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Adjudicator’s decision not enforced due to breach of paragraph 8(2) of the Scheme

It’s been some time since I blogged about a Scottish adjudication enforcement case, so I was pleased to be sent Pentland Investments Ltd v Aitken Turnball Architects Ltd recently. It’s good to be back in the world of Sheriffs, decrees of absolvitors, diets of taxation and the like.

Pentland v Aitken Turnball

Pentland owns the Raeburn Hotel in Edinburgh and, in 2011, it assembled a design team to oversee substantial remedial works. It appointed Aitken Turnball as the architect and McColl Associates as the structural engineer. After defects were noted in the works, in August 2017 Pentland started adjudication proceedings against Aitken Turnball, and a Mr Hunter was appointed as the adjudicator.

Mr Hunter wrote to the parties on 1 September 2017 confirming his nomination and willingness to act. He also notified Aitken Turnball that he had been appointed as the adjudicator in a dispute between Pentland and McColl Associates concerning the same project, and that he would be adjudicating on both disputes at the same time.

Aitken Turnball responded to the adjudicator the same day advising that it did not consent to the adjudicator adjudicating on multiple related disputes at the same time, and Aitken Turnball invited him to resign. After receiving comments from Pentland, the adjudicator confirmed that he would not resign because:

“I disclosed the fact that I am adjudicating simultaneously on the other matter simply to make the Responding Party aware of the situation. As the other adjudication is quite separate I do not require the consent of the Respondent in this adjudication will [sic] therefore not resign.”

The adjudication continued and the adjudicator found that Aitken Turnball was liable to make payment to Pentland. Aitken Turnball did not pay, hence the need for the proceedings before Sheriff Ross.

The enforcement proceedings

The enforcement proceedings turned on the meaning and effect of paragraph 8(2) of the Scheme for Construction Contracts (Scotland) Regulations 1998, which is the same as paragraph 8(2) of the English and Welsh Scheme:

“The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on related disputes under different contracts whether or not one or more of those parties is a party to those disputes.”

Pentland argued that paragraph 8(2) does not prevent an adjudicator from dealing simultaneously with two separate disputes between different parties in two separate adjudications, even if the disputes are related. Rather, Pentland said that consent is only required for an adjudicator to hear the related disputes between the different parties in the same adjudication.

Aitken Turnball argued that the dispute turned on the meaning of the words “at the same time” in paragraph 8(2), and that paragraph 8(2) prevents an adjudicator hearing related disputes without consent, whether they are within a single adjudication or more than one adjudication.

Sheriff Ross found that Aitken Turnball’s submissions were “clearly to be preferred”, and he therefore decided that the adjudicator lacked jurisdiction and declined to enforce his decision. Sheriff Ross analysed paragraph 8(2) and s.108 of the Construction Act 1996 in some detail, and ultimately found that the words “at the same time” in paragraph 8(2) apply to disputes arising in different adjudications, and as well as in the same adjudication.

Not a surprising result

While I may not be terribly good at picking winning horses (as Saturday’s Grand National result proved, given that my horse, Road to Riches, finished just outside the places (it came sixth)), I’d have been willing to bet on the outcome of this case with some confidence. The argument that the words “at the same time” in paragraph 8(2) only apply to multiple disputes run in the same adjudication was raised 16 years ago in the TCC in Pring & St Hill Ltd v C J Hafner (t/a Southern Erectors), and it failed on that occasion as well.

In Pring, HHJ LLoyd QC said of paragraph 8(2):

“In my judgment paragraph 8(2) is intend to cover, and does cover, a variety of circumstances. It is intended to cover all the situations in which there may be related disputes under different contracts, whether or not the parties are the same and whether or not there may be permissibly be consolidation of the two proceedings. It applies whenever where one party needs to know or may need to know, before allowing the adjudication to proceed in that way, whether the adjudicator is going to have to pass on information or may acquire information which would not be available in the other adjudication to which it is not a party. In other words they are all circumstances where, as a matter of principle, a party’s rights to the resolution of a dispute, privately and confidentially, would or might be infringed by the introduction of a third party, either in the same proceedings or by having the dispute determined by a person who would or could acquire knowledge from the other proceedings but which could not used in the resolution of the dispute, yet might either consciously or unconsciously influence its outcome. A party must give a real and informed consent to any reduction in such rights.”

Although Pring is a first instance English judgment (which was not binding on Sheriff Ross), he recognised that it is correct to have due regard to developing jurisprudence under a UK statute, particularly that of a specialist court such as the TCC. Sheriff Ross therefore had due regard to Pring and other TCC cases.

Multiparty adjudications

However, although I was not surprised about the result of this case given the wording of paragraph 8(2) and the relevant authorities, I can see the sense in consolidated multiparty adjudications, particularly where an employer is seeking to recover damages against a number of parties for the same loss, as Pentland was in this case.

While I can also see the benefit of paragraph 8(2) of the Scheme for the reasons set out by HHJ LLoyd QC, if I was an employer drafting a contract, I may be tempted to include an amendment to paragraph 8(2) to permit consolidation of proceedings where more than one party is involved: that would have been of particular benefit to Pentland in this case. Perhaps their Road to Riches would have had more success than mine with such an amendment!

MCMS Ltd Jonathan Cope

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