Highlands And Islands Airports Ltd V Shetland Islands Council

The adjudicator was materially in breach of the rules of natural justice in obtaining the legal advice of senior counsel on an issue by failing to tell the parties that he was going to do so, to inform them of the advice and to give them an opportunity to comment on it


Highlands And Islands Airports Ltd V Shetland Islands Council
Scotland, Outer House, Court of Session
Lord Menzies
20 January 2012
The adjudicator issued a decision awarding the client a specified sum in respect of the consultant’s breaches of contract and the resultant requirement for remedial measures and additional costs. Before reaching his decision the adjudicator took legal advice from senior counsel in relation to the proper construction of clause 41.3 of the NEC Professional Services Contract. The adjudicator did not tell either of the parties that he had taken advice or what advice he had received or give either of the parties any opportunity to address him on the proper construction of clause 41.3.
Lord Menzies held that the adjudicator was materially in breach of the rules of natural justice. The question of the correct interpretation of clause 41.3 of the NEC form of contract of engagement which was the subject of the legal advice obtained by the adjudicator was central to the quantification of the largest part of the award made by the adjudicator and therefore of considerable potential importance and far from peripheral or irrelevant. The confirmation (or otherwise) that the adjudicator was seeking advice from senior counsel fell to be categorised as legal advice notwithstanding that the adjudicator asserted that he was not seeking a legal opinion or advice and the advice he obtained was given informally and without charge and did not take long to impart. Whilst the client submitted that the proper interpretation of clause 41.3 had been adequately canvassed in the referral document and whilst this issue was touched on in passing, It was not a matter on which the client’s submissions were focused or a central issue in its case. The legal advice sought and obtained by the adjudicator on this question was sufficiently important to the adjudicator that when the first senior counsel he approached (counsel for the client in the instant case), declined to speak to him because of a conflict of interest, he went on to telephone another senior counsel to obtain advice on the point and central to the quantification exercise which the adjudicator had to carry out. Whilst the adjudicator was not being deliberately unfair, an opportunity was afforded for injustice to be done.