Carillion Utility Services Ltd V SP Power Systems Ltd
Scotland, Outer House, Court of Session
18 August 2011
The contractor carried out the excavation, backfilling and reinstatement of works and installed electricity and ancillary cables and made a disputed claim for payments for the provision of lamping and guarding of cable excavations during periods when it was waiting for the employer’s personnel to carry out and complete cable jointing operations. The adjudicator decided that the contractor was entitled to payment of a specified sum.
Lord Hodge held that the adjudicator did not act in breach of the rules of natural justice in applying his own reasoning to assess the quantum of the contractor’s claim. In so holding, he stated that the adjudicator did not go off on a frolic of his own in rejecting the contractor’s multiplier approach as overstating its loss and concluding that an average of two barriers and two cones was an appropriate measure of the extra equipment which it required. As a matter of fact and degree the adjudicator derived his reasoning from the parties' submissions rather than adopting a wholly extraneous methodology. The employer’s submission that an adjudicator had to consult the parties if he adopted a methodology not been canvassed before him was too broadly stated and would, if accepted, introduce unwelcome rigidity into the process of adjudication.
The adjudicator did, however, act in breach of the rules of natural justice in failing to give the parties notice of the commercial rates which he had derived from his own experience as being reasonable and which he proposed applying but about which there was no evidence in the adjudication. In so holding, he stated that there was no doubt that the calculation of X (part of his methodology for assessing the quantum) was a material part of his decision and could not be regarded as being in any way peripheral or insignificant. As it was an addition to a daily charge, a minor adjustment in the rate would have altered the mark up which he allowed by a significant sum of money. The parties were entitled to know of this input into his reasoning; and to have a chance to comment on it.