Stiell Limited V. Riema Control Systems Limited
| Jurisdiction | Scotland |
| Judge | Lord Prosser |
| Date | 23 June 2000 |
| Docket Number | X1/53 |
| Court | Court of Session |
| Published date | 23 June 2000 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
| Lord Prosser Lord Philip Lord Caplan | X1/53/00 OPINION OF THE COURT delivered by LORD PROSSER in APPEAL From the Sheriffdom of South Strathclyde, Dumfries & Galloway at Hamilton by STIELL LIMITED Pursuers and Respondents; against RIEMA CONTROL SYSTEMS LIMITED Defenders and Appellants: _______ |
Act: Howie; MacRoberts (Pursuers and Respondents)
Alt: Mackenzie, Solicitor-Advocate; Masons, Glasgow (Defenders and Appellants)
23 June 2000
[1]In or about March 1999, the pursuers in this action, Stiell Limited, were instructed by the defenders, Riema Control Systems Limited to carry out the supply and installation of certain control and electrical equipment at a site known as British Telecom, Atlantic Quay, Glasgow. The original contract price was £156,982, exclusive of VAT. The pursuers aver that the defenders instructed them to carry out certain extra works, and that the total value of all the works carried out is £275,104.15, exclusive of VAT. Certain payments having been made, they sue for the sum of £139,375.93, which they say is the balance remaining due, including VAT.
[2]The action was raised in January 2000. Under a warrant for arrestment on the dependence, sums in the hands of a third party were arrested. The amount arrested was restricted, by agreement, to £160,000. It is not disputed that the arrestment was competent and valid, at the time when it was effected in January.
[3]Prior to the raising of the action, in December 1999, the pursuers had exercised their right, under section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 to refer a dispute arising under the contract for adjudication under the appropriate procedure. The dispute thus referred related to the valuation in respect of the supply and installation of control and electrical equipment, including the value of additional work. The remedy sought was an award in favour of the pursuer, as the Referring Party, of £118,617.81 plus VAT together with interests and costs. The contract between the parties was a sub-contract, and clause 11.0 thereof dealt with adjudication. The clause provided inter alia that any adjudication was to be carried out under the Centre of Dispute Resolution (CEDR) Rules for adjudication. On 11 February 2000, the adjudicator issued his decision that the total value of the works, including the value of additional works carried out by the Referring Party totalled £220,336.67 (excluding VAT, Retention, Interest and subject to current VAT regulations). The adjudicator ordered that the defenders, as Responding Party, must pay to the pursuers as Referring Party the amount of £58,655.01, and must comply with the decision within five working days of issue. That amount was paid, together with the appropriate VAT.
[4]On 22 February, the sum arrested on the dependence of the action was further restricted, by agreement, to £90,000. Thereafter, the defenders moved that the arrestments be recalled; and having heard submissions from the parties, the sheriff refused the motion. The defenders reclaim. They submit that the sheriff erred, and that the arrestments are now incompetent, or alternatively that they are nimious and oppressive.
[5]In terms of section 108(1) of the 1996 Act, the adjudication must be "under a procedure complying with this section". Subsection (3) provides that "The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration...or by agreement."
[6]By virtue of section 108(5) and section 114(4), implied terms are imported into the contract, where there is default of contractual provision agreed by the parties. In the present case, however, as we have indicated, the parties agreed that the CEDR Rules, which comply with section 108, were imported into the contract. In terms of paragraph 11 of those Rules, "every decision of the Adjudicator shall be binding on the parties and notwithstanding paragraphs 12 and 13 shall be implemented without delay by the parties who shall be entitled to such reliefs or remedies as are set out in the decision." Paragraph 12 provides that if a party is dissatisfied with the decision of the adjudicator, it may within a specified time give written notice of its dissatisfaction. If no notice of dissatisfaction is issued within the specified period, it is provided by paragraph 12 that "the decision of the adjudicator shall be final and binding upon the parties." Paragraph 13 provides that if a notice of dissatisfaction is given, the dispute "will be finally determined by court proceedings or by reference to arbitration in accordance with the contract between the parties." The paragraph further provides that unless otherwise agreed by the parties, the court or the arbitrator shall not be bound by, and shall have power to review and revise every decision of the adjudicator. Following upon the adjudicator's decision in the present case, the pursuers gave timeous notice of dissatisfaction, and it is not disputed that all issues raised in the action, including that which was referred to the adjudicator, now fall to be resolved by the court in those proceedings, without regard to the adjudicator's decision or anything that followed thereon.
[7]As enrolled, the motion for recall of arrestments which was made to the sheriff was upon the basis that the arrestments were nimious and oppressive. However, the submissions advanced to him in argument were upon a wider basis, turning upon the fact of the adjudicator's decision requiring the defenders to pay the pursuers £58,655.01. The sheriff describes the defenders' submission as having been "that such an adjudication award having been granted on the identical subject-matter of the present litigation, then the arrestments should be recalled as the matter was res judicata". In the present appeal, the defenders and appellants proceed upon the basis that the sheriff has misunderstood the nature of the submission made to him. Their position is that the arrestments are incompetent, the sums claimed by the pursuers being contingent. We shall come to that submission; but it is said that "the decision of the adjudicator renders the unsuccessful part of the pursuer's claim contingent upon final determination by legal proceedings or agreement between the parties". The crux of the matter is therefore the nature and effect of the prior decision, in respect of the same matter as is being brought before the court. At least in that respect, there is some similarity with the situation which arises where a plea of res judicata is taken. Whether or not the sheriff has misunderstood the precise nature of the submission, the point was not pressed on behalf of the pursuer and respondent, and in their submissions to this court counsel for both parties were concerned with the primary issue of law rather than any specific aspect of the sheriff's disposal of it.
[8]On behalf of the defenders and appellants, it was emphasised that the provisions for referral to adjudication, and all that had followed thereon, were contractual matters. The 1996 Act made provision for such referral, and the contractual provisions with which we were concerned were consistent with the statutory requirements. But it was important to bear in mind at all times that the referral was made in terms of the parties' contract, and that in reaching his decision, the adjudicator was essentially carrying out the parties' bargain.
[9]As we have indicated, the defenders and appellants do not submit that the arrestments were incompetent originally. The contention that they are incompetent is based upon the assertion that the sums claimed are "contingent". But it is important to note that it is not said that they would be contingent in any sense, apart from the provisions for adjudication. Moreover, it is not said that they are made contingent by the mere presence...
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