The Construction Centre Group Limited V. The Highland Council
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen |
| Date | 23 August 2002 |
| Docket Number | CA127/02 |
| Court | Court of Session |
| Published date | 23 August 2002 |
| OUTER HOUSE, COURT OF SESSION | |
| CA127/02
| OPINION OF LORD MACFADYEN in the cause THE CONSTRUCTION CENTRE GROUP LIMITED Pursuers; against THE HIGHLAND COUNCIL Defenders: ________________ |
Pursuers: MacKenzie, Solicitor Advocate; Masons
Defenders: Currie, Q.C.; Dundas & Wilson, C.S.
23 August 2002
Introduction
[1]This commercial action relates to a dispute which arose out of a contract between the parties in terms of which the pursuers undertook to design, construct and maintain for the defenders works known as the Small Isles and Inverie Ferry Scheme. When the dispute arose, it was referred to adjudication in accordance with the provisions of the contract, which complied with the requirements of the Housing Grants, Construction and Regeneration Act 1996 ("the Act"). On 28 June 2002 the adjudicator issued his decision, in terms of which he found the sum of £245,469.24 payable by the defenders to the pursuers, and ordered payment within seven days. The defenders have not made payment. In this action, therefore, the pursuers conclude for payment of the sum to which they were found entitled by the adjudicator, with interest from the date of citation. Defences have been lodged, in which the defenders put forward a number of grounds for resisting the granting of decree in terms of the conclusion. The pursuers have enrolled for summary decree for the sum concluded for, on the ground that no defence to the action is disclosed in the defences. The defenders have opposed that motion.
The test for summary decree
[2]Rule of Court 21.2(1) provides that a pursuer may, at any time during the dependence of an action after defences have been lodged, apply for summary decree "on the ground that there is no defence to the action, or a part of it, disclosed in the defences". An application for summary decree may take a number of forms, one of which is a motion "to grant decree in terms of all or any of the conclusions of the summons" (Rule 21.2(2)(a)). In the present case the application takes the form of a motion for decree in terms of the sole conclusion of the summons. Where the motion takes that form, the court may grant it "if satisfied that there is no defence to the action disclosed" (Rule 21.2(4)(a)). Mr MacKenzie, who appeared for the pursuers, properly referred me to Mackays Stores Ltd v City Wall (Holdings) Ltd 1989 SLT 835 in which Lord McCluskey considered the circumstances in which it would be appropriate for the court to decide, on a motion for summary decree, a substantial issue of law raised in the defences, and expressed (at 836E) the opinion that:
"The test I have to apply at this stage must be to ask myself if the question of law which is raised (the only question being one of law) admits of a clear and obvious answer in the pursuers' favour."
In the event Mr Currie for the defenders accepted that I might determine the matter at this stage if I was satisfied (as I am) that the issues had been adequately discussed in the parties' submissions. I should record, however, in connection with Lord McCluskey's observations at 836H about the considerations favouring deferring the decision until after full debate on the procedure roll, that in this case a full day was set aside as a diet for the pursuer's motion for summary decree, and an order for the exchange by the parties of notes of argument was made and implemented.
[3]In view of the terms of Rule 21.2 Mr MacKenzie accepted that he could only succeed in his motion if he persuaded me that I should hold at this stage that none of the points taken by the defenders in the defences had any merit. The defences contain ten pleas-in-law, and Mr MacKenzie proposed for the purpose of presenting his submissions to address them in four groups. He characterised the first group (pleas 1, 2 and 3) as being concerned with the provisional nature of an adjudicator's determination. The second group (pleas 5 and 6) involved contentions that the adjudicator's decision was ultra vires. The third (pleas 7, 8 and 9) related to the question of retention or set-off. The fourth group was a miscellaneous one encompassing the remaining pleas which did not fall into the other three groups, namely plea 4 (relevancy) and plea 10 (quantum). Mr Currie, however, helpfully interrupted Mr MacKenzie's submissions to say that he did not seek to rely on pleas 4 or 10. Moreover, when he came to make his own submissions, Mr Currie did not seek to maintain that there was a sound defence based on the proposition that the adjudicator's award was ultra vires. It is therefore only necessary for me to consider the submissions made by counsel in relation to the first and third groups of pleas-in-law identified by Mr MacKenzie.
The provisional nature of an adjudicator's award
[4]Mr MacKenzie submitted that an adjudicator's award was, on the one hand, provisional, in the sense that its effect might be reversed or altered when the dispute in question was finally resolved by agreement between the parties, or by arbitration, or by litigation. On the other hand, it was temporarily binding and enforceable, and therefore required to be implemented by the parties and should, if necessary, be enforced by the court. In the context of disputes arising out of construction contracts, the process of adjudication was a creature of statute. The relevant provisions were to be found in section 108 of the Act. Section 108(1) confers on a party to a construction contract a right to refer a dispute arising under the contract for adjudication under a procedure complying with the section. Subsection (2) requires the contract to enable a party to give notice at any time of his intention to refer a dispute to adjudication, and inter alia to provide a certain timetable for the conduct of the adjudication. Adjudication can therefore arise at any stage in the contract. Subsection (3) provides:
"The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement."
The subsequent arbitration or litigation contemplated in subsection (3) is not, Mr MacKenzie submitted, a process of review of or appeal from the adjudicator's decision, but rather a final determination of the dispute in respect of which the adjudicator's decision had provided a provisional determination; the ultimate arbitration or litigation would supersede the adjudicator's award, but until it did so that award was binding, required to be implemented, and could if necessary be enforced (City Inn Ltd v Shepherd Construction Ltd 2002 SLT 781 at 794K, paragraph [59]). Adjudication was concerned not merely with providing an answer to a matter of dispute, but with securing payment of money on the basis of a provisional decision. In support of that emphasis on actual payment, Mr MacKenzie referred to Farebrother Building Services Ltd v Frogmore Investments Ltd (Technology and Construction Court, 20 April 2001, unreported) in which His Honour Judge Gilliland QC said:
"The general rule in relation to adjudication decisions is that they are binding until set aside, and the approach which this court has adopted is that they should be enforced summarily because the whole purpose of adjudication is to provide a quick and effective remedy for the payment of money on a provisional basis."
[5]It is not disputed that the contract between the parties in the present case is a construction contract, or that it makes provisions for adjudication which comply with the requirements of the Act. The contractual dispute resolution procedure is to be found in Clause 66 and Annex 3. Clause 66(4) provides:
"The Employer [the defenders] and the Contractor [the pursuers] shall give effect forthwith to every decision of:
(i) ...
(ii) the Adjudicator on a Dispute given under this Clause 66
unless and until the decision is revised by agreement of the Employer and the Contractor or pursuant to this Clause 66 and Annex 3 to Conditions of Contract."
Clause 66(6)(ii) provides:
"Any decision of the Adjudicator shall be final and binding upon the Employer and the Contractor unless and until there is an amicable settlement in accordance with paragraph 2 of Annex 3 to Conditions of Contract or unless and until the Dispute has been referred to arbitration as hereinafter and an arbitral award has been made or a settlement reached between the Employer and the Contractor."
Clause 66(6)(iv) provides inter alia:
"... the Employer and the Contractor shall give effect forthwith to every decision of the Adjudicator except and to the extent that the same shall have been revised by a settlement reached between the Employer and the Contractor or an arbitral award."
Paragraph 1 of Annex 3 contains the contractual adjudication procedure adopted by the parties. Paragraph 1.10 provides:
"The Adjudicator's decision shall be binding until the Dispute is finally determined by legal proceedings, by agreement or by arbitration as provided in paragraph 3 (Arbitration) of this Annex 3 to Conditions of Contract."
[6]It was clear, Mr MacKenzie submitted, that in accordance with the provisions of the parties' contract, the adjudicator's decision was binding on the parties, and fell to be implemented. Arbitration might ultimately result in a different determination of the dispute, but neither the Act nor the parties' contract contemplated that that circumstance would stand in the way of enforcement of the award in the meantime. Reference was made to A & D Maintenance and Construction Ltd v Pagehurst Construction Services Ltd [2000] 16 Const LJ 199, and Absolute Rentals Ltd v Gencor Enterprises Ltd [2001] Const LJ 322. Such being the intention of the parties as expressed in their contract, reflecting the intention of Parliament, the defenders first plea-in-law was not well founded. The proposition stated in that plea was that...
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