Introduction
The opinion of Lord Drummond Young in the Outer Court of Session in
Castle Inns (Sterling) Ltd v Clark Contracts
Ltd [2005] CS OH178 on 29 December 2005 is an important judgment which sheds
light on the nature of adjudication and the status of the adjudicator's
decision including the award of his fees.
There is an incisive analysis of the relationship between the
adjudicator's decisions on interim Certificates and the Final Certificate in
JCT standard forms, and the effect of time-bar provisions. See the
extensive commentary at the end of this article.
Background
On 2 May 2001 Castle Inns contracted for Clark to carry out building works to provide
a watertight shell accommodation for
fitting out as licensed premises by others at 6-8 Methven Street,
Perth. The contract was by tender and acceptance and not a formal written contract
but
incorporated the conditions of the Scottish Building Contract without
Quantities, Contractors Design Portion (January 2000 revision), subject to
certain amendments and modifications.
First Adjudication
On 13 June 2003 Clark served a notice
of adjudication on Castle Inns in relation to the
sum due to be paid on interim certificate no 10. On 27 August 2003 the
adjudicator issued his decision. He found that Clark was entitled to an extension of time
and to payment of direct loss and/or expense and that Castle Inns had no entitlement to withhold
certain sums from interim certificates nos 9 and 10. He ordered that interim certificate
no 10 should be opened up, reviewed and revised, with the result that a further sum was due by Castle Inn to Clark. The adjudicator ordered
Castle Inn to pay all of his fees which were paid.
Second Adjudication
On 16 September 2003 Castle Inns served a notice of adjudication for recovery
of sums either under the contract or as damages for breach of contract, for alleged
defects in the works and for sums paid as loss and expense to the contractor fitting out the
premises. The same adjudicator was appointed adjudicator and issued his decision on 7 November
2003. He decided the value of the claim which was marginally less than the amount
that had already been withheld and accordingly ordered Castle Inns to pay the balance.
The adjudicator ordered that Castle Inn was liable for all of his fees in that second adjudication.
Castle Inn did not pay.
Final Certificate
On 8 October 2003 during the second adjudication, the
architect issued a final certificate declaring the value of the contract sum as finally adjusted
which taking into account the amounts in previous interim certificates left a balance of 249,781.06 plus value added tax to be paid by
Clark to Castle Inns.
The Instant Proceedings
Castle Inns commenced the instant court proceedings
before Lord Drummond Young and sought:
- Final determination of the matters decided in the first adjudication.
- Payment of the Adjudicator's fees in the first
adjudication paid by Castle Inns.
- Reimbursement of loss and expense paid to the
fitting out contractor as damages due to delay by Clark as alleged breach
of contract.
- Compensation for loss of profit as damages due to
delay by Clark as alleged breach of contract.
- Payment under the terms of the contract of the
balance due under the Final Certificate.
The above claim raised four issues, each of which are set out below.
Issue 1 - The Adjudicators Fees
Castle Inns claim for repayment of the adjudicator's fees was based on
the situation where the Court determined the incidence of liability different to that decided
by the adjudicator. In that case, it was argued, Clarke would have financially benefited from
"the erroneous
allocation of liability in the adjudication to the extent of the amount paid
by the Pursuer as a proportion of Adjudicator's fees, and as such has been
unjustly enriched to the extent of that portion of Adjudicator's fees and
expenses".
The main basis of the claim was therefore unjustified
enrichment. Lord Young therefore proceeded to decide in principle
the question whether a
party which was unsuccessful in an adjudication but was subsequently successful
in court in "unwinding the adjudication" was able to recover sums that he
had
paid towards the adjudicator's fees and expenses.
Restitution - The Principle
of Law
Lord Young held that any benefit obtained
in consequence of a contractual entitlement cannot be challenged on the
ground that it involved unjustified enrichment - the existence of a
contractual right provides clear legal justification for the enrichment.
He referred to and relied upon the judgment of Lord Hope of Craighead in
Dollar Land (Cumbernauld) Ltd. v. C.I.N Properties Ltd.
(Scotland) [1998] SC (HL) 90:
"An
obligation in unjustified enrichment is owed where the enrichment cannot be
justified on some legal basis arising from the circumstances in which the
defender was enriched. There can be no better justification for an
enrichment than that it was obtained and is being retained in the exercise
of a contractual right against the party who seeks to invoke the
remedy".
Lord Young considered therefore that it was necessary to
examine the instant contractual scheme to discover whether it had a bearing
on the ultimate liability to pay the adjudicator's fees and outlays.
The Effect of Section 108(3)
Lord Young observed that Section 108(1)
allowed a party to refer a "dispute" arising under the contract
for adjudication. He observed that "dispute" was a word of
wide significance. He observed that a dispute was
something that existed prior to the reference to adjudication.
Crucially Lord Young held that that meant that liability to pay the
adjudicator's fees and outlays could not be a "dispute".
Subsection 108(3) made the adjudicator's decision binding until the
dispute was finally determined by legal proceedings, arbitration or
agreement. Clause 41A (and particularly Clause 41A.8.1) of the contract gave effect to the legal requirements of section
108.
Lord Young observed that the decision of the adjudicator was provisionally binding on the
parties, but clause 41A.8.1, following
section 108(3), contemplated that the court or an arbiter or the parties by
agreement could in effect undo the adjudicator's decision on a dispute or
difference and substitute another decision, which would thereafter be binding
on the parties. When the court was involved, the mechanism that was used was an
ordinary action to enforce the parties' contractual rights. Any such
proceedings before the court were not an appeal.
The court proceedings did not involve any reconsideration of the
adjudicator's decision, but were entirely free-standing.
Ancillary Finding
Clauses 41A.7.1
and .2 provided for the adjudicator to determine liability for his own fee and
expenses. Lord held that although any finding by the
adjudicator on his fees formed part of his decision, nevertheless, any such finding
did not
relate to the dispute that was the subject of adjudication; it was merely an
ancillary finding.
The "dispute" that was contemplated by Section 108 and Clause 41A
was something that predated the reference to adjudication, and formed
the substantive subject matter of the adjudication; the finding relative to
the adjudicator's fees and expenses, by contrast, was something that could only
be determined at the end of the adjudication process.
The Contractual Scheme
Lord Young held that the adjudicator's decision on fees could
not be reconsidered by the court or, presumably, by
an arbiter. Such reconsideration
would be contrary to the contractual scheme found in clause 41A. He gave
three reasons.
- There was no contractual mechanism
in clause 41A that would allow reconsideration to take place. The power
in clause 41A.7.1 was conferred specifically upon the adjudicator. No appeal
was possible against an adjudicator's decision, and an adjudicator's decision
could not be challenged on the ground that it was wrong on the facts or in
law:
Diamond v
PJW Enterprises Ltd [2004] SC 430. It followed that the
adjudicator's decision as to liability for his fee and expenses could not be
challenged directly.
- The indirect challenge to the adjudicator's decision
permitted by clause 41A.8.1 and Section 108(3) was only for an underlying
dispute. It did not apply to the
adjudicator's decision on his fee and expenses, as that part of his decision
did not involve a "dispute" in the contractual sense. The contractual
scheme excluded any challenge to ancillary findings, such as a finding on liability
for the adjudicator's fee and expenses.
- Because the adjudicator's
decision on liability for his fee and expenses was essentially ancillary in
nature, there was no commercial necessity that it should be capable of
reconsideration. In any system of dispute resolution the parties were likely
to incur irrecoverable outlays and expenses; indeed in some jurisdictions,
such as those in the United States, a successful party does not recover
anything in respect of expenses, outlays and other costs. Thus the normal
criterion for the implication of a contractual term did not apply to the
part of the adjudicator's decision dealing with his fee and expenses.
The three reasons why an adjudicator's decision on his fee and expenses
could not be reconsidered by the court all related to the
contractual structure of clause 41A. There was a fourth practical reason based on
considerations which appear to relate to
the administration of justice.
Administration of Justice
Lord Young foresaw the practical difficulty of
reconsidering the adjudicator's decision on matters of his fees. He identified that Adjudication was a
distinct process, with its own peculiar features which might compel an
adjudicator to come
to a relatively hasty decision. In court proceedings the judge had a significantly
better opportunity to come to a carefully reasoned decision. It was
accordingly impossible to conclude merely from the fact that the court
reached a different decision that the adjudicator's decision was wrong. The
decisive factor in the court's decision might not have been presented to the
adjudicator, or might have been presented in such a way that its
significance was obscured. Matters may be
argued before the adjudicator that were not argued before the court. Lord
Young observed that any apportionment was an extremely difficult task for a tribunal that
had not
heard the same arguments as the adjudicator. So for sound practical reasons
he held that an
adjudicator's decision on liability for his fee and expenses could not be
reopened in any proceedings before the court. Additional
Arguments
Castle Inns raised two additional arguments
which allowed Lord Young to further develop his analysis: .
- Castle Inns argued that if the court reached a decision that
was contrary to the adjudicator's decision, that brought the adjudicator's
decision to an end, leaving the question of liability for the adjudicator's
fee and expenses at large.
Lord
Young repeated his decision that the court proceedings were free standing;
they did not constitute an appeal against the adjudicator's decision. He
held that consequently they could only supersede the adjudicator's decision
to the extent that disputes or differences were specifically raised and
decided in the court proceedings. They did not render the decision a nullity,
even if the court's decision was contrary to the adjudicator's. That meant
that the part of the adjudicator's decision dealing with liability for his
fee and expenses was not affected by the court proceedings.
- Castle Inns argued that the result of the final determination of the dispute
by the court was to annul the adjudicator's decision under the first sentence of clause
41A.7.1 as to apportionment of his fee and expenses. The second
sentence of clause 41A.7.1 operated with result that the parties
should bear the cost of the adjudicator's fee and expenses in equal
proportion.
Lord Young repeated his decision that it was only those parts of the adjudicator's decision that
were determined by the court that were superseded; the remainder of the
decision stood.
Power of Court to Alter Adjudicator's Decision
Finally, Castle Inns argued that the
court had power to alter the adjudicator's decision on liability for his fee
and expenses by virtue of clause 41C.2 of the contract which provided:
"When any dispute or difference is to be determined by
court proceedings, then insofar as the Conditions provide for the issue of a
certificate, or the expression of an opinion or the giving of a decision,
requirement or notice such provision shall not prevent the Court, in
determining the rights and liabilities of the parties hereto, from making
any finding necessary to establish whether such certificate was correctly
issued or opinion correctly expressed or decision, requirement or notice
correctly given on the facts found by the Court; nor shall such provision
prevent the Court establishing what certificate ought to have been issued or
what other opinion should have been expressed or what other decision,
requirement or notice should have been given as if no certificate, opinion,
decision, requirement or notice had been issued, expressed or given".
Lord Young observed that Clause 41C.2 was introduced
into the JCT forms of contract to deal with the decision in Northern
Regional Health Authority v Derek Construction Co. Ltd [1984] QB 644,
where it was held that a court had no power under the earlier JCT forms to
open up, review and revise certificates issued by the contract architect.
Crouch had been overruled by Beaufort Developments (N.I.)
Ltd. v Gilbert-Ash (N.I.) Ltd [1985] AC 191 and the practical
significance of the clause was reduced in consequence. The clause was designed to remove a disability from exercising the court's normal
powers; it was not designed to confer an additional power on the court.
Lord Young observed that Clause
41C.2 applied in particular to any "dispute or difference" that was to be
determined by court proceedings. The adjudicator's decision as to liability for his
fee and expenses did not form part of a dispute or difference
Lord Young
accordingly concluded that Clause 41C.2 had no bearing on the instant case.
Issue 2 - Repayment of Amounts Paid on Adjudicator's Decision
Castle Inns did not adequately state the basis on which payment was
sought of the amount paid in the first adjudication. Lord Drummond
Young considered that the defect could be rectified fairly easily and had
the case put out to order to enable an appropriate motion to be made.
In doing so he examined the possible legal basis for repayment and came to a
logical and expected conclusion.
Lord Young considered that if the court's decision on the dispute was
at variance with the adjudicator's decision, any sums that have been paid
pursuant to the adjudicator's decision should obviously be repaid. Neither
section 108 nor clause 41A stated the legal basis for such repayment. Two
possible theories were, either an implied term of the parties' contract or a restitutionary obligation based on unjustified enrichment.
He considered that where the parties' contract remained in full force and
effect the use of an implied term of the contract was a more natural
mechanism than a restitution, which was necessarily an extra-contractual
obligation. The ground for the implication of a contractual term was that it
was necessary to give business efficacy to the parties' agreement. That would achieve a repayment of
any sums that had been wrongly paid, in the sense that the court had
ultimately found those sums not to be due.
He considered that what is contemplated by section 108(3) and clause 41A.8.1
was an "unwinding" of the adjudicator's decision which should not
be based on principles of unjustified enrichment The parties' rights and
obligations following a successful unwinding of the adjudicator's decision
were better analyzed using an implied term rather
than restitution because
the obligation to repay monies arose very squarely from the operation of
the parties' contract, and in particular clause 48A.8.1.
Nonetheless he considered that where the payment was made on grounds that were
not ultimately held to be justified, then an error existed, albeit on the part of a third party,
the adjudicator, rather than the party making the payment. There was
ultimately no justifiable cause for the payment. In that case if restitution
had been appropriate, Lord Young considered that a restitutionary
remedy would be available, even if it could not be fitted into the defined
categories already explicitly recognized.
Issue 3 - Final Certificate and Adjudicator's
Decision
Castle Inns claimed the balance due under the Final Certificate. In issuing the final certificate
on 8 October 2003, the architect made certain decisions and awarded certain
sums on a basis that was different to the determination of the adjudicator
in the second adjudication, which was issued on 7 November 2003.
Lord Young identified that one of the critical issues in the instant case
was whether an adjudicator's decision on a dispute arising under an interim
certificate was binding on the architect at the time when he issued the
final certificate, and proceeded to establish an important proposition of
law.
Castle Inns primary argument was that the effect of the final certificate
was to re-evaluate the position arising between the parties on a
comprehensive basis and that the final certificate reflected the correct
position between the parties. Castle Inns argued that there was no
challenge to the second adjudication in the instant action, because the
final certificate was independent both of the interim certificates issued by
the architect and of any adjudication in respect of those certificates. The
second adjudication had arisen out of an interim certificate, and was
accordingly of no relevance to the final certificate.
Castle Inns secondary argument was that the criteria for decisions on an
interim certificate were quite different from those that applied to the
final certificate. Consequently the Court would require to be satisfied on
the evidence that the decision in the second adjudication involved issues
that were the same as those that arose in the final certificate.
Lord Young observed that it was not clear on the pleadings which
parts of the final certificate might be affected by the decision in the
second adjudication, but the parties agreed that at least some of the
matters determined in the second adjudication were matters that also arose
for decision in the preparation of the final certificate. He therefore
proceeded to find on the basis of legal principle and not fact.
Lord Young also observed that there were certain important differences
between interim certificates and the final certificate:
- Interim certificates are essentially provisional in nature, and the
sums paid under them might be adjusted subsequently.
- The final certificate, by contrast, was definitive, and had conclusive
effect as to the matters set out in clause 30.9.1; interim certificates
had no such effect.
- The final certificate was prepared following the various financial
adjustments that are described in clause 30.6, and fixed conclusively the
sum due to the contractor. An interim certificate had no such effect.
Importantly and crucially, Lord Young considered that despite these differences, there
were substantial similarities
in the tasks that the architect had to perform in preparing an interim
certificate and in preparing a final certificate. In both cases the
architect was calculating the sum that was due to be paid to the contractor
on the relevant date. In both cases the architect was concerned with such
tasks as valuing items of work or ascertaining direct loss and expense
caused by particular relevant events in terms of clause 26. By the time of
the final certificate it was a common occurrence that extra work
or omissions or errors would come to light, or defects would have emerged, with
the result that the figures in the interim certificates had to be corrected.
Nevertheless, much of the calculation would typically be the same at the
stages of interim and final certificates, and the general approach to
calculation would normally be the same, even though the figures might have to
be altered or refined. For this reason Lord Young held that an adjudication
decision relating to an interim certificate might be relevant to the final
certificate.
Lord Young observed that the decision of an adjudicator could be
undone, but only in the three ways contemplated by section 108(3) and
clause 41A.8.1, that is, by court proceedings, by arbitration or by the
agreement of the parties. The architect had no power to undo the decisions
of an adjudicator, and accordingly had to comply with those decisions so
far as they were relevant to any of his tasks. Lord Young relied on and
referred to the requirements of Clause 41A.8.2 that the parties were to
comply with decisions of the adjudicator immediately on delivery of the
decision, and that the employer and the contractor "shall ensure that
the decisions of the Adjudicator are given effect". He held that that
wording contemplated that the parties to the contract would ensure that
the adjudicator's decision was implemented not only by themselves but also
by any other person to whom they can give instructions. Lord Young
considered that that would include the architect, who was the agent of the
employer. Consequently, the effect of clause 41A.8.1 and .2 was to oblige
the employer to ensure that the architect complied with decisions of the
adjudicator.
Lord Young held that to the extent that the adjudicator had decided a
matter that was relevant to the final certificate, the architect was bound
by the adjudicator's decision. There was one important qualification. He
held that if new material had emerged since the date of the adjudicator's
decision, the architect was entitled to take that into account in
preparing the final certificate, or indeed any interim certificate, and to
make any appropriate modification to the adjudicator's decision.
Lord Young distinguished two types of case:
- Those that merely involved the refinement of the adjudicator's
decision in accordance with new material; and
- Those that involve a challenge to the issue of principle in the
adjudicator's decision.
The first type of modification was permissible; the second was not.
Lord Young recognised that distinguishing the two cases was a matter of degree, and might
involve difficult questions of judgment in marginal cases. Nevertheless it
was a distinction that had to be drawn on a case-by-case basis. Lord Young gave an example of the valuation of loss and expense. Where
the adjudicator had assessed direct loss and expense under clause 26 but
more exact figures for the loss and expense were available at the time
when the final certificate is prepared, the architect was entitled to take
those more exact figures into account. Lord Young held that what the
architect could not do, in the example, was to refuse a head of direct
loss and expense that had been allowed by an adjudicator, or to go against
the basic principle on which the adjudicator proceeded in awarding a sum
for such loss and expense.
Lord Young observed that the above proposition of law was supported by
the express terms of the instant contract:
- Clause 30.9.2: That clause contemplated the situation where
adjudication proceedings have started before the issue of the final
certificate but remain uncompleted at that time. If the adjudication was
subsequently concluded, clause 30.9.2.1 provided that the final
certificate, although issued, was to be subject to the terms of any
decision of the adjudicator. Lord Young held that that assumed that the
decisions of adjudicators were binding on the architect for the purposes
of the final certificate. He considered that the clause confirmed that
there was no fundamental distinction between the interim certificate and
the final certificate for the purpose of a dispute or difference that had
arisen in respect of an interim certificate.
- Clause 30.9.3: That clause dealt with
adjudication proceedings that were started within 60 days (in Scotland; 28
days in England and Wales) after the final certificate has been issued.
That clause provided that the final certificate was to have effect as
conclusive evidence as provided in clause 30.9.1 with an exception for the
matters to which the adjudication proceedings related. Once again, that
assumed that the decision in the adjudication would bind the architect for
the purposes of the final certificate. It also assumed that "matters"
could be identified that were the subject of the adjudication decision and
are also relevant to the final certificate.
- Clause 30.9.4: That clause provided
for challenge to an adjudication decision given after the date of issue of
the final certificate in very wide terms. Lord Young considered that it
covered any dispute or difference, relating to any certificate, provided
that the adjudicator's decision was given after the date when the final
certificate is issued.
Lord Young considered that the final certificate
involved the conclusive determination of the matters specified in clause
30.9.1 but was subject to the terms of any adjudication decision
pronounced after its date, and had to be modified accordingly.
- Clause 30.7: That clause required the ascertainment of the sum due to each nominated
subcontractor, as finally adjusted or ascertained, to be made in an
interim certificate issued not less than 28 days before the Final
Certificate. Lord Young also considered that Clause supported the
proposition of law.
Issue 4 - Time Bar
Clark argued that by virtue of clause 30.9.4, a challenge to an
adjudicator's award given after the date of the final certificate could be
made only within 28 days after the award was made. In the instant case the
final certificate was issued on 8 October 2003 and the adjudicator's second
award was made on 7 November of that year. Consequently clause 30.9.4
applied. Clark argued that since the instant proceedings were not started
until March 2004, well beyond the period of 28 days, the second award could
not be challenged.
Lord Young observed that Clause 30.9.1 provided that the final
certificate was to have effect as conclusive evidence of a number of
matters, including standards of workmanship and conformity to the contract.
Clause 30.9.3, as amended by the Scottish Supplement, provided that if
any adjudication, arbitration or other proceedings have been commenced
within 60 days after the final certificate, the final certificate was to
have effect as conclusive evidence save only in respect of all matters to
which those proceedings relate.
Any such
adjudication decision might be undone by court or arbitral proceedings. In
order to ensure that the final certificate could be given effect at the
earliest opportunity, however, a strict time limit was imposed on the
commencement of such proceedings; otherwise the final resolution of the
parties' liabilities could remain in limbo for an unnecessarily long
period.
Clause 30.9.4 imposed a strict
contractual time bar on proceedings to have any matter decided by an
adjudicator after the final certificate finally determined by arbitration
or court proceedings. If such proceedings were not begun within the 28-day
period specified in the clause the time bar operated, then the
adjudicator's decision became final and was binding for the purposes of
the final certificate.
Lord Young considered that there was a practical
reason for imposing such a time limit. If the architect in issuing a final
certificate was bound by all adjudication decisions so far as they were
material to the certificate, and was further obliged by clause 30.9.2 to
have regard to any adjudication decisions made after the date of the final
certificate, he had to know within a short period whether any such
decision was to be attacked by means of court proceedings or arbitration.
That explained why the relatively short period of 28 days was selected as
a time bar in clause 30.9.4 (in the versions used both in Scotland and in
England and Wales).
Castle Inns argued that the above construction of Clause 30.9.4 would
prevent any part of the final certificate that was dealt with in an
adjudication decision issued after the date of the final certificate from
being challenged unless the adjudication decision were attacked within 28
days. It was argued that that would fetter the court's power to review and
revise the final certificate, as contemplated by clause 41C.2 and the
decision in Beaufort Developments (N.I.) Ltd. v Gilbert-Ash (N.I.) Ltd.
Lord Young held that all that clause 30.9.4 did was to impose a time bar
on challenge is to adjudication decisions issued after the date of the final
certificate. That did not fetter the court's powers; it only meant that the
exercise of those powers had to be invoked relatively quickly.
Judgment
Lord Young held that Castle Inns was barred from challenging the
decisions of the adjudicator in the second adjudication by legal proceedings
or arbitration of the sort contemplated by section 108(3) of the Housing
Grants, Construction and Regeneration Act 1996.
Commentary
It is suggested that the analysis and the propositions of law of Lord
Drummond Young apply equally in English Law. It is likely that they
will also apply to other standard forms of contract, although this may be
affected by the express terms.
The judgment is consistent with common
sense.
It must be the case that where the Court "unwinds" an
adjudicator's decision, that the sums paid on that decision are required to
be re-paid. The legal mechanism of an implied terms should apply, but
if not then it is to be noted that Lord Young was prepared to adopt the
theory of restitution if necessary.
As for the adjudicator's fees, the
judgment again accords with common sensible and will help to avoid
unnecessary litigation. Simply because the Court decides differently to the
adjudicator on the substantive issue does not mean that the adjudicator was
wrong on the case before him. If, as the many cases show, the Court is
willing to enforce a decision if it is wrong in law and on the facts, it is
difficult to see why the Court would wish to enter into opening up his
decision on the apportionment of his fees. The matter might be
different if it is decided that the adjudicator's decision is a nullity
because he lacked threshold jurisdiction. More interesting is the case
where the adjudicator rendered his decision unenforceable due to his
unacceptable conduct of the adjudication proceedings.
As to the
inter-relation between an adjudicator's decision on an interim certificate
and the architect's decision on the final certificate, that part of the
judgment is to be considered in the light of a number of other judgments.
There is a similarity of purpose of an adjudicator's decision and the final
certification process under the contract. Interim certificates on
remeasurement contracts (as opposed to lump sum instalment contracts) are
not conclusive. They are not a wholly exact exercise and involve
elements of assessment and judgment - see The Secretary of State for
Transport v Birse-Farr Joint Venture (1993) 62 BLR 36. Although interim
certificates establish a cause of action including for matters which should
have been certified, this is different to the cause of action under the
final certificate - see Court of Appeal in Henry Boot Construction Ltd v
Alstom Combined Cycles Ltd [2005] BLR 437. The reasoning is based
on the difference in inquiry in the interim certificate process and the
final certificate process. That same approach has been adopted by Lord
Young. The basis for his judgment is that the nature of the inquiry of
an adjudicator is the same as that required by the process for the final
certificate. On that basis Lord Young considered that the
adjudicator's decision on interim certificates trumped those of the
architect in the final certificate.
The logic must be correct as was the
qualification. If new material had emerged since the date of the
adjudicator's decision, it must be right that the architect should be able
to that into account as a refinement of the adjudicator's
decision, but not as a challenge to the issue of principle in the
adjudicator's decision.
It could be argued that the short period
allowed to an adjudicator to decide issues makes the inquiry
indistinguishable from the process of interim certification. It could
also be argued that the process involved in the final certificate allows
considerably more time and therefore inquiry.
It is suggested that such
arguments are unlikely to succeed. The parties have agreed a process
of adjudication for deciding disputes, with all the safeguards of such a
judicial process. Recent decisions show that an engineer making a
decision under the contract is not embarked on a judicial process and is not
subject to the same requirements of natural justice - see the Court of
Appeal in Amec Civil Engineering Ltd v Secretary of State for Transport
[2005] EWCA Civ 291 [2005] BLR 227. The parties have therefore
agreed to determine their rights, provisionally, by adjudication and this
should be taken into account in the final certificate subject to Lord
Young's qualification.
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