Charles Henshaw & Sons Ltd v Stewart & Shields Ltd (Scot, IH, CS - 10.6.2014)

The adjudicators determination was in respect of a dispute in relation to the contractors non-payment of items in the sub-contractors payment application which arose from the sub-contract


Scotland, Inner House, Court of Session
Ladies Smith, Dorrian and Cosgrove

10th June 2014

The contractor, in withholding sums of money applied for by the sub-contractor for items of work, relied on clause 27 of the “Technical and Scope of Works Clarifications”. This clause provided that the sub-contractor had quoted for the sizes, quantities and details of items as set out in its estimate and that any variations would be subject to a re-quote.
The contractor submitted that (i) if the sub-contractor wished to be paid for quantities in excess of those in its estimate, each divergence had to be treated as a variation and re-quoted for (ii) Each such variation constituted a fresh contract which did not arise from the (original) sub-contract and (iii) The adjudicator did not have jurisdiction to determine a payment dispute arising out of such fresh contracts. 
The adjudicator, the sheriff and the sheriff principal rejected these submissions. The contractor appealed the sheriffs’ decisions to the Inner House of the Court of Session in Scotland.
The Inner House dismissed the appeal on the basis that the facts as shown by the documents the dimensions could not be said to be so different as to require to be classed as other than part of the sub-contract.
Lady Smith, in delivering the opinion of the court, commented on the statement of the Court of Appeal in Carillion Construction Ltd v Devonport Royal Dockyard Ltd that “to seek to challenge the adjudicator’s decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest of cases) is likely to lead to a substantial waste of time and expense”. She stated that (i) It is only in a very limited class of cases that the court will refrain from enforcing adjudicators’ determinations (ii) it was inconceivable that this phrase of the Court of Appeal was not intended to apply to jurisdictional challenges just as much as to those based on breaches of natural justice. It should be only in the plainest of cases that the court upholds a challenge to an adjudicator’s determination based on a submission that he has exceeded his jurisdiction.