Nkt Cables A/s Against Sp Power Systems Limited

JurisdictionScotland
CourtCourt of Session
JudgeLady Wolffe
Neutral Citation[2017] CSOH 38
Docket NumberCA100/16
Date08 March 2017
Published date08 March 2017

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OUTER HOUSE, COURT OF SESSION

[2017] CSOH 38

CA100/16

OPINION OF LADY WOLFFE

In the cause

NKT CABLES A/S

Pursuer

against

SP POWER SYSTEMS LIMITED

Defender

Pursuer: MacColl; Burness Paull LLP
Defender: Borland QC; Shepherd & Wedderburn LLP

8 March 2017

[1] In this action the pursuer seeks to enforce an award in its favour following an adjudication under the Housing Grants, Construction and Regeneration Act 1996 (“the Act”) in the principal sum of £2,143,712.28, together with ancillary claims for VAT and interest at a specified daily rate. The principal sum was the figure specified in an amended decision of the Adjudicator (“the Amended Decision”, see paragraph [11], below). In the alternative, the pursuer seeks decree in the amount of £1,851,408.53, being the amount specified in the Adjudicator’s original decision, together with VAT and interest (“the Original Decision”, see paragraph [8], below). Where it is not necessary to distinguish between the Amended and Original Decisions or where there is no material difference, I shall simply refer to “the Decision”.
[2] The defender resists the pursuer’s action on several grounds. In brief, it contends that the Adjudicator had no power to amend his Original Decision and that in any event, the correction was not within the scope of any slip rule that might apply (whether by implication or under statutory instrument). The defender further contends that the Adjudicator’s purported correction was in breach of natural justice. Finally, the defender contends that the Adjudicator failed to exhaust his jurisdiction in that he failed to address substantive lines of defence or the defender’s alternative valuations and, further, that his reasons were wholly inadequate.

Background
[3] By a contract dated 25 November 2010 the defender engaged the pursuer to supply and install certain 132/33 kV electricity and pilot cables and accessories in Glasgow (“the Contract”). The purpose of the project, which was associated with the 2014 Commonwealth Games, was to reinforce the pre‑existing electricity supply for a newly‑built athletes’ village. The work was substantially, but not entirely, completed by the time the Contract was first suspended and then terminated. While there are disputes about those events, they do not feature as part of this action. However, a dispute arose between the pursuer and the defender regarding the amount of any outstanding balance under the Contract.

Referral to Adjudication
[4] By notice dated 6 May 2016 (“the Notice”), the pursuer intimated its intention to refer the dispute to adjudication. In particular, the pursuer sought a determination of the gross value of its entitlement under the Contract, which it stated to be £12,722,192.36, and certification of the sum outstanding, that is after deductions for sums already paid. The Notice provided the date of the Contract. (This date is potentially relevant to the argument about whether the statutory scheme in its amended form could apply to an adjudication in respect of a contract entered into prior to that amendment. The statutory instrument is set out in paragraph [32], below.) The Notice did not make express reference to the statutory instrument governing adjudications in Scotland. Thereafter, on 10 May 2016, the parties appointed Alan Joseph Turner as Adjudicator (“the Adjudicator”).

[5] The pursuer served the Referral Document (“the Referral”) and supporting documents on 13 May 2016. The defender replied to this in their response dated 26 May 2016 (“the Response”). There were further exchanges between the parties, including the pursuer’s reply dated 31 May 2016 to the defender’s response (“the Pursuer’s Reply”) with appendix, and the defender’s further response dated 3 June 2016 to the Pursuer’s Reply (“the Second Response”).

The Agreement
[6] The parties and the Adjudicator entered into an agreement dated 24 May 2016 (“the Agreement”) to govern the conduct of the adjudication, which narrated:

A Dispute has arisen between the Parties under a Contract between them dated on or about 2th November 2010 in connection with: electricity supply for the 2014 Commonwealth Games in Glasgow, which has been referred to adjudication in accordance with the Adjudication Rules set out in The Scheme for Construction Contracts (Scotland) Regulations 1998 (Sl1998/687)) (the Procedure) and the Adjudicator has been requested to act. ” (Emphasis in original).

The Agreement provided that the adjudication “shall be conducted in accordance with the Procedure”. While the Procedure was defined by reference to SI 1998/697) (“the Scheme”), it did not expressly specify whether this was to the Scheme in its amended or unamended form. After sundry further procedure, the Adjudicator issued his decision. Part of the challenge concerns the procedure followed by the Adjudicator and his issue of the Amended Decision. It is necessary first to set out the calculation in his Original Decision.

The Calculation in the Original Decision
[7] The calculation of the award in the Original Decision was set out, as follows, with line numbers inserted for ease of reference:

TABLE 7-SUMMARY

DESCRIPTION SUMS

1.Value of works (as provided) £ 6,799,908.00

2.

3.Variation and claims £2,122,950.84

4.

5.Interest (to 01/07/16) £124,531.69

6.

7.TOTAL £9,047,390.53

8.

9.Sum certified/paid (this sum excludes interest yet to

be certified but acknowledged by the Engineer)

£7,195,982.00

10.Sum to pay £1,851,408.53

[8] Unfortunately, the figure representing the gross value of the Contract the Adjudicator had calculated at line 7 was not correctly carried over into his formal award and decision on the last page of his Original Decision. While the figure for the net balance outstanding remained the same (at £1,851,408.53), the Adjudicator had mistakenly inserted a different figure as the gross value of the Contract, namely of £9,376,220.72. Counsel who appeared at the debate before me were agreed that this was a “rogue” figure and could not be derived from any of part of the Adjudicator’s prior workings.

Email Exchanges between the Pursuer and the Adjudicator
[9] The Adjudicator issued his decision on the afternoon of 1 July 2016 (“the Original Decision”). By email sent on 4 July, and timed at 19:33, the pursuer’s agents queried the calculation of the total outstanding balance, as follows:

“Thank you for your Decision of 1 July2016. Our client has reviewed the Decision and has identified an apparent slip in the calculation of the total...

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2 cases
  • Axis M&E UK Ltd v Multiplex Construction Europe Ltd
    • United Kingdom
    • Queen's Bench Division (Technology and Construction Court)
    • 4 February 2019
    ...it, were cases to which the statutory slip rule now contained in the Scheme did not apply. 29 In NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38 in the Outer House of the Court of Session, Lady Wolffe considered a case in which it was argued that a provision equivalent to the statutory......
  • Gt Equitix Inverness Limited Against Board Of Management Of Inverness College
    • United Kingdom
    • Court of Session
    • 18 June 2019
    ...fails to consider a significant line of defence to the claim before him. Mr Walker referred to NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38; 2017 SLT 494 and Joint Administrators of Connaught Partnerships Ltd v Perth & Kinross Council [2014] CSOH 149. Submission for the pursuer ......
1 firm's commentaries
  • Get your ducks in a row if you want to challenge an adjudicator's decision
    • United Kingdom
    • JD Supra United Kingdom
    • 22 June 2017
    ...outside the slip rule – and therefore their powers – when making the correction (as happened in NKT Cables A/S v. SP Power Systems Ltd [2017] CSOH 38, a Scottish Be aware that the scope of the slip rule is limited and can only be used on fairly narrow grounds to correct genuine mistakes or ......

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