Adjudication: Construction Centre Group v Highland Council

United Kingdom

CCG was contractually entitled to enforce the provisional determination, whether it was right or wrong. This would have no effect on the final determination of the Arbiter. The decree was not a judicial determination of the merits of the dispute, but merely enforcement of contractual obligations. HC was contractually obliged to implement the provisional award pending final determination. HC was not entitled to rely on a notice to withhold payment, served after the decision, to set off sums against the decision.

Lord MacFadyen, Outer House, Court of Session

23 August 2002

HC employed CCG to design, construct and maintain works. Disputes were referred to adjudication. The adjudicator decided that HC should pay £245,469.24 to CCG. The payment was not made and CCG sought a summary decree on the ground that HC had disclosed no defence.

HC argued that the effect of a decree would be to give final judgment in place of the interim decision and the arbiter had no power to open up or revise the adjudicator's decision or alter the effect of the final decree of the court. A decree would remove the provisional quality of the adjudicator's decision and prevent HC obtaining different determination of the dispute by arbitration.

The Judge disagreed and, using the authorities of Watson Building Services Ltd v Harrison and Macob Civil Engineering Ltd v Morrison Construction Ltd, concluded that not to allow enforcement of the award would defeat the purpose of s108 HGCRA. CCG was contractually entitled to enforce the provisional determination, whether it was right or wrong. This would have no effect on the final determination of the Arbiter. The decree was not a judicial determination of the merits of the dispute, but merely enforcement of contractual obligations. HC was contractually obliged to implement the provisional award pending final determination.

HC also claimed that, since it had a claim against CCG for liquidated damages in excess of the adjudicator's award, it was entitled to resist enforcement of the award. It had also served a valid notice under s111 HGCRA which gave it a right of retention of the monies.

The Judge decided that this defence could have been put to the adjudicator, and it was now too late to raise it as a ground for not implementing the adjudicator's decision. The service of the s111 notice within 7 days after the adjudicator's decision was ineffective as the wording of s111 did not extend to cover such decisions. The Judge agreed with the decision in KNS Industrial Services (Birmingham) Ltd v Sindall Ltd that the scope of an adjudication is determined by the notice of adjudication, and was of the opinion that any ground that may be relied on by the responding party to justify its position also falls within the scope of the adjudication. The right of retention had only been lost in respect of the adjudicator's award - it remained exercisable against any future sum falling due under the contract. The facts of Solland International Ltd v Daraydan Holdings Ltd and David Maclean Housing Contractors v Swansea Housing Association Ltd, on which HC had relied, were distinguished.

CCG was contractually entitled to enforce the provisional determination, whether it was right or wrong. This would have no effect on the final determination of the Arbiter. The decree was not a judicial determination of the merits of the dispute, but merely enforcement of contractual obligations. HC was contractually obliged to implement the provisional award pending final determination. HC was not entitled to rely on a notice to withhold payment, served after the decision, to set off sums against the decision.