Adjudication under construction contract — Time limits — Whether adjudicator’s decision given out of time — Dates from which time running — Whether late decision ultra vires Decree de plano granted
The pursuer and the defender entered into a construction contract that contained no provision for the adjudication of disputes. By virtue of section 108(1) and (5) of the Housing Grants, Construction and Regeneration Act 1996, disputes arising under such a contract could be referred for adjudication under the procedures set out in the Scheme for Construction Contracts (Scotland) Regulations 1998. Para 7(1) provided for the referring party to refer the dispute to the adjudicator in writing, and, by para 19(1), the adjudicator was required to reach his decision no later than 28 days “after the date of the referral notice”, unless the referring party consented to a longer period of 42 days.
A dispute arose between the parties and was referred to an adjudicator by the pursuer. The undated referral notice was posted on 18 September 2003 by special delivery. Delivery was unsuccessful and the adjudicator did not collect the notice from the delivery office until Tuesday 23 September.
On 21 October, the adjudicator requested, and obtained, the pursuer’s consent to postpone his decision. On 23 October, he intimated that he had reached a decision and requested the payment of his fee. He finally delivered his decision on 27 October. The defender maintained that the decision was ultra vires because the period for giving it had expired on 16 October, 28 days after 18 September, and the adjudicator’s jurisdiction had therefore ceased five days prior to the adjudicator’s request for more time. The adjudicator maintained that the relevant decision date was 27 October, the date of its delivery in writing. The pursuer argued that:
(i) the appropriate inception date was 23 September, when the referral notice had been received; and (ii) in any event, the referring party had consented to the extended period of 42 days, during which time a decision had been reached.
Held: A decree de plano was granted to the pursuer.
1. The use in the scheme of the phrase “date of the referral notice” implied that the referral notice would have a date expressed upon it, and also that the date so expressed would be the date upon which the referring party sent off the notice and accompanying documentation to the adjudicator. If there were a substantial interval between the dispatch and receipt of the notice, the adjudicator could ask for further time. If that was refused, he could resign. Accordingly, the relevant start date from which time ran, for the purposes of para 19(1) of the scheme, was the sending date of the referral notice. In the present case, this date was 18 September 2003.
2. Paragraph 19(3) of the scheme, which referred to the delivery of a copy of the decision by the adjudicator “after he has reached a decision”, clearly distinguished between the reaching of a decision and the subsequent delivery of a copy of that decision. For a written decision, the processes of composition and subsequent communication of a copy were distinct. It was not possible to hold that a decision would have only been reached when copies of it had been successfully communicated to the parties: St Andrews Bay Development Ltd v HBG Management Ltd 2000 SLT 740 distinguished. In the present case, therefore, the decision date was 23 October.
3. Although, under the law of arbitration, the jurisdiction of the arbiter ceased at the time stipulated for delivery of his award, the technical rules of arbitration did not apply in all respects to construction contract adjudications: Costain Ltd v Strathclyde Builders Ltd unreported 17 December 2003 considered; Gillies Ramsay Diamond v PJW Enterprises Ltd unreported 24 December 2003 applied. Ultimately, it was necessary to construe the adjudication scheme itself. On a proper view, the provisions relating to the times within which the adjudicator should reach his decision were directory, rather than mandatory, provisions, entailing nullity of any late decision for want of jurisdiction. Delay by an adjudicator did not bring the adjudication process to an end: Simons Construction Ltd v Aardvark Developments Ltd [2003] EWHC 2474 (TCC) applied.
Stephen Walker (instructed by Lindsays WS, of Ediburgh) appeared for the pursuer; John MacKenzie, solicitor-advocate, (instructed by Masons, of Edinburgh), appeared for the defender.
Sally Dobson, barrister
