Charles Henshaw And Sons Ltd V. Stewart And Shields Ltd
| Jurisdiction | Scotland |
| Judge | Sheriff Principal Mhairi M. Stephen |
| Court | Sheriff Court |
| Date | 19 February 2014 |
| Docket Number | CA13/13 |
| Published date | 05 March 2014 |
| SHERIFFDOM OF LOTHIAN AND BORDERS Case Number: CA13/13 | |
| Judgment by SHERIFF PRINCIPAL MHAIRI M STEPHEN in the cause CHARLES HENSHAW AND SONS LTD Pursuers and Respondents against STEWART & SHIELDS LTD Defenders and Appellants ___________________________ |
Act: Thomson, Advocate for the Appellants instructed by Simpson & Marwick
Alt: Walker, Advocate for the Respondents instructed by Dundas & Wilson
EDINBURGH, 19 February 2014
The Sheriff Principal having resumed consideration of the cause, refuses the appeal, adheres to the sheriff's interlocutors of 13 and 27 November 2013, finds the defenders and appellants liable to the pursuers and respondents in the expenses of the appeal, as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and to report and certifies the appeal as suitable for the employment of junior counsel.
(signed) Mhairi M Stephen
This is an abbreviated judgment delivered immediately after the appeal hearing on 18 February 2014
NOTE:
1. This case arises as a result of a dispute between the parties in respect of a contract which they entered into in 2011 relating to both supply and installation of screens, windows etc at Gartnavel Royal Hospital Chapel in Glasgow. The contract, as the sheriff observes, consists of the pursuers' letter dated 18 October 2011 together with bills of quantity and schedules attached along with sketch of sheets and other technical details. The contract is concluded by the defenders' purchase order which is dated 31 October 2011 and a brief acceptance of the price etc contained in the respondents' offer.
2. This places the dispute fairly and squarely in the world of building construction where any contract normally requires to be sufficiently robust and flexible to withstand the demands of the particular construction project and the imperative that buildings are built to a programme and fittings fit properly and work. In that sense the construction contract, just like the law, is a living instrument.
3. The respondents referred a dispute about an interim payment under the contract to adjudication. The adjudicator found in favour of the respondents. When the appellants declined to make payment in terms of the decision of the adjudicator the respondents raised proceedings in this court to enforce the adjudicator's decision. The sheriff heard the parties on the respondents motion for summary decree and granted decree in his interlocutor of 13 November 2013. The defenders and appellants appeal that interlocutor. The parties are agreed that the issue is whether the adjudicator had jurisdiction to determine the dispute referred to him by the respondents, Charles Henshaw and Sons Limited in respect of the contract.
4. In the course of the appeal there was no need to consider the terms of Ordinary Cause Rule 17.2 which governs motions for summary decree by either party in the Sheriff Court. In essence, if the adjudicator acted within his powers and jurisdiction the respondents were entitled to decree whereas if the adjudicator acted ultra vires the appellants were entitled to decree of absolvitor.
5. The adjudication process is governed by the Housing Grants, Construction and Regeneration Act 1996 (HGCR) otherwise known as the 1996 Act. The Scheme for Construction Contracts (Scotland) Regulations 1988 (The Regulations) also apply. I was not referred to the Act or Statutory Instrument in any detail but it is accepted that the Act and Regulations do provide the legal framework. The sheriff deals with this in paragraph 3 of his judgment and I do not propose to repeat what is said other than to make some observations on the purpose of the 1996 Act in allowing certain disputes to be referred to adjudication.
6. In the time I have available I do not propose to deal with the authorities to which I was referred in detail. However, I was referred to a line of authorities beginning in chronological order with the decision of Lord MacFadyen in Barr Ltd v Law Mining Ltd (2003) SLT 488; the decision of the Court of Appeal of England and Wales in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358. The sheriff also refers to Lord Hodge's decision in SW Global Resourcing Limited v Morris & Spottiswood Limited [2012] CSOH 200. These cases indicate the court's approach to the objective and purpose of the 1996 Act and the manner in which the courts have approached challenges to adjudicators decisions. The Act introduces a scheme for speedy dispute resolution in construction contracts. It provides an effective mechanism to enforce payments due under a contract by reference to an adjudicator. Often there are parallel proceedings in court which may be said to be on the slow track to more detailed resolution of contractual disputes. What is clear from the decisions to which I refer and other decisions, the court will be slow to interfere with the adjudicator's decision unless there has been an affront to natural justice or the adjudicator has plainly acted outwith his jurisdiction or ultra vires.
7. Accordingly, the objective of the legislative scheme means that a party to a construction contract with a grievance or dispute can obtain an award from the adjudicator for payment which is capable of judicial enforcement within a very short timescale. Furthermore the court have actively discouraged challenges to the adjudicator's decisions. The courts have acknowledged that mistakes are made by adjudicators. The sheriff in his judgment refers to Lord Hodge's decision in SW Global Resourcing Limited at paragraph 18. In that passage Lord Hodge states that the court is not concerned with whether the adjudicator has made errors of fact or law but only with the question of whether he has acted unfairly or ultra vires. The court is hostile to technical arguments to postpone the enforcement of the award and frustrate the purpose of the legislation. Reference has been made to the adage of "pay now argue later" which certain commentators have coined with reference to the purpose of the scheme. Any errors or mistakes in the adjudication process will be ironed out in an arbitration or litigation which would deal definitively with the parties respective rights and obligations under the contract. The adjudication award is an interim step in deciding who pays whom and the amount pending final resolution of overall disputes. That in my view appears to summarise the import of the legislation. It could be said to be a speedy and pragmatic approach to contractual disputes which promotes cash flow and does not permit one party to prejudice the other by delay by holding the whip hand in the dispute.
8. Lord MacFadyen in Barr Ltd v Law Mining Ltd had this to say at paragraph [9]:-
"I have no difficulty in accepting that adjudication is intended to provide a means of obtaining a speedy, but merely provisional, resolution of a dispute arising in the course of a construction contract. It is envisaged that ultimately, whether by litigation or arbitration or agreement between the parties, the determination of the dispute may be a different one from the provisional determination made by the adjudicator. It is, however, envisaged that the adjudicator's determination will in the meantime be implemented."
He goes on at paragraph 10:-
"I also accept that an adjudicator's decision will be enforceable even if it can be shown that the adjudicator in making his determination made an...
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