Scottish court confirms that adjudication enforcements are still hard to resist

The latest Scottish court decision on a challenge to an adjudication award somewhat predictably saw the court enforcing the adjudicator’s award.

Enforcement actions rarely fail as the courts are reluctant to interfere with adjudicator’s awards unless there are compelling reasons to do so. Cases such as this one are still sometimes defended on what appear to be flimsy grounds, resulting in significant delay in payment of the award, thus undermining the intention of the adjudication process to provide a swift resolution.

In the Sheriff Appeal Court decision between Siteman Painting and Decorating Services Ltd (Siteman) and Simply Construct (UK) Ltd (SCUK), SCUK sought to avoid paying a £57,400 award by challenging the adjudicator’s jurisdiction on the grounds that either no dispute had been referred to the adjudicator because the notice of adjudication was not “clear and precise”, or that multiple disputes had been referred, rendering the reference invalid.

No dispute referred

SCUK complained that Siteman did not present a “clear and precise claim” in the notice of adjudication. The Sheriff held that this is not the appropriate standard for a notice of adjudication. Under the Housing Grants, Construction and Regeneration Act 1996 and Scheme for Construction Contracts (Scotland) Regulations 1998 (which were reflected in the parties’ contract in this case), the adjudication notice need only set out the nature and a brief description of the dispute to establish jurisdiction.

On appeal, counsel for SCUK drew back slightly from insisting on a high standard of clarity and precision in the notice of adjudication, referring instead to the principle established in AMEC Civil Engineering Ltd v Secretary of State that there will be no dispute if the claim “is so nebulous and ill-defined that the respondent cannot sensibly respond to it”.

In considering this argument the court decided that the AMEC case does not support SCUK’s argument as it deals with whether or not there is a pre-existing dispute, not how clearly disputes are described in a notice of adjudication. Even if the test were to apply to notices of adjudication though, the court considered that it sets a very low test and that the notice of adjudication was sufficient to establish a dispute in this case.

The court also noted that whether there is a dispute between the parties is a matter of fact and, although every case will therefore depend on its own facts, the bar is not high when it comes to showing that a dispute exists.

Multiple disputes referred

SCUK also complained that multiple disputes had been referred to adjudication without its consent.

The adjudicator had considered this jurisdictional challenge when it was raised and identified that this was in fact a single dispute about the gross value and the sums due, even though it involved considering a series of payment applications to consider what works had been carried out and whether variations had been instructed. The Sheriff agreed with this assessment.

It is well established that more than one payment application may be referred as part of a single dispute and SCUK was criticised for not offering any explanation in the appeal court pleadings as to why the different payment applications in this case should be taken to constitute multiple separate disputes. The onus was on SCUK to aver and prove such a case so in the absence of any specific and detailed averments to support it the court found no adequate reason to conclude that there was more than a single dispute referred.

The appeal failed and SCUK was ordered to pay the adjudication award and the expenses of the enforcement action.

Comment

The problem of cases such as this one causing delay and undermining the intention of the adjudication process to provide a quick resolution was recognised in guidance issued by the commercial judges of the Court of Session on the enforcement of adjudication awards earlier this year. The guidance acknowledges the frustrations caused by delays in enforcement actions and confirms that there is an opportunity to fast-track such cases to improve the process of enforcing adjudication awards so it is likely that future enforcement actions will be concluded in a much shorter timeframe than this one was.

Get in touch

Please contact a member of our construction team for advice or assistance in relation to the adjudication process or any other issues arising under construction contracts.

Laura McCorquodale – [email protected] – 0131 247 2535

Miranda Cannibal – [email protected] – 0141 227 9436