Dickie and Moore Ltd v Trustees of the Lauren McLeish Discretionary Trust
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Judgment Date | 30 June 2020 |
| Neutral Citation | [2020] CSIH 38 |
| Court | Court of Session (Inner House) |
| Date | 30 June 2020 |
| Docket Number | No 1 |
[2020] CSIH 38
Extra Division
Lord Doherty
AMEC Group Ltd v Thames Water Utilities Ltd [2010] EWHC 419
Beck Interiors Ltd v UK Flooring Contractors Ltd [2012] EWHC 1808; [2012] BLR 417; [2012] CILL 3209
Bell Building Projects Ltd v Arnold Clark Automobiles Ltd [2017] CSOH 55; 2017 GWD 12-174
Bovis Lend Lease Ltd v Trustees of the London Clinic [2009] EWHC 64; (2009) 123 Con LR 15; [2009] CILL 2672; [2009] Bus LR D76
Cantillon Ltd v Urvasco Ltd [2008] EWHC 282; [2008] BLR 250; 117 Con LR 1; [2008] CILL 2564
Carillion Utility Services Ltd v SP Power Systems Ltd [2011] CSOH 139; 2012 SLT 119; [2012] BLR 186
Cleveland Bridge UK Ltd v Whessoe-Volker Stevin Joint Venture [2010] EWHC 1076; [2010] BLR 415; 130 Con LR 159; [2010] CILL 2876
CSC Braehead Leisure Ltd v Laing O'Rourke Scotland Ltd [2008] CSOH 119; 2009 SLT 454; 2009 SCLR 297; [2009] BLR 49
DC Community Partnerships Ltd v Renfrewshire Council [2017] CSOH 143; [2018] CILL 4073; 2017 GWD 38-581
Highlands and Islands Airports Ltd v Shetland Islands Council [2012] CSOH 12; 2012 GWG 7-120
Homer Burgess Ltd v Chirex (Annan) Ltd 2000 SLT 277; [2000] BLR 124; 71 Con LR 245
Lidl UK GmbH v RG Carter Colchester Ltd [2012] EWHC 3138; (2012) 146 Con LR 133; [2013] CILL 3276
Pilon Ltd v Breyer Group plc [2010] EWHC 837; [2010] BLR 452; 130 Con LR 90; [2010] CILL 2865; [2011] Bus LR D42
Whyte and Mackay Ltd v Blyth and Blyth Consulting Engineers Ltd [2013] CSOH 54; 2013 SLT 555
Willow Corp SARL v MTD Contractors Ltd [2019] EWHC 1591; (2019) 185 Con LR 97
Working Environments Ltd v Greencoat Construction Ltd [2012] EWHC 1039; [2012] BLR 309; 142 Con LR 149; [2012] CILL 3188
Latham, M, Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry ((HMSO, London, July 1994) (Online: https://constructingexcellence.org.uk/wp-content/uploads/2014/10/Constructing-the-team-The-Latham-Report.pdf (5 July 2020))
Scottish Building Contracts Committee, Standard Building Contract with Quantities for use in Scotland (SBC/Q/Scot) (SBCC, Edinburgh, November 2011), art 7; cl 9.2
Contract — Building contract — Adjudication — Adjudicator's award containing elements both within and outwith jurisdiction — Builder seeking to sever and enforce part within jurisdiction — Whether competent — Whether appropriate
Dickie and Moore ltd brought an action under the commercial cause rules (Act of Sederunt (Rules of the Court of Session 1994) 1994 (SI 1994/1443 (S 69)), Ch 47) in the Court of Session against the trustees of the Lauren McLeish Discretionary Trust seeking declarator and payment in terms of an award of an adjudicator under Pt II of the Housing Grants, Construction and Regeneration Act 1996 (cap 53). Following sundry procedure, the action proceeded to proof before answer before the commercial judge (Lord Doherty) on 1 and 2 August 2019. At advising, on 12 September 2019, the commercial judge held that a material part of the dispute described in the notice of adjudication had not crystallised before the notice was served and, therefore, the adjudicator did not have jurisdiction ([2019] CSOH 71). The commercial judge put the cause out by order and invited supplementary submissions on possible severance of the award so as to allow enforcement of those parts of the judgment over which the adjudicator did have jurisdiction. The parties, thereafter, lodged supplementary written submissions on the issue of severance. At advising, on 8 November 2019, the commercial judge held that those parts of the claim in which the adjudicator had lacked jurisdiction could be severed from those where he had jurisdiction and the latter part enforced, and granted decree accordingly ([2019] CSOH 87). The defenders reclaimed.
A builder entered a building contract with an employer to construct a large house near Armadale. Between October and December 2018, the parties fell into dispute about certain deductions, liquidated damages and withheld sums for defective work that had been made by the architect in a final adjustment certificate. In December 2018, the builder served a notice of intention to refer a dispute to adjudication. In addition to the issues over the various deductions to the final adjustment certificate, the builder also included substantial claims for extension of time and consequential loss and expense.
By decision dated 15 March 2019, the adjudicator issued an award finding the employer liable to the builder in the amount of £324,492.60 plus interest. This award included amounts in respect of both the deductions to the final adjustment certificate and also sums due as consequential loss and expense. The builder brought proceedings against the employer to enforce the adjudicator's award. The employer resisted enforcement on the grounds that the adjudicator did not have jurisdiction against the employer at all, had failed to exhaust his jurisdiction, had acted in breach of natural justice, and the dispute described in the notice of adjudication had not crystallised before the notice was served.
At first instance, while rejecting most of the builder's grounds, the commercial judge held that no dispute had crystallised in respect of the builder's claims for extension of time and loss and expense prior to service of the notice of adjudication. In a supplementary opinion, the commercial judge held that it was, however, competent and appropriate in the circumstances to sever those amounts of the award relating to the claim for extension of time and loss and expense from the remainder of the decision, and order enforcement of the remainder. The employer reclaimed.
The employer argued that the commercial judge: (1) had failed to follow established authority that in single dispute adjudications such as the present there was no possibility of severance of the award; (2) had erred in failing to hold that the parties had contracted only to be bound by decisions of the adjudicator, and not by a decision that was subsequently rewritten by the court; (3) had been wrong to take a policy-driven issue of severance; and (4) had erred in holding that those parts of the award in respect of which decree was pronounced were not tainted by the general jurisdictional challenge.
Held that: (1) the commercial judge had been correct to take account of the policy considerations underlying the legislation governing adjudications which required to be interpreted so as to achieve its fundamental purpose of enabling contractors to obtain payment of sums found due to them without undue delay and lengthy dispute-resolution procedures (paras 21–23); (2) in relation to an adjudicator's award that was partially valid and partially invalid, the valid part should be enforced if that was realistically practicable, which would depend on whether the valid and invalid parts could be severed from each other. The courts required to adopt a practical and flexible approach that sought to enforce the valid parts unless significantly tainted, and the correct approach was for the court to assume that the parts of the decision that were invalid did not exist, and then consider whether the remainder of the decision could be enforced without it being tainted by the invalid part; to the extent there was any overlap, the court required to consider whether the reasoning in the ultra vires part of the decision affected the conclusion in the intra vires part to any material extent and the greater the overlap, the more likely it would be that there would have been an influence (paras 24, 25, 42, 43); (3) the commercial judge's conclusion that, aside from the extension of time and associated loss and expense claims that could not stand, the adjudicator's decision could properly be enforced had been correct (para 48); and reclaiming motion refused.
Homer Burgess Ltd v Chirex (Annan) Ltd 2000 SLT 277, Bovis Lend Lease Ltd v Trustees of the London Clinic(2009) 123 Con LR 15, Beck Interiors Ltd v UK Flooring Contractors Ltd[2012] BLR 417 and Willow Corp SARL v MTD Constructors Ltd(2019) 185 Con LR 97approved, CSC Braehead Leisure Ltd v Laing O'Rourke Scotland Ltd2009 SLT 454, Carillion Utility Services Ltd v SP Power Systems Ltd2012 SLT 119, Highlands and Islands Airports Ltd v Shetland Islands Council2012 GWD 7-120 and Whyte and Mackay Ltd v Blyth and Blyth Consulting Engineers Ltd2013 SLT 555commented upon, Cantillon Ltd v Urvasco Ltd[2008] BLR 250considered and Cleveland Bridge UK Ltd v Whessoe-Volker Stein Joint Venture[2010] BLR 415disapproved.
The cause called before an Extra Division, comprising Lord Menzies, Lord Drummond Young and Lord Malcolm, for a hearing on the summar roll, on 31 January 2020.
At advising, on 30 June 2020, the opinion of the Court was delivered by Lord Drummond Young—
Opinion of the Court— [1] The pursuer has raised the present proceedings in order to enforce the decision of an adjudicator and to recover 50 per cent of the adjudicator's fees and expenses. The parties entered into a building contract dated 26 May and 4 August 2016 for the construction of a large house on a site near Armadale. The contract was subject to the terms of the Standard Building Contract with Quantities for use in Scotland (2011 Edition). The pursuer was the contractor under the contract and the defenders the employer. The contract contained standard adjudication provisions relating to any ‘dispute or difference’ which arose under the contract. Article 7 of the contract provided that the scheme set out in Pt 1 of the Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687 (S 34)) (as amended by the Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SSI 2011/371)) should apply, subject to modification.
[2] The pursuer constructed the house in the course of 2017 and 2018. A final adjustment statement...
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