REUTERS | Yiannis Kourtoglou

Court of Session reminds us how tough it is to resist enforcement of adjudicator’s decision

I’ve talked before about the meaning of a kitchen sink claim, where one of the parties has thrown everything (and the kitchen sink) into its claim. The concept also crops up in adjudication enforcement proceedings, when the defendant raises as many arguments as it can to resist enforcement of the adjudicator’s decision. It is how Practical Law described the challenges in Morgan Sindall Construction and Infrastructure Ltd v Westcrowns Contracting Services Ltd, and I’m not going to argue with them.

Morgan Sindall v Westcrowns

The parties’ dispute centred on the quality of the vinyl flooring installed by Westcrowns in a school and cultural centre that Morgan Sindall built for North Lanarkshire Council. It was alleged that after the flooring had been laid, the vinyl started to bubble and blister in a number of locations.

Westcrowns was first advised of the problem in July 2013, when an initial list of locations was provided to it, although it appears that more locations of “bubbling and blistering” were subsequently identified and notified to it.

As is so often the case, the parties disagreed over the cause of the problem. Morgan Sindall’s expert said it was all to do with the primer that Westcrowns had used. It was the wrong one and, in any event, had been inadequately applied. There was also an issue with the moisture content in the screed that the vinyl flooring had been laid over.

When the matter was referred to adjudication during spring 2017, the adjudicator agreed with Morgan Sindall and awarded it some £430,000, which was the cost of having another firm replace the flooring.

Enforcement proceedings

Fast forward to the Scottish equivalent of our enforcement proceedings and we see that Westcrowns argued that the adjudicator’s decision should not be enforced because the adjudicator had:

  • Acted “outwith his jurisdiction” by deciding matters that were outside the scope of the dispute referred to him.
  • Dealt with two disputes, not one.
  • Left out of account a relevant consideration.
  • Acted in a procedurally unfair way.
  • Failed to exhaust his jurisdiction in respect of a particular matter and to “give reasons, or at least intelligible reasons, for his decision (if he made one) on that matter”.

In response, Morgan Sindall argued that each of these grounds was unfounded. It also argued that Westcrowns could not rely on the first challenge, since it had not raised that jurisdictional challenge during the adjudication: it had failed to reserve its position in that regard.

Lord Clark says no

Just like the computer in Little Britain that I referred to a few weeks ago, Lord Clarke said no to each of Westcrowns challenges (and yes to Morgan Sindall’s reservation point).

No, Westcrowns could not raise a jurisdictional point that it had failed to deal with in the adjudication when it was “plainly available to be taken during the adjudication”. It was now debarred form raising that particular jurisdictional challenge.

No, there was only one dispute and that was what caused the vinyl to bubble and blister. It was a question of

“… what a reasonable person in the position of the defender, having the background knowledge available to the parties, would have understood the Notice of Adjudication to mean. The language used in the Notice must be construed against that background.”

Lord Clarke reminded us of the view expressed by Akenhead J in Cantillon Ltd v Urvasco, with which he agreed, that the courts should not:

“… adopt an overly legalistic analysis of what the dispute between the parties is, but should determine in broad terms what is the disputed claim or assertion. If the courts were to take an overly legalistic approach, each sub-issue or individual point of difference between the parties could be taken as a dispute. That approach is unrealistic and not in accordance with commercial common sense.”

This meant the adjudicator had not decided matters that were outside the scope of the dispute or his jurisdiction.

No, there was only one dispute and it would be artificial to characterise it as two disputes. Again, Lord Clark referred to Akenhead J’s words  (this time in Witney Town Council v Beam Construction (Cheltenham) Ltd) that “one dispute might encompass two or more causes of action, heads of claim or issues”.

No, the adjudicator did not fail to address certain matters or leave them “wholly out of account”. Thus, the adjudicator did not act in a way that “amounted to a procedural impropriety” and he was not in breach of the rules of natural justice. Therefore, he did not fail to exhaust his jurisdiction, or fail to give reasons or intelligible reasons.

Lord Clarke found that this case could be contrasted with Lady Wolffe’s judgment in NKT Cables A/S v SP Power Systems Ltd, where she held that the adjudicator had failed to deal with six substantive issues and therefore had failed to exhaust his jurisdiction. In that case, the adjudicator had also failed to give reasons as to why he had rejected these defences, which, Lady Wolff held, were material failures.

What do I take from this case?

For me, this case is yet another example of the lengths some parties will go to try to get out of complying with an unfavourable adjudicator’s decision. I fully understand why that may be, given the sums involved and the complexity of matters referred, it just doesn’t make it right.

I also thought it was a good example of how a tribunal (in this case a judge) needs to deal with every argument advanced and to address those points in a measured way for the “disappointed party”. It is a very easy judgment to read, and clearly explains why each of Westcrowns’ challenges failed.

MCMS Ltd Matt Molloy

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: