Adjudication
William Naylor v Greenacres Curling Limited (June 2001) Crt of Session

© Daniel Atkinson 2001 22 September 2001

The issue in William Naylor v Greenacres Curling Limited (June 2001) Crt of Session was whether the an interdict and suspension ordered by the Court on a second adjudication should be recalled. The main issue was whether the dispute referred to the second adjudicator was substantially the same as the one previously referred and the actions to be taken by the Court if the Adjudicator refused to resign.

Naylor and Greenacres had entered into a contract in which Naylor was to lay and finish a concrete surface over previously laid refrigeration pipes and insulation for an ice rink at Greenacres Curling Club. The work was carried out in August. Naylor submitted its invoice for the work £19,484.17. Greenacres refused to pay on the basis that the concrete supplied did not comply with the contract specification.

Naylor commenced the first adjudication on February 2001 and sought payment of the sum of £19,484.17 on the basis that it had carried out the work required. Greenacres defended by stating that Naylor had failed to carry out its contractual obligation to supply and lay the concrete floor in terms of the parties' contract and as such Greenacres was not obliged to pay any amount. Greenacres requested the Adjudicator to find that Naylor had failed to meet the concrete mix specification and achieve the specified surface tolerance and were not entitled to any sum.

On 30 March 2001 the Adjudicator decided that Naylor was entitled to full payment of £19.484.17.

On 13 April 2001 Greenacres initiated the second adjudication proceedings stating that Naylor had failed to meet the specification which has resulted in the ice rink slab being defective and not in accordance with the contract.

Greenacre argued that there was a difference between the disputes referred to the respective adjudicators. The first adjudication was held to determine if the money should be paid; the second adjudication was held to identify deficiencies in the work.

Naylor accepted that the first adjudicator's process of reasoning in arriving at his decision was very difficult, if not impossible, to follow. There were however various factual matters relating to the specification taken into account by the Adjudicator. Naylor argued that the first adjudicator's decision appeared to be a decision on the dispute whether Naylor’s application for an order for payment should be granted or should be refused on the ground that Naylor had failed to meet the specification.

Lord Bonomy held that the effect of the notice of adjudication, the referral notice and the response document was to submit to the first adjudicator the dispute whether Naylor had fulfilled the contract and was entitled to payment or whether payment should not be ordered because Naylor had failed to comply with the specification. The dispute was substantially the same as that which Greenacre sought to refer to a second adjudicator. The fact that Greenacre sought damages for breach of contract or alternatively rectification of the slab at the expense of Naylor as their redress did not alter the fact that the dispute was substantially the same, namely whether Naylor had executed the contract in accordance with its terms or failed to comply with the specification for the concrete.

On 24 April 2001 at a hearing at which only Naylor was represented a decree of interdict and suspension ad interim had been pronounced. Greenacre now sought to recall that decree. The issue was whether it was appropriate for the Court to grant such relief, effectively supervising the process of adjudication.

Paragraph 9(2) of the Scheme required an adjudicator to resign where the dispute was the same or substantially the same as one which has previously been referred to adjudication, and a decision had been taken in that adjudication.

Naylor had two arguments. The first submission was characterised as a cross between relevancy and competency. No wrong was identified in the petition which was capable of being interdicted. Reliance was placed on English authority summarised in Workplace Technologies Plc v E Squared Ltd (2000) TCC which indicated that in England it may be that there is no power to grant an injunction to restrain a party from initiating a void reference and pursuing proceedings which themselves are void. The second submission was that ordinary petition procedure was incompetent where the application was made, as this one was, to the supervisory jurisdiction of the Court. Such an application could now be made only by petition for judicial review.

In answer to the first submission, Greenacres relied on authority in Scots Law which allowed intervention by the Court in Scotland where an arbiter proposed to exercise a jurisdiction which he did not possess. On the basis of that authority Lord Bonomy held that it is competent to pronounce interdict in such circumstances and that there was no reason why the same should not apply in the case of an adjudicator.

On the second submission, Lord Bonomy held that what Naylor was seeking to challenge was the vires of the second adjudicator. The challenge arose out of the failure of the second adjudicator to resign as required by paragraph 9.2 of the Scheme. He had failed to implement his statutory duty. While interdict and suspension was the remedy sought, that was simply a means of effecting specific performance of the second adjudicator's statutory duty. The line of authority about the interdicting of arbitration proceedings were simply examples of the exercise by the Court of its supervisory jurisdiction. It was argued by Naylor that if the second adjudication was allowed to proceed and a decision was made in favour of the respondents, Naylor would then require to seek judicial review of that decision, and that by granting interim interdict the Court would prevent that from happening. Lord Bonomy held that if the Court would in those circumstances be exercising its supervisory jurisdiction, then it would also plainly be doing so when asked in the present proceedings to consider interdicting the second adjudication. Since 1985 it had been mandatory to present applications to the supervisory jurisdiction of this Court by petition for judicial review. Ordinary petition procedure was no longer competent. It followed that there was no primafacie case for interim decree.

Accordingly Lord Bonomy granted Greenacres’ motion and recalled the interim interdict and suspension pronounced on 24 April 2001.