The Construction Centre Group Limited v The Highland Council
Case reference:
[2002] ScotCS CSOH_354
Friday, 23 August 2002
Key terms: Summary decree - provisional nature of adjudicator's decision - Clause 66 - Section 111 - retention - set off
The pursuers, The Construction Centre Group Limited, undertook to design, construct and maintain for the Highland Council ("the defenders") works referred to as the Small Isles and Inverie Ferry Scheme. A dispute arose and was referred to adjudication in accordance with the contract. The Adjudicator's decision found that the defenders should be pay the sum of £245,469.24 within 7 days. The defenders did not pay, and so the pursuers sought a summary decree.
The defenders raised a series of issues, some of which were abandoned. The Court were asked to consider two main issues. First the provisional nature of the Adjudicator's decision, and second the right to withhold, retain or set-off amounts against that decision.
In respect of the provisional nature of the decision, the defenders argued that the effect of a summary decree would give the interim decision a final nature. Second, the court's power to open up, review and revised would allow the court to consider the substantive points, and therefore the court should deal with the substantive matters. Third, the defenders sought a sist of the action pending arbitration. In respect of the right to withhold, retain or set-off the defendant argued that they could either withhold, retain or set-off the value of liquidated and ascertained damages as they had served a withholding notice after the issue of the decision, but before the date for paying the decision.
Lord Macfayden held that the summary nature of the Adjudicator's decision did not stand in the way of a final determination. Second, the application was for a summary decree, and therefore the court was not required to consider the substantive issues. Third, a sist pending arbitration ignored the contractual obligation to pay, and therefore would not be granted.
In respect of the withholding notice, there had been no certification of the sum due by an engineer, so the opportunity to serve a withholding notice in the normal course of events did not arise. The defender argued that the language of Section 111 of the Act was wide enough to allow money to be withheld against an Adjudicator's decision. Lord MacFayden did not agree. He held that Section 111 was not wide enough to withhold against an adjudicator's decision because the notice was to be served before the final date for payment, which meant the date in the certification procedure of the contract, not payments to be made pursuant to an adjudicator's decision. Therefore, Lord MacFayden granted the summary decree.
The defenders raised a series of issues, some of which were abandoned. The Court were asked to consider two main issues. First the provisional nature of the Adjudicator's decision, and second the right to withhold, retain or set-off amounts against that decision.
In respect of the provisional nature of the decision, the defenders argued that the effect of a summary decree would give the interim decision a final nature. Second, the court's power to open up, review and revised would allow the court to consider the substantive points, and therefore the court should deal with the substantive matters. Third, the defenders sought a sist of the action pending arbitration. In respect of the right to withhold, retain or set-off the defendant argued that they could either withhold, retain or set-off the value of liquidated and ascertained damages as they had served a withholding notice after the issue of the decision, but before the date for paying the decision.
Lord Macfayden held that the summary nature of the Adjudicator's decision did not stand in the way of a final determination. Second, the application was for a summary decree, and therefore the court was not required to consider the substantive issues. Third, a sist pending arbitration ignored the contractual obligation to pay, and therefore would not be granted.
In respect of the withholding notice, there had been no certification of the sum due by an engineer, so the opportunity to serve a withholding notice in the normal course of events did not arise. The defender argued that the language of Section 111 of the Act was wide enough to allow money to be withheld against an Adjudicator's decision. Lord MacFayden did not agree. He held that Section 111 was not wide enough to withhold against an adjudicator's decision because the notice was to be served before the final date for payment, which meant the date in the certification procedure of the contract, not payments to be made pursuant to an adjudicator's decision. Therefore, Lord MacFayden granted the summary decree.