CSC Braehead Leisure Limited and Capital & Regional (Braehead) Limited v Laing O-Rourke Scotland Limited
Case reference:
[2008] CSOH 119
Tuesday, 19 August 2008
Key terms: Late Decision - Jurisdiction - Interim Award
Braehead claimed that Laing, had caused or contributed to the collapse of a ceiling in an Odeon Cinema. On 23 January 2008, Braehead referred the dispute to adjudication. The time for the issuing of the decision was extended until noon on 7 April 2008. By email timed and dated 11.56am on 7 April, the adjudicator issued his decision. A signed version of the final document was issued on 10 April 2008. Laing said the decision was invalid. Braehead issued enforcement proceedings
When the adjudicator emailed his decision, in which he held that Laing were in breach of contract, he said that he envisaged some minor further written procedure to take account of a matter touching on overall quantum. In fact, he sought comment from the parties by 11 April in relation to this discrete issue. If there was agreement, so much the better, but if there was not, the adjudicator said he would work further on any submissions received. Laing immediately said that as the adjudicator had failed to issue a proper decision by noon, the mandatory period for a decision had expired and the adjudicator’s jurisdiction had come to an end. Laing were not prepared to agree any further extension. In correspondence with Laing, the adjudicator referred to his award being an "interim award". Laing replied that a proper decision should have been issued by the 12 noon deadline, as an adjudicator has no power to make an interim decision, and was obliged to reach his decision within the time limited as extended. The adjudicator did not determine the dispute referred to him but left certain matters to be determined at a later date.
Braehead argued that it was clear that the adjudication procedure was intended to be flexible, and that the adjudicator could make interim directions. Directions might be issued at any stage and were not confined to procedural matters. While it is clear there must be one final decision dealing with all matters, there was no reason why the adjudicator could not issue his decision in part. The adjudicator was clearly aware of the timescale and regarded his decision as final. The adjudicator intended to produce a document which would fulfill the obligations incumbent on him in terms of his remit. There was no obvious reason why en route to the final decision, the adjudicator should not make an interim or partial finding. Looking at the decision as a whole, the final document did constitute the adjudicator’s final decision as required by the contract, and there was nothing in the document to suggest that it was not intended to be relied on.
Where the adjudicator knows that the time limit is about to expire then maybe all that could be done is for him to give the decision his "best shot". Lord Menzies agreed: "In the present case he was doing the best that he could in the time allowed; he can be presumed to be acting in good faith and not to produce a nullity". The only issue causing the adjudicator concern here was whether a particular item, the sum of £490,000, should result in any deduction. The actual finding was for the minimum amount which the adjudicator considered to be due. Lord Menzies noted that there were difficulties of expression in the adjudicator's decision. The adjudicator acknowledged that he could not reconcile one figure with another and sought further statements. The adjudicator also delayed apportioning his expenses. This might tend to suggest that this was not a final decision.
However, looking at the document as a whole, the Judge reached a view that the adjudicator intended it to be his final decision. The findings with regard to liability were conclusively stated. The adjudicator noted that he was satisfied he had sufficient information to allow him to make a decision on quantum. He then went on to express a concern about one aspect of quantum, which may have resulted in a deduction. That concern was directed to 10% of the value of the claim. What the adjudicator had done was find in favour of Braehead for the minimum sum which could possibly be due. He was aware of the time limits but offered to refine that decision if the parties agreed to an extension of time to let him do this. The amount which he found in favour of Braehead was the bottom line below which he was not prepared to go. Therefore the decision could be enforced.
There was also a bespoke amendment to the contract which stated that:
When the adjudicator emailed his decision, in which he held that Laing were in breach of contract, he said that he envisaged some minor further written procedure to take account of a matter touching on overall quantum. In fact, he sought comment from the parties by 11 April in relation to this discrete issue. If there was agreement, so much the better, but if there was not, the adjudicator said he would work further on any submissions received. Laing immediately said that as the adjudicator had failed to issue a proper decision by noon, the mandatory period for a decision had expired and the adjudicator’s jurisdiction had come to an end. Laing were not prepared to agree any further extension. In correspondence with Laing, the adjudicator referred to his award being an "interim award". Laing replied that a proper decision should have been issued by the 12 noon deadline, as an adjudicator has no power to make an interim decision, and was obliged to reach his decision within the time limited as extended. The adjudicator did not determine the dispute referred to him but left certain matters to be determined at a later date.
Braehead argued that it was clear that the adjudication procedure was intended to be flexible, and that the adjudicator could make interim directions. Directions might be issued at any stage and were not confined to procedural matters. While it is clear there must be one final decision dealing with all matters, there was no reason why the adjudicator could not issue his decision in part. The adjudicator was clearly aware of the timescale and regarded his decision as final. The adjudicator intended to produce a document which would fulfill the obligations incumbent on him in terms of his remit. There was no obvious reason why en route to the final decision, the adjudicator should not make an interim or partial finding. Looking at the decision as a whole, the final document did constitute the adjudicator’s final decision as required by the contract, and there was nothing in the document to suggest that it was not intended to be relied on.
Where the adjudicator knows that the time limit is about to expire then maybe all that could be done is for him to give the decision his "best shot". Lord Menzies agreed: "In the present case he was doing the best that he could in the time allowed; he can be presumed to be acting in good faith and not to produce a nullity". The only issue causing the adjudicator concern here was whether a particular item, the sum of £490,000, should result in any deduction. The actual finding was for the minimum amount which the adjudicator considered to be due. Lord Menzies noted that there were difficulties of expression in the adjudicator's decision. The adjudicator acknowledged that he could not reconcile one figure with another and sought further statements. The adjudicator also delayed apportioning his expenses. This might tend to suggest that this was not a final decision.
However, looking at the document as a whole, the Judge reached a view that the adjudicator intended it to be his final decision. The findings with regard to liability were conclusively stated. The adjudicator noted that he was satisfied he had sufficient information to allow him to make a decision on quantum. He then went on to express a concern about one aspect of quantum, which may have resulted in a deduction. That concern was directed to 10% of the value of the claim. What the adjudicator had done was find in favour of Braehead for the minimum sum which could possibly be due. He was aware of the time limits but offered to refine that decision if the parties agreed to an extension of time to let him do this. The amount which he found in favour of Braehead was the bottom line below which he was not prepared to go. Therefore the decision could be enforced.
There was also a bespoke amendment to the contract which stated that:
"The adjudicator shall determine the matters in dispute in accordance with the law and the terms of the contract, applying the normal standards of proof applicable to civil disputes."
Laing said this imposed an onerous duty on the adjudicator, requiring him to find evidential proof on the balance of probabilities. Laing said that the adjudicator had failed in this duty. Lord Menzies said, that challenges such as this to an adjudicator's decision can only succeed if his reasons are "so incoherent that it is impossible for the reasonable reader to make sense of them". Here, the Judge noted that the adjudicator's reasons were at times briefly stated and "somewhat opaque" but he did not consider it was impossible to make sense of them. Of course, whether the decision was correct or not, was not and could not be the point of these proceedings.