Karl Construction (Scotland) Ltd V Sweeney Civil Engineering (Scotland) Ltd (Part I)

The adjudicator's decision was not void for lack of jurisdiction by reason of being based it on an issue not referred, ie that the Scheme for Construction Contracts applied
 
KARL CONSTRUCTION (SCOTLAND) LTD v SWEENEY CIVIL ENGINEERING (SCOTLAND) LTD

Scotland, Outer House, Court of Session
Lord Caplan
21 December 2000
 

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 rejected the challenge. Both parties were wrong in their principal contentions insofar as the sub-contractor believed it could rely on the sub-contract terms with the result that the notice of withholding provisions applied and the contractor thought it could delay payment on the application until it received a certificate under the main contract. However, looking at the issue more broadly the parties were in dispute as to the time for payment in respect of the outstanding works as set out in the sub-contractor’s payment application and it was difficult to say that this matter did not become part of the dispute referred. If the construction and application of the sub-contract payment provisions required there to have been a separate adjudication, there would have ensured the very protracted wrangling which the summary remedy for adjudicators’ decisions was designed to avoid.

 

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.

 

Advice Note

This case is a good example of the court holding that a decision was not made without jurisdiction simply because it might well have been wrong on the facts and the law. Lord Caplan’s finding was upheld on appeal.
 

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