Ballast plc -v- The Burrell Company (Construction Management) Limited
Case reference:
[2002] ScotCS 324
Tuesday, 17 December 2002
Key terms: Right to refer a matter to adjudication - section 107 - reclaiming motion - judicial review
The petitioners (and Respondent), Ballast Plc, was a management contractor for a development for the Reclaimers (First Respondent), the Burrell Company, in Glasgow. The terms of the contract were the JCT Form of Management Contract 1987 edition. A dispute arose in respect of the valuations. The amount of the valuations fluctuated, and that dispute was referred to adjudication. Ballast claimed that they were owed about £1.6 million. However the adjudicator resigned before issuing a decision. Ballast therefore issued a further notice of dispute in respect of essentially the same subject matter.
Ballast (the Referring Party) claimed that the construction manager had interfered with the contract in that payment was being refused on the basis that no formal instruction had been given for work that the construction manager knew had been carried out. The claim was that the respondent to that adjudication had acted in bad faith in withholding the payments. The adjudicator issued a decision which merely stated that the issues raised by the Referring Party were “not valid”. The issue before the Court was whether the adjudication was a nullity in that the adjudicator had in good faith misconstrued what he was being asked to do.
The Court held that the adjudication was a nullity. The adjudicator had been asked to determine the dispute in the Notice, as “amplified” by the Referral. However, the adjudicator had considered that his powers were limited to considering the strict contractual terms between the parties. He was, however, obliged to consider the “whole dispute” and had failed to do so. Therefore, he had misconstrued what he was being asked to do and his decision was a nullity.
The Judges’ supported their decision with the well known case of Anisminic v Foreign Compensation Commission [1969] 2 AC147. If an adjudicator does not answer a question put to him in its entirety in either a positive or negative way, then the decision will be a nullity. If the adjudicator misconstrues the question put to him then the decision will be a nullity. In this case the adjudicator had failed to consider the entirety of the dispute put to him in that he had considered the strict contractual terms, but had not considered the reality of the situation between the parties.
Ballast (the Referring Party) claimed that the construction manager had interfered with the contract in that payment was being refused on the basis that no formal instruction had been given for work that the construction manager knew had been carried out. The claim was that the respondent to that adjudication had acted in bad faith in withholding the payments. The adjudicator issued a decision which merely stated that the issues raised by the Referring Party were “not valid”. The issue before the Court was whether the adjudication was a nullity in that the adjudicator had in good faith misconstrued what he was being asked to do.
The Court held that the adjudication was a nullity. The adjudicator had been asked to determine the dispute in the Notice, as “amplified” by the Referral. However, the adjudicator had considered that his powers were limited to considering the strict contractual terms between the parties. He was, however, obliged to consider the “whole dispute” and had failed to do so. Therefore, he had misconstrued what he was being asked to do and his decision was a nullity.
The Judges’ supported their decision with the well known case of Anisminic v Foreign Compensation Commission [1969] 2 AC147. If an adjudicator does not answer a question put to him in its entirety in either a positive or negative way, then the decision will be a nullity. If the adjudicator misconstrues the question put to him then the decision will be a nullity. In this case the adjudicator had failed to consider the entirety of the dispute put to him in that he had considered the strict contractual terms, but had not considered the reality of the situation between the parties.