Profile Projects Ltd V Elmwood (Glasgow) Ltd

The non-compliance (and subsequent striking out) of a contractural adjudication provision with section 108 of the Construction Act did not mean that all the provisions of the agreement where replaced by the Scheme
 

 

PROFILE PROJECTS LTD V ELMWOOD (GLASGOW) LTD
Scotland, Outer House, Court of Session
Lord Menzies
8 April 2011
 

A debate which has not yet been resolved by an appellate court is what happens if any of the adjudication or payment provisions of a construction contract do not comply with the requirements of section 108 of the Construction Act. There would appear to be a distinct divergence of view between English and Scottish judges. English judges have held that all the contractual adjudication or payment provisions are replaced by the provisions of the Scheme for Construction Contracts (in their entirety). Scottish judges on the other hand have held that only the non-compliant provisions are replaced by the equivalent provisions of the Scheme.

 

Lord Menzies (a Scottish judge) in this case reiterated the Scottish judges' view on this issue. He stated in giving his reasons that Lord Clarke stated in Hills Electrical and Mechanical v Dawn Construction that it was to be assumed as a matter of statutory interpretation that the legislature only intended to innovate on parties' freedom of contract to the extent that this was clearly provided for by the terms of the legislation itself either expressly or by clear implication. Any implication that Parliament did intend to curtail the parties' freedom of contract in the manner contended for by the sub-contractor in relation to contractual adjudication as well as payment provisions arising from the differing terms of section 108(5) and sections 109, 110(3) and 113 was not strong enough to displace the assumption referred to by Lord Clarke because (i) If Parliament had intended to make such a major curtailment of parties' freedom to contract, one would have expected to see this stated clearly in the language of the Construction Act (ii) The English decisions did not confront this principle and instead merely observed that there would be difficulties if there was a result which was partly contractual and partly scheme (iii) However, that was the position with regard to payment provisions and it had not caused insuperable difficulties and (iv) The court should adopt a principled approach and proceed on the assumption that parties had freedom of contract except where Parliament had clearly stated otherwise.
 

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