Curot Contracts Ltd V Castle Inns (Stirling) Ltd

The adjudicator could not be said to have acted in excess of jurisdiction by having stated in his award that he was reluctant to construe the contract in the way suggested 'for obvious reasons of reasonableness"
Scotland, Outer House, Court of Session
Lord Glennie
16 December 2008
The employer sought to resist enforcement of the adjudicator's decision in the contractor's favour on the ground that the adjudicator had acted in excess of jurisdiction in his reasoning in his award. The employer contended that the adjudicator in his reasoning simply ignored the contract and decided the issues between the parties on the basis of what he considered was reasonable. The adjudicator stated in his award that he was reluctant to construe the contract in the way suggested "for obvious reasons of reasonableness". It was clear from this statement that the adjudicator was putting "reasonableness" above the contract. The adjudicator had found that the contract was, as the employer contended, a fixed price lump sum contract but then simply ignored that because it drove him to a result which he did not consider reasonable. This amounted to an excess of jurisdiction. It was not for the adjudicator to decide whether the contract was appropriate or the result of applying the contract terms was reasonable.
Lord Glennie rejected the employer's contention. The adjudicator in his award approached the question as one of construction, did not find that the contract was a lump sum fixed price contract, simply found that the form used was a form for a lump sum fixed price contract and pointed out that not all the work was set out in the contract bills. It was in light of these observations that he said that the form of contract used was inappropriate. That did not, however, mean he was disregarding the contractor. Rather the adjudicator looked to see whether, on a proper construction, the parties were to be taken to have agreed that the fit out budget costs schedule was to be adjusted only by variation instruction (the employer's position) or by the revised sums derived from the priced bills of quantities post contract after the design had been finalised (the contractor's position). The adjudicator answered this question in favour of the contractor. His remarks about "reasonableness" could not properly be understood as showing that he was disregarding the terms of the contract. The adjudicator clearly asked the right question and answered it. He did not seek to replace the contract terms with his own notions of what was reasonable.