the pursuer had made a valid application for payment; that
there was no valid notice specifying the sum that the defender considered to be due; that no
valid pay less notice had been issued by the defender; that the final date for payment had
passed without full and proper payment in respect of the application, and that the notified
sum of £1,081,254.83 (excluding VAT) was to be paid by the defender not later than 7 days
from the date of the decision, with interest, fees and expenses. In terms of section 108(3) of
the 1996 Act and paragraph 23(2) of the Scheme, his decision is binding and enforceable
until the dispute is finally resolved by agreement or by a final tribunal.
[4]
The defender maintains that the adjudicator materially breached the rules of natural
justice. The sub-contract required notices served under it to be sent by first class recorded
delivery post to a stipulated address or to such further address as might be notified in
writing from time to time, or else by fax. It was further agreed at a pre-contract meeting that
any applications for payment to the defender had to be submitted to two specified email
3
addresses. The application in question took the form of an attachment to an email sent to a
different email address, albeit one that was associated with the defender, and it did not seek
to argue that it had not duly received the email. Rather, it maintained at adjudication that
the use of a method of service other than that stipulated in the contract rendered what was
sent invalid as an application for payment of a notified sum within the meaning of the
1996 Act. The pursuer argued that the parties had adopted a course of conduct which
treated applications served other than in accordance with the provisions of the contract as
nonetheless valid. It relied on a witness statement to that effect and on observations in the
judgment of Carr J (as she then was) in Jawaby Property Investment Ltd v Interiors Group
submissions, the adjudicator asked the parties which law governed the contract, and they
told him it was Scots law.
Defender's submissions
[5]
On behalf of the defender, senior counsel submitted that before the adjudicator the
pursuer had founded on Jawaby and had furnished him with a witness statement setting out
the factual basis for its contention that that case was in point. In response, the defender had
submitted that the pursuer had not set out any principle of Scots law, or relied on any such
principle, in relation to its submissions on the alleged course of conduct. The pursuer had
not argued that Scots law was the same as English law, or suggested that a Scots law
principle was engaged. It had made no submissions under the Scots law principles of
waiver or personal bar. Had it done so, it would have been open to the defender to advance
submissions to the effect that waiver and personal bar (or whatever other principle might
have been relied on by the pursuer) were not engaged on the facts of the case. As no such
4
argument had been advanced, it was not necessary (or indeed possible) for the defender to
make any such submissions.
[6]
The adjudicator accepted the pursuer's position, and held that the 25 March
application was validly issued because of the established course of conduct. It was evident
that he had applied an English case decided by an English court under English law to the
case before him - which was a Scottish one that he was specifically told by both parties fell to
be decided under Scots law. He appeared to criticise the defender for not providing him
with any authority as to why a course of conduct was not sufficient for the pursuer's case to
succeed, saying at paragraph 6.25 of his decision: "The Respondent does not provide any
authority as to why a change of format would defeat a course of conduct relative to who the
applications were to be served upon". That was a reference to another argument that was
advanced by the defender, but was indicative of the adjudicator thinking that the onus of
proof relative to establishing that the English case relied on did not apply rested on the
defender.
[7]
The principles applicable to enforcement actions had been reiterated recently by the
Inner House in Atalian Servest AMK Ltd v BW (Electrical Contractors) Ltd. At [35] the court
cited Bresco Electrical Services v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, [2020] Bus
LR 1140. It stated that it agreed with what had been said there by Lord Briggs at [12],
namely:
"A very important underlying objective ... of adjudication was the improvement of
cashflow to fund ongoing works on construction projects. A particular concern was
that a dispute between (say) a sub-contractor and a sub-sub-contractor which could
only be resolved by litigation or arbitration could in the meantime disrupt the entire
project while a refusal of interim payment led to the cessation of significant works.
The motto which has come to summarise the recommended approach is `pay now,
argue later'. Adjudication was one of five reforms ... designed to facilitate the
realisation of the cash flow aspiration behind that motto. ... It is achieved by rigorous
time limits for the conduct of the adjudication, the provisionally binding nature of
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the adjudicator's decision and the readiness of the courts ... to grant speedy
summary judgment by way of enforcement, leaving any continuing disagreement
about the merits of the underlying dispute to be resolved at a later date by
arbitration, litigation or settlement agreement."
At para [36] the court also cited J&A Construction (Scotland) Ltd v Windex Ltd [2013]
CSOH 170 where Lord Malcolm had adopted a passage from the judgement of HHJ Wilcox
in Absolute Rentals Ltd v Gencor Enterprises Ltd, unreported, 16 July 2000 as follows:
"The purpose of the Scheme is to provide a speedy mechanism for settling disputes
in construction contracts on a provisional basis and, by requiring decisions by
adjudicators to be enforced pending final determination of disputes by arbitration,
litigation or agreement, whether these decisions are wrong in point of law or fact, if
within the terms of reference. It is a robust and summary procedure and there may
be casualties although the determinations are provisional and not final ..."
The court went on at [36] to say that it was:
"reluctant to interfere with an adjudicator's award unless the adjudicator has acted
ultra vires by, for example, failing to answer the questions posed to him or if he has
acted in a manner contrary to natural justice (the principle of fairness)."
[8]
The law in relation to the circumstances in which an adjudicator's decision would be
vitiated by a breach of the rules of natural justice was discussed in Van Oord UK Limited v
was successfully resisted in that case was that the adjudicator had decided the dispute on
the basis of a programme which neither party founded upon, and did so without telling
either party that that was his intention or seeking submissions from them on it. That was
held to have given rise to the risk of material injustice, and enforcement of his decision was
refused accordingly. The applicable legal propositions were set out at [15] - [19] as follows:
"[15] The underlying legal principles are not in dispute. As a starting point, the
courts will in general summarily enforce decisions of adjudicators: Carillion
was put in that case at paragraph 86, the need to have the `right' answer is
subordinated to the need to have an answer quickly. Having regard to that statutory
objective, it was said that challenges to an adjudicator's decision on the ground of
breach of natural justice were likely to succeed only in the plainest of cases.
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[16] Nonetheless, where an adjudicator is found to have acted contrary to the
interests of natural justice, enforcement will be refused: Gillies Ramsay Diamond v
PJW Enterprises Limited 2004 SC 430, per the Lord Justice Clerk (Gill) at 25.
[17] The application of the principles of natural justice to the process of adjudication,
and the extent to which an adjudicator may fairly decide a case other than by
accepting the submissions of one or other party, has been the subject of much judicial
discussion. Lord Drummond Young considered the interaction of natural justice and
adjudication in Costain Limited v Strathclyde Builders Limited 2004 SLT 102, in
particular at paragraph [20]; and the following cases were also referred to in
submissions: Roe Brickwork Ltd v Wates Construction Ltd [2013] EWHC 3417; Balfour
Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd [2009] EWHC 2218;
and Miller Construction (UK) Ltd v Building Design Partnership Ltd [2014] CSOH 80.
[18] These cases give rise to the following propositions, which to some extent
overlap, but none of which is controversial:
(i) Each party must be given a fair opportunity to present its case: Costain.
(ii) If the adjudicator makes investigations and inquiries of his own, or
proposes to use his own knowledge and experience to advance significant
propositions of fact or law which have not been canvassed by the parties, it
will normally be appropriate to canvas those propositions with the parties
before a decision is made: Costain.
(iii) The adjudicator should not decide a point on a factual or legal basis that
has not been argued or put forward before him: Roe Brickwork, per Edwards-
Stuart J at paragraph 22.
(iv) However, an adjudicator can reach a decision on a point of importance on
the material before him on a basis for which neither party has contended
provided that the parties were aware of the relevant material and that the
issues to which it gave rise had been fairly canvassed: Roe Brickwork at 24.
(v) For a breach of natural justice to vitiate a decision, it must be a material
breach. A breach is likely to be material where the adjudicator has failed to
bring to the attention of parties a point or issue which they ought to have
been given the opportunity to comment on, if it is one which is either decisive
or of considerable potential importance to the outcome of the resolution of
the dispute: Balfour Beatty Engineering Services at paragraph 41 (quoting from
Cantillon Ltd v Urvasco Ltd [2008] BLR 250 at paragraph 57). The question
comes to be whether, in deciding the case, the adjudicator went off on a frolic
of his own.
(vi) An adjudicator is afforded considerable leeway and is entitled to adopt
an intermediate position not contended for by either party without giving
notice of his intention to do so: Miller Construction (UK) Ltd v Building Design
[19] In applying these principles, and asking whether there has been a breach of
natural justice, the words of Lord President Clyde in Barrs v British Wool Marketing
Board 1957 SC 72 at 82 must be borne in mind: `The test is not `Has an unjust result
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been reached?' but `Was there an opportunity afforded for injustice to be done?' If
there was such an opportunity, the decision cannot stand.'"
[9]
An adjudicator had to give adequate and cogent reasons for the decisions he made
that were responsive to the issues in dispute. Incoherent or unintelligible reasons would not
form the basis of a reasoned decision: Balfour Beatty at [48]. Further, the arguments placed
before the adjudicator could not simply be ignored. That would represent a failure to
exhaust his jurisdiction: DC Community Partnerships Limited v Renfrewshire Council [2017]
at [17]; Connaught Partnerships Limited (in administration) v Perth & Kinross Council [2013]
CSOH 149, 2014 SLT 608 at [18] - [21]; NKT Cables A/S v SP Power Systems Limited [2017]
CSOH 38, 2017 SLT 494 at [113] - [114], and Whyte and Mackay v Blyth and Blyth Consulting
the courts were reluctant to interfere with adjudicators' decisions, they would do so in
circumstances where clear, material breaches of the rules of natural justice could be
demonstrated or where the adjudicator had otherwise acted ultra vires or failed to provide
intelligible reasons engaging with all of the significant lines of argument.
[10]
In the instant case, the defender advanced two closely connected lines of argument.
First, it contended that the adjudicator went off on a frolic of his own. He was not provided
with any submissions by the pursuer to the effect that English law applied, or that Scots law
was the same as English law or that there was a Scots law principle that was the same as
those upon which the English court in Jawaby had founded. He must either have decided
that, contrary to what he had been told, English law applied, or else that Scots law was the
same as English law or that there was some Scots law principle (on which he was not
favoured with any submissions) that gave rise to the same result as that which pertained in
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Jawaby. In either case, he had breached the rules of natural justice. He did not tell the
parties that he was intending to adopt either of those courses. The defender had been
materially prejudiced. It was not aware that the adjudicator would apply a foreign law
when he had specifically been told that Scots law applied, or that he would search out an
equivalent Scots law principle and apply it. It did not know that the adjudicator would treat
Scots law as being identical to English law, or that he would place on the defender the onus
of providing an authority that vouched the proposition that an English case decided under
English law did not apply. That gave rise to a situation where the defender was effectively
deprived of any opportunity to make responsive submissions. If the adjudicator had
directed himself that English law applied, he ought to have alerted the parties to his
intention to do so, in circumstances where they had specifically informed him that Scots law
applied. The defender could have made submissions as to why that was inappropriate. If
the adjudicator had investigated the law and directed himself that Scots law and English law
were the same, he ought to have alerted the parties to his intention to do so. The defender
could have made submissions as to why that was wrong. If he had investigated the law and
directed himself that there was some Scots law principle that he himself had identified as
potentially applying, then he ought to have invited submissions on that. It was impossible
to know what he had done or what submissions might have been capable of being made. It
was equally impossible to know if such submissions would have been successful or not. A
real and substantial opportunity for injustice had arisen.
[11]
Secondly, the defender contended that the adjudicator failed to engage with the
defender's argument to the effect that the pursuer had not provided any basis in Scots law
for its submission that an established course of conduct meant that its failure to follow the
express contractual provisions pertaining to the service of notices was not fatal to its claim.
9
Again, the defender had been prejudiced. It did not know why that argument was
unsuccessful. That was amply demonstrated by the fact that the defender was unable to be
specific about how or why the adjudicator considered himself bound by Jawaby or a
principle of Scots law arising out of a course of conduct. There were several possible ways
that he might have directed himself with the effect that he felt it necessary to follow the
Jawaby decision or some unknown and undisclosed Scots law principle. The absence of
reasons on this important issue meant that the decision failed to engage with the argument
and failed to let the defender know why it lost on this point.
Submissions for the pursuer
[12]
On behalf of the pursuer, senior counsel submitted that the point raised in the
defences was a narrow one, which boiled down to the suggestion that the adjudicator had
failed to address a material line of defence, namely an argument that the pursuer had failed
to set out any principle of Scots law or authority upon which it could rely in relation to its
submissions on a course of conduct validating service on the defender of the pursuer's
application for payment. The pursuer's position was that, on a fair and proper reading of
his decision, the adjudicator did not go off on a frolic of his own, but clearly addressed that
line of defence (which was in any event not material), rejected it and gave adequate reasons
for his decision. Whether the decision was correct or not, in law or fact, did not matter.
There was no breach of the requirements of natural justice and the decision should,
accordingly, be enforced.
[13]
Adjudication had two main objectives. First, to facilitate cash-flow in the
construction industry by encouraging parties to "pay now, argue later". Second, to provide
a speedy mechanism for settling disputes in construction contracts on a provisional basis by
10
requiring decisions by adjudicators to be enforced pending final determination of disputes
by arbitration, litigation or agreement, whether these decisions were wrong in point of law
or fact, so long as they fell within the terms of reference. It was a robust and summary
procedure and there might be casualties although the determinations were provisional and
not final: Atalian Servest (IH) at [35] - [36]. The adjudication procedure ought not to be
derailed by the pursuit of technical legal arguments: Charles Henshaw and Sons Ltd v Stewart
& Shields [2014] CSIH 55 at [17]. As a result, the court's approach to the enforcement of
adjudicators' decisions had been developed over a series of cases and was summarised in
" ... the court will only interfere in the plainest of cases - it is chary of technical
defences - if the adjudicator has answered the right questions, his decision will be
binding, even if he is wrong in fact or law - the court will, however, intervene if the
adjudicator: (a) was not validly appointed, (b) acted outside his jurisdiction, (c) did
not comply with the rules of natural justice, or (d) provided inadequate reasoning".
Where an adjudicator had failed to address and determine a material line of defence, this
might result in unfairness and a breach of natural justice which would mean that the court
would not enforce his decision: UK Grid Solutions Ltd v Scottish Hydro Electric Transmission
plc [2024] CSOH 5, 2024 SLT 232 at [41] and the authorities there cited. An adjudicator might
be described as going off on a "frolic of his own" if he had failed to bring to the attention of
parties a point or issue which they ought to have been given the opportunity to comment
on, if it was either decisive or of considerable potential importance to the outcome of the
resolution of the dispute: Van Oord at [18(v)]. An adjudicator could not be said to have gone
off on such a frolic if the parties had made submissions about the very matter which was
said to be the subject of the alleged frolic: cf. GT Equitix Inverness Ltd v Board of Management
11
[14]
An adjudicator enjoyed a presumption of regularity and propriety. It was to be
assumed that he had considered any relevant information submitted to him by either party,
unless his decision and reasons suggested otherwise. Whether the adjudicator understood
the significance of that information was another matter: Gillies Ramsay Diamond v PJW
Enterprises Ltd at [28]; SW Global Resourcing Ltd v Morris & Spottiswood Ltd [2012] CSOH 200
at [13] and [17]. It was not necessary for an adjudicator to deal in his decision expressly with
every argument made to him provided that he dealt with the arguments which were
sufficient to establish the route by which the decision was reached: UK Grid Solutions at [49].
A failure to refer to a specific point would not of itself matter and it had to be apparent from
the adjudicator's decision or reasoning that a material issue had not been addressed:
Hochtief Solutions AG at [26]. If an adjudicator failed to reference in his reasons a particular
submission, that could not give rise to the inference that he omitted altogether to take the
relative submission into account: Atholl Developments at [19]. Acceptance by an adjudicator
of one position might be sufficient to indicate the reasons for rejecting the other position; or
rejection of a defence might be implicit in, or a corollary of, the reasons given by the
adjudicator: SW Global Resourcing at [17]; DC Community Partnerships Ltd at [26]. An
adjudicator might accept the arguments of one party in a way which necessarily entailed the
rejection of the other party's arguments, so that the reasonable reader of the decision would
be aware, at least in general terms, of what its basis was without being left in any material
doubt as to whether any matter put forward had been overlooked. A failure to achieve
perfection of expression of reasoning was not a proper basis upon which to build a case of
failure to exhaust jurisdiction when, read fairly and in context, the decision indicated at the
very least by necessary implication how the arguments were regarded: Atalian Servest AMK
12
and ready nature of adjudication, and the fact that an adjudicator's decision was enforceable
even if the question referred had been wrongly answered, it would be rare for a reasons
challenge to succeed if an argument based on failure to exhaust jurisdiction had been
[15]
The parties had joined issue before the adjudicator inter alia on whether the pursuer's
interim payment application of 25 March 2024 had been validly served by the pursuer on the
defender. A number of points had been advanced on either side in relation to that issue,
including one based on a claimed course of conduct, namely that the defender had treated as
valid several previous interim applications served on it in the same way as the one in issue,
and could not now deny the validity of its service. That argument had been attacked by the
defender in its response in the adjudication, initially by seeking to show that on the facts no
relevant course of conduct had been established. In responding, the pursuer had submitted:
"3.3.4. The fundamental point is whether or not the interim application for payment
was valid. It is clear from Jawaby that the conduct of the payer plays an important
role in that determination. If interim applications for payment have been treated as
valid, then the recipient is incapable of denying applications received in the same
manner. As if to confirm the foregoing, Justice Carr continues in paragraph 50 of
Jawaby, stating:
`...In any event APS (on behalf of JPIL) waived any requirement for hard
copy service by its dealings with TIG on Valuations 1 to 6, all of which were
sent by email. Alternatively, JPIL is estopped from asserting that notification
by email is invalid by reason of the parties' course of conduct, which
extended over months and on a significant number of valuations. APS clearly
had authority to act on behalf of JPIL in relation to the mode of service under
Article 3 of the Contract. It would be unconscionable to allow JPIL to resile
from the convention in this regard now.'
...
3.3.14 Following Jawaby, having for c.2.5 years, accepted interim applications for
payments issued via email to the same email addresses as the Application, it would
be unconscionable to allow OCL to resile from the established convention now."
The defender in turn rejoined:
"2.18.3 Reason 3: ATG has failed to evidence any principle of Scots law upon which
it is seeking to rely in relation to its submissions on course of conduct. This case is
13
about ATG arguing that its Application becomes payable in full (i.e. it is attempting
to exert a legal entitlement). What is the principle that an application becomes
payable in full through a course of conduct even if such conduct did exist (which is
denied). ATG has not explained its position in this regard nor provided any
authority.
...
2.30.8.3 [ATG] has failed to provide a Scots law principle or any authority for their
assertions."
No further substantive submissions on the point had been made by the parties to the
adjudicator, although the defender had made fairly extensive submissions to the adjudicator
concerning a separate point arising under reference to Jawaby. In his discussion of the
parties' arguments in his decision, the adjudicator had set out the terms of paragraph 50 of
Jawaby and said:
"6.24 I consider this matter turns on course of conduct.
6.25 It is clear that the contract requirements for the serving of applications for
payment were not followed (Pre-Contract Meeting Minutes item 3.8) in that it was
not issued to the relevant email addresses as stated herein. However I am satisfied
that the issuing to Mr Hyslop was the accepted practice for the serving of
applications for payment, evident the examples provided by Mr Pollock in his
witness statement. I am not persuaded that the change of format in the application
content as highlighted by the Respondent has any effect on that. The Respondent
does not provide any authority as to why a change of format would defeat a course
of conduct relative to who the applications were to be served upon. Mr Hyslop
received the applications and issued payment notices relative to those applications.
There can be no doubt that this was the accepted procedure. I am satisfied a course
of conduct was established and in line with the findings in Jawaby (reference item
6.18 above) it would be incorrect to fail to accept that course of conduct in respect of
the subject payment application."
The adjudicator had further formally confirmed that he had considered all the matters put to
him.
[16]
It was quite clear that in relying on Jawaby the adjudicator was not going off on a
frolic of his own. The pursuer had expressly relied on Jawaby in its submissions. The
defender had made no positive case to the effect that Scots law was materially different from
what was stated in Jawaby or why, on a proper application of Scots law, the result contended
14
for by the pursuer, in reliance on Jawaby, would not be achievable. The defender merely
confined itself to a rather meek submission that the pursuer did not set out any Scots law
principle or authority upon which it could rely.
[17]
In these circumstances, the defender's assertion that the adjudicator went off on a
frolic of his own in applying Jawaby without any material before him to allow him to do so
was misconceived, and amounted merely to the suggestion that the adjudicator was wrong
to rely on Jawaby and that his resultant decision was wrong. That was an irrelevant assertion
in the context of the action.
[18]
Although the defender sought to frame an additional argument in terms of failure to
give reasons, that amounted to the same point, namely that the adjudicator had failed to
address the defender's argument that the pursuer had not set out any principle of Scots law
or authority upon which it could rely in relation to its submissions on course of
conduct - cf. UK Grid Solutions at [40]. The defender's argument was not a positive case
about the application of Scots law leading to a different result from that which the pursuer
sought under reference to Jawaby. The court should proceed on the basis that the
adjudicator had considered all the relevant material submitted to him by both parties. At
any rate, failure to reference the defender's argument that the pursuer had not set out any
principle of Scots law or authority upon which it could rely in relation to its submissions on
course of conduct could not give rise to the inference that he omitted altogether to take the
submission into account: Atholl Developments at [19]. There was no need for the adjudicator
to deal expressly with the argument that the pursuer had failed to set out any principle of
Scots law or authority upon which it could rely in relation to its submissions on course of
conduct. His express reliance on Jawaby clearly indicated that he was unpersuaded that the
defender's argument represented a barrier to him reaching the decision which he reached.
15
The reasonable reader of the decision would be aware of what the basis of the decision was,
without being left in any material doubt as to whether any matter put forward by either
party had been overlooked. The decision indicated at the very least by necessary
implication how the parties' arguments were regarded.
[19]
The defender's averments were bound to fail, the defence to the action was
irrelevant, and the court should grant decree de plano in terms of the first conclusion of the
summons.
Decision
[20]
The defence to this action is entirely without merit. The law on the application of the
principles of natural justice to adjudicators' decisions has been the subject of authoritative
discussion in this court for at least 20 years, and its content is not open to serious doubt. It is
perhaps unfortunate that the number of occasions on which the court had had to deal with
the matter, and the level of detail and analysis in which it has engaged, may have given rise
to the impression (or at least furnished the opportunity to argue) that the questions raised
are more complex and subtle than in fact they are. I do not propose in this opinion to add
further to the already unwieldy jurisprudence on the subject.
[21]
To describe an adjudicator as having gone off on a frolic of his own is to maintain
that his decision depends to some material extent on a ground which was not suggested to
him by the parties and on which he gave them no sufficient opportunity to comment. It is
that lack of opportunity to state one's case which permits the categorisation of such a frolic
as a breach of the requirements of natural justice. In the present case, both parties accepted
that a live question in the adjudication was whether the defender's behaviour in having
accepted and dealt with earlier payment applications from the pursuer which had not been
16
made by the means prescribed by the contract resulted in its not being entitled in point of
law to insist on those means having been used for the application in question. The pursuer
submitted as the applicable legal principle in such circumstances that "If interim
applications for payment have been treated as valid, then the recipient is incapable of
denying applications received in the same manner", and cited paragraph 50 of Jawaby "[a]s if
to confirm the foregoing". In other words, a legal principle was asserted to be applicable
and its deployment in very similar facts as arose in the present case was exemplified by
reference to Jawaby. The nature of the legal principle being asserted as applicable by the
pursuer was entirely clear. It was open to the defender to submit whatever it chose in
response to that assertion. It could, for example, have denied the existence of such a legal
principle, or argued that any such principle was inapplicable to the facts of the case as either
party maintained they were. Instead, it contented itself with the somewhat delphic
pronouncement that the pursuer had "failed to evidence any principle of Scots law upon
which it is seeking to rely in relation to its submissions on course of conduct", adding later
that the defender had "failed to provide a Scots law principle or any authority for their
assertions." Counsel for the defender was adamant that that amounted to a positive
submission that Jawaby did not exemplify a principle recognised in Scots law. I rather doubt
that, but the matter is of no moment, since even if the defender had made such a submission
in so many words to the adjudicator, he was perfectly entitled to prefer the pursuer's
submission that the principle exemplified in Jawaby applied to the case he was deciding, and
even if he was wrong in his determination of what the applicable content of the law was,
that would represent no more than an intra vires error of law on his part, about which the
defender could have no relevant complaint in the present context.
17
[22]
What the adjudicator decided was that he was satisfied that the course of conduct
alleged by the pursuer was made out and that "it would be incorrect to fail to accept that
course of conduct in respect of the subject payment application", that conclusion being "in
line with the findings in Jawaby". I have no difficulty in reading that as a decision that the
applicable legal principle to the matter in issue was that the defender was not entitled to
take any point about the nature of the service of the payment application in question
because it had previously accepted as valid applications from the defender served otherwise
than in accordance with the contractual conditions. That that conclusion was said to be "in
line with" Jawaby does not suggest to me that the adjudicator considered that case to be
anything more than an example of the application of the identified principle in analogous
circumstances, but even if it means that he felt bound by the decision in Jawaby, again that
would represent a conclusion which, for present purposes, he was entitled to reach. It may
be tempting to forget from time to time that it is no part of the function of this court to act as
a general appeal tribunal in respect of the adjudicator's decision, but it must not be lost sight
of that the criticism of the adjudicator in this connection is that he breached the requirements
of natural justice by going off on a frolic of his own. Once it is recalled that the issue of the
import of the defender's previous conduct in accepting irregularly-served applications was
well known by both parties to be a live one in the adjudication, that each party was given
ample opportunity to say whatever it wanted on the subject, and that the adjudicator
decided the issue by applying the legal principle claimed to be applicable by the pursuer
and under reference to the very authority cited to him as apposite, it may readily be seen
that the suggestion that he went off on a frolic of his own is nothing less than an inversion of
reality. No opportunity for injustice to be done was afforded.
18
[23]
Turning to the defender's secondary argument that the reasons given by the
adjudicator for his decision on the point in issue were inadequate, I see no difficulty at all in
concluding that any reasonable reader of his decision would readily understand that his
rationale was that the legal principle applicable to the matter was that the defender was not
entitled to take any point about the nature of the service of the payment application in
question because it had previously accepted as valid applications from the defender served
otherwise than in accordance with the contractual conditions. That amply exceeds the
degree of explanation required of adjudicators for their decisions.
[24]
The squall got up by the defender about a distinction (real or imagined) between the
content of Scots and English law applicable to this issue is an immaterial distraction from the
true questions in this case. The adjudicator was well aware that the dispute fell to be dealt
with by the application of Scots law. He must be presumed to have attempted to discern
and apply that law in the absence of clear demonstration to the contrary. No such
demonstration has been provided. If the adjudicator was wrong in thinking that the
principle espoused by the pursuer and exemplified in Jawaby formed part of Scots law (and I
am very far from suggesting that he was wrong in that) then, as already explained, that was
nothing more than an unexceptionable intra vires error of law. There is nothing at all in the
defender's complaint about the adjudicator's reasons. At the conclusion of the debate, I
granted decree de plano for the principal sum sued for, with interest.
[25]
The legislative policy behind the relevant sections of the 1998 Act is well-known, and
is summarised in the aphorism "pay now, argue later". Judicial policy ought to be to
discourage, so far as properly possible, the statement of frivolous defences, such as those
advanced here, to actions seeking to enforce adjudicators' decisions. As it happened,
unexpected availability in the court's diary meant that in this case decree was granted only
19
14 days after the case first came before the court for a preliminary hearing, but that will by
no means be the sort of timetable ordinarily capable of being applied to actions of this sort,
with the result that contractors entitled to immediate payment are liable to be left standing
out of what is their due for relatively lengthy periods if defences of the kind stated here are
advanced. There is also the consideration that a complaint that an adjudicator has breached
the requirements of natural justice inevitably calls into question the professionalism or
competence of the adjudicator, in this case without the slightest warrant. In these
circumstances I was left in no doubt that the statement and maintenance of the defence in
this case fell comfortably within the kind of unreasonable behaviour described in McKie v
expenses on the agent and client, client paying scale, and I duly found the defender liable to
the pursuer in the expenses of and incidental to the debate on that scale.
