Stork Technical Services (rbg) Limited

CourtCourt of Session
JudgeLord Tyre
Neutral Citation[2015] CSOH 10A
Publication Date03 February 2015
Date03 February 2015
Docket NumberCA98/13


[2015] CSOH 10A



In the cause







Pursuer: M Hamilton; Maclay Murray & Spens

Defender: Drummond; Shepherd & Wedderburn

3 February 2015

[1] In 2008 the pursuers, then known as RBG Limited, entered into a contract with a company called SGL Carbon Fibers Limited (“SGL”), in terms of which the pursuers agreed to construct an additional production line at SGL’s factory premises. The contract between the pursuers and SGL incorporated inter alia the conditions of the NEC3 form of engineering and construction contract as amended. Those conditions included a dispute resolution procedure (Option W2) whereby disputes would be referred to and decided by an adjudicator to be nominated, in absence of agreement, by the president for the time being of the Institution of Civil Engineers.

[2] In the course of the contract, disputes between the pursuers and SGL were referred for adjudication on two occasions. On the second of those occasions, Mr George Ross was nominated by the ICE to act as adjudicator. Mr Ross accepted the appointment while inviting the parties to note that he was now employed by a firm of solicitors called Knights, Solicitors LLP (“Knights”), Newcastle-under-Lyme, Staffordshire. An Adjudicator’s Agreement was entered into between the pursuers, SGL and Mr Ross. Thereafter Mr Ross held meetings and hearings, and on several occasions sought the opinion of senior counsel on matters upon which he wished advice. On 8 October 2010, Mr Ross issued his decision which, including appendices, ran to 228 pages. Certain clerical errors were corrected by a letter dated 22 October 2010. Mr Ross found the pursuers liable to pay SGL the sum of £1,074,609.99 plus VAT and interest.

[3] SGL subsequently attempted to enforce Mr Ross’s decision by raising proceedings in this court. The pursuers resisted enforcement and, for their own part, sought reduction of the decision on the grounds (i) that it, or part of it, had been made in breach of the principles of natural justice, and (ii) that in reaching his decision, Mr Ross had failed to exhaust his jurisdiction or, alternatively, had exceeded it. In an opinion issued on 31 March 2011, Lord Glennie held that Mr Ross had made his decision in breach of the rules of natural justice and further that he had failed to exhaust his jurisdiction. Decree reducing the decision was pronounced. It therefore became unenforceable.

[4] In the course of the adjudication process, fees were paid by the pursuers and by SGL in connection with Mr Ross’s appointment. Seven separate payments were made by each of the pursuers and SGL. These payments were made in settlement of invoices issued by Knights. The total fees paid (including outlays and VAT) were £281,008.62 of which the pursuers paid one half, ie £140,504.31. In this action, the pursuers seek repayment of the latter sum. The claim is made on the basis of unjustified enrichment. On 14 August 2013, Mr Ross died, and the action was transferred to run against the defender in her capacity as Mr Ross’s executor.

[5] The pursuer’s claim is resisted by the defender on a variety of grounds. Firstly, it is contended that the party to the contract with the pursuers and SGL was Knights, and not the pursuer as an individual. Secondly, in the event that it is held that the contract was with Mr Ross, it is contended that in the circumstances of this case, any remedy which the pursuers may have ought to have been based on contract and not unjustified enrichment. Thirdly, it is contended that even if the claim has been correctly made on the basis of unjustified enrichment, (a) there has been no such enrichment; (b) in any event, the pursuers’ claim overstates the extent of enrichment; and (c) in any event, it is not equitable to order repayment.

The Adjudicator’s Agreement
[6] On 9 April 2010, Mr Ross wrote, on Knights headed notepaper, to solicitors acting for SGL and the pursuers respectively. The letter stated:

“I have been selected by the Institution of Civil Engineering [sic] on the 9 April 2010 to act as Adjudicator in a dispute between the above Parties.

Upon receipt by me of the Referral Notice together with any accompanying documents (including a copy of the contract) that the Referring Party intends to rely upon I will write to the Parties regarding the timetable for the Adjudication and shall issue my further directions that may be required. As is my usual procedure in Adjudication, I would like to clarify some housekeeping matters:

(a) Please direct all correspondence to me at:

Mr G.M. Ross

{here followed Mr Ross’s home address, telephone and fax numbers and email address]

(b) Wherever practical I request the Parties to communicate with me by fax and first class post (not e-mail) and concurrently to send a copy of any such communication to the other Party. Where a document is too large to be faxed the Parties should fax the covering sheet and post or courier the document, again including a copy to the other party.

(c) I will not accept telephone calls from either Party.

Yours sincerely

G.M. Ross

Accredited Adjudicator/Trainee Solicitor

for Knights solicitors llp”

[7] Mr Ross next wrote, again on Knights headed notepaper, to the solicitors for SGL and the pursuers on 14 April 2010, stating inter alia:

“I acknowledge receipt of the Referring Party’s letter dated 12 April 2010.

Whilst writing I would be grateful if the Parties address all correspondence to my home address and not that of my former employer.

Please note that I am now employed by Knights Solicitors.

All communications to me to be by fax and first class post (not e-mail).”

The letter was signed as before. I understand the reference to “my former employer” to be to a company called Morrison Ross Limited which offered a variety of services in the construction industry. Mr Ross was an employee of the company prior to resigning in 2010 when he became a trainee solicitor. He remained a director thereafter.

[8] On 21 April 2010, Mr Ross wrote to the parties’ agents, again on Knights headed notepaper, stating inter alia:

“… I acknowledge receipt of the Responding Party’s representative’s fax dated 21 April 2010.

I also refer to my telephone conversations of 21 April 2010 with [representatives of the Parties] with regard to my terms and conditions.

Please find attached my revised Adjudicator’s Agreement and Schedule to the Adjudicator’s Agreement for the Parties signature.

For the avoidance of any doubt I confirm that [sic] following:

1. I will provide a description of the time spent on matters with my fee bill.

2. I am employed by Knights solicitors llp and Knights will issue fee bills for my services as Adjudicator.

3. …”

The letter was signed as before.

[9] One copy of the Adjudicator’s Agreement was signed by Mr Ross on 23 April 2010 and by an agent on behalf of SGL on 29 April 2010. A separate copy of the Agreement was signed by Mr Ross on 23 April 2010 and on behalf of the pursuers on 5 May 2010. The Agreement bore to be made between SGL (the first party) and the pursuers (the second party), collectively referred to as “the Parties”, of the one part and Mr Ross, referred to as “the Adjudicator”, of the other part. It narrated that disputes had arisen between the Parties under their contract which were referred to adjudication in accordance with Option W2 of NEC3, and that various matters were agreed by the Parties and the Adjudicator, including:

“3. The Parties bind themselves jointly and severally to pay the Adjudicator’s fees and expenses in accordance with the Procedure as set out in the attached Schedule to the Adjudicator’s Agreement.”

[10] The Schedule provided inter alia as follows:

“1.0 Fees and Disbursements

The Parties are bound by the following terms and are jointly and severally liable to pay the Adjudicator as follows:

2.0 The Adjudicator shall be paid the hourly rate of £200.00 plus Value Added Tax in respect of all time spent upon, or in connection with, the Adjudication including time spent travelling whether or not the Parties settle before the Decision is made together with all expenses, disbursements and outgoings incurred by him.

3.0 The Adjudicator shall be reimbursed in respect of all disbursements properly made including but not restricted to [there follows a list of reimbursable expenses].

4.0 All fees, expenses, disbursements and outgoings will be subject to the addition of Value Added Tax at the rate current at the time of invoicing, that is properly applicable.

5.0 The Adjudicator shall be paid his fees and expenses (per the allocation of liability indicated within his Decision) within seven days after issue of his Decision.

6.0 In the event of a settlement of the issues by agreement between the Parties before a Decision is made, the fees, expenses, disbursements and outgoings due to the Adjudicator shall be paid by the Party or Parties responsible for doing so under the Terms of Settlement, immediately after notification of the amount.

For the avoidance of doubt, should the responsible Party fail to pay these fees and expenses, both Parties remain jointly and severally liable for them.

10.0 The Adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as Adjudicator unless the act or omission is in bad faith.

11.0 The Adjudicator shall keep the Parties appraised of his fees throughout the course of the Adjudication and shall submit interim fee bills which each party shall pay on an equal basis, and in my Decision my fees will be apportioned. Payment is due within 7 days of date of invoice.

12.0 If I require Quantity Surveying input during this adjudication I will utilise the resources of Morrison Ross Limited at the following...

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