Karl Construction (Scotland) Ltd V Sweeney Civil Engineering (Scotland) Ltd (Appeal) (Part II)

The adjudicator was not required as a matter of natural justice to have invited submissions from the parties before she departed from their agreed position that the sub-contract's payment provisions complied with the requirements of the Construction Act

Scotland, Inner House, Court of Session
Lords Marnock, Dawson and Clarke
22 January 2002

The adjudicator decided that the contractor should pay a specified sum to the sub-contractor. The contractor petitioned for judicial review of the decision on the ground of lack of jurisdiction. The contractor argued that in determining the value of the sub-contractor’s work, the adjudicator strayed beyond her remit by basing her decision on an issue not referred. This was that the sub-contract payment provisions did not make adequate provision for when payments became due as required by section 110 of the Construction Act 1996 with the result that the payment provisions of the Scheme for Construction Contracts applied.


Lord Caplan at first instance rejected the challenge. Once the adjudicator decided that the Scheme applied, this was sufficient to permit her to find that the sub-contractor was entitled to the redress it sought. Whilst the adjudicator might have made arrangements for the parties to have addressed her on her view that there was no adequate sub-contract mechanism to decide when monthly instalments became due, she might have rejected such submissions. If the adjudicator had followed unsatisfactory procedures or had wrongly decided the effect of the sub-contract payment provisions, such matters were mistakes in the treatment of the referral rather than a venture beyond her jurisdiction.


The Inner House on appeal endorsed Lord Caplan’s finding at first instance. The Inner House also rejected a further challenge by the contractor that as a matter of natural justice the adjudicator should (at least) have invited submissions from the parties before she departed from their agreed position before the adjudicator that the sub-contract’s payment provisions complied with section 110. It was clear that the adjudication process as envisaged by the Act and as embodied in the sub-contract provisions was one far removed from the traditional adversarial format adopted in the courts. The parties had no good reason to suppose that the adjudicator would not apply the relevant law as she saw it on the basis of any written representations made to her during the adjudication as to the parties’ views of the relevant law.


Advice Note

An adjudicator does not have to seek the parties’ submissions on a particular issue if he believes that he can deal with the issue without such submissions in order to comply with the rules of natural justice.