Restitution following Termination of Contract: a Contractual or Enrichment Remedy?
| Published date | 01 May 2015 |
| Pages | 269-273 |
| Date | 01 May 2015 |
| DOI | 10.3366/elr.2015.0280 |
In 2008, the pursuers (“Stork”) had entered into a contract with a company called SGL Carbon Fibers Ltd (“SGL”) under which they agreed to build a production line for SGL at its factory. Any disputes which arose under the contract were to be settled by an adjudicator nominated by the Institution of Civil Engineers (the “ICE”). The ICE appointed a Mr George Ross as an adjudicator in order to settle a dispute relating to various claims made by SGL against Stork. In order to settle the dispute, Mr Ross, who was employed by a firm of solicitors called Knights LLP, wrote to SGL and Stork seeking their agreement to enter into a contract of adjudication. Having secured such agreement, and having adjudicated in the dispute, Mr Ross issued a decision in which he found Stork liable to pay SGL the sum of £1,074,609.99 plus VAT and interest. When SGL sought to claim payment of this sum, Stork took steps to have the adjudication reduced on the ground that the award, or part of it, had been made in breach of the principles of natural justice, and that Mr Ross had failed to exhaust, or had exceeded, his jurisdiction. In the Outer House, Lord Glennie found for Stork on both of these grounds, and a decree reducing the award was pronounced.
Because Stork had, during the adjudication process, paid fees amounting to approximately £140,000 to Mr Ross, they subsequently sought the restitution of this sum from the defender (Mrs Ross), who was the executor of the now deceased Mr Ross. Mrs Ross defended the action on the basis that: (i) the adjudication contract had been entered into by Knights LLP and not Mr Ross, (ii) even if the contract had been entered into by Mr Ross, any remedy which the pursuers might have was based on contract and not unjustified enrichment, and (iii) even if the proper basis of the claim was in unjustified enrichment, there had been no enrichment (or else the enrichment was not as great as that claimed) and it was not equitable to order repayment.
Lord Tyre, examining the pre-contractual communications between the parties, held that it had been Knights LLP which had contracted with Stork and SGL, and not Mr Ross. That point was sufficient, of itself, to justify dismissal of the claim (and his Lordship therefore thought it unnecessary to consider ground (iii) of the defence). However, he offered an important
although there has been no reported Scottish case in which a party to a contract who has made payment in...
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