Barhale Ltd v SP Transmission plc

[2021] ScotCS CSOH  

This was another adjudication enforcement case. SP said that the adjudicator had failed to address one of the critical issues referred to it for determination, and had therefore failed to exhaust their jurisdiction, with the result that the decision was unenforceable. Specifically, SP said that the decision had failed to consider their argument as to the proper contractual basis for assessment and payment for the excavation and associated disposal and filling works, and the operation and effect of rules M6 and M16 in the Civil Engineering Standard Method of Measurement, 3rd edition (“CESMM3”). The adjudicator had simply determined that a bulk excavation was required by the contract, and then awarded the claim in full, dismissing SP’s counterclaim and failing to address points in the SP response.

It was not the case that the measurement argument had been considered and impliedly rejected. The two issues were discrete: the first was a question of contractual interpretation; the second concerned the measurement of the sum due to the pursuer on the assumption that its argument on interpretation was preferred (as it was). 

It should be noted that, unusually, there is a distinction between Scottish and English cases here. Under English case law a failure by an adjudicator to address a question referred to him might render the decision unenforceable, but only if the failure was deliberate. The usual Scottish approach was arguing that there had been a failure to exhaust jurisdiction which did not distinguish between deliberate and inadvertent failure.

Barhale noted that if the court was in any doubt as to whether the CESMM3 argument had been considered and rejected, regard should be had (i) to the presumption of regularity; (ii) to it being inherently unlikely that the adjudicator would fail to consider an argument that featured prominently in SP’s submissions, which the adjudicator had summarised in the Decision; and (iii) to the nature of adjudication, which could be a “rough and ready” process that did not demand the same level of reasoning as a judicial decision. 

Lord Tyre said that there was no requirement for an adjudicator expressly to address every point taken by the parties in their submissions. A court should not put a fine toothcomb through the adjudicator’s decision, seeking to ensure that every single point has been addressed. It is necessary to take a broad-based approach, looking at the dispute referred and the result.

If an adjudicator wrongly failed to have regard to the responding party’s defence to the claim, because they erroneously thought that they could not do so, then they were not addressing the question that had been asked. An adjudicator could not engage with the dispute that had been referred if they failed to consider the defence to the claim. That said, such a conclusion could only be reached by the court “in the plainest cases”. There was also a significant difference in law between, on the one hand, not answering the right question at all and, on the other, answering the right question but in the wrong way.

Here the dispute before the adjudicator raised four issues for determination. One of these was if the Works Information required Barhale to carry out a bulk excavation disposal and fill,  then how was that work  to be measured in terms of CESMM3?

The Judge was of the view that the adjudicator did not address this issue effectively or indeed address it at all. The issue was a critical one raised by SP in its response to the referral and rejoinder and in a subsequent email. SP’s primary contention was that even if Barhale was correct that the Works Information required a bulk excavation, disposal, and filling, CESMM3 was applicable and restricted the volume measured for both the excavation and the filling to the volume occupied by (including beneath) or vertically above any part of the foundation. The adjudicator simply did not address that argument. In this way, the adjudicator failed to exhaust their jurisdiction, and the decision could not be enforced.

Reading the decision as a whole it is obvious that the adjudicator did not engage with the CESMM3 argument at all.

Further, although the Judge was not persuaded that it was necessary to characterise the adjudicator’s failure to exhaust jurisdiction as deliberate before it could be held to be unenforceable, here the failure could fairly be characterised as deliberate. On two separate occasions the adjudicator put it to the parties that they considered that the decision that had to be made was whether the Works Information instructed the pursuer to undertake bulk earthworks, or not. On both occasions, SP replied by insisting that the adjudicator also had to decide the issue of the applicable contractual method of measurement. The Decision was not enforced. 

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