St Andrews Bay Development Limited v HBG Management Limited and Mrs Janey Milligan
Case reference:
[2003] ScotCS 103
Thursday, 20 March 2003
Key terms: Standard Scottish Building Contract with Contractors Design (May 1999) - reason for decision - Lien - reaching and delivering decision
The First Respondent, HBG, entered into a contract for the building of a leisure complex at Kingask, St Andrews with St Andrews Bay Development Limited. The conditions of the contract were the Standard Scottish Building Contract with Contractor's Design (May 1999 Edition) with amendments.
On 9th January 2003 HBG issued a Notice of Intention to Refer a Dispute to Adjudication. The Second Respondent was appointed as Adjudicator. The Referral Notice was issued on 10th January 2003, and after various extensions of time the decision was required to be reached by 5th March 2003. HBG contacted the Adjudicator after 5.00 pm on 5th March 2003 because they had not received a decision. A secretary employed by the Adjudicator's firm stated that the Adjudicator had reached a decision but did not intend to release it until her fee had been paid. At that time an invoice in respect of her fee had not been issued. By fax dated 6th March 2003, HBG stated that it would pay the whole of the Adjudicator's fee in order to secure the release of the decision. The Adjudicator then released her decision by fax on 7th March 2003. The reasons for her decision were released to the parties on 10th March 2003. At no time did the Adjudicator seek a further extension of time beyond 5th March 2003.
St Andrews Bay Development Limited challenged the Adjudicator's decision, essentially claiming that she had no power to reach her decision after 5th March 2003. They claimed that the decision issued on 7th March 2003 was therefore not valid. They argued that a decision reached but not communicated was no decision at all. The provisions of the Standard Form of Contract stated that if an Adjudicator failed to produce a decision within the time provided then the Referring Party can instruct another Adjudicator and the original Adjudicator must resign.
Reliance was placed upon Bloor Construction (UK) Limited v Bowmer & Kirkland (London) Limited 2000 TCC 764. That case primarily concerned the rectification of those errors, but the Adjudicator in that case had reached his decision on the last day provided for under the agreement but had not published it for a further two days. Judge Toumlin said that the decision must be communicated immediately once it has been reached, and that a decision contains two elements. First, the reaching of that decision, and second the sending of that decision to the parties.
Lord Wheatley decided that the Adjudicator had not reached her decision within the time limits provided for either by the Act or by the Standard Contract. While the Act is silent on the question of communication of the decision, there is a contemporaneous duty to communicate the decision to the interested parties once it has been reached. Otherwise the purpose of the legislation would be meaningless. Rendering a decision "forthwith" means immediately by fax or similar and not by first class post which might be regarded as "archaic". Further, the Adjudicator was not entitled to delay communication of the decision until her fees had been paid because nothing in the Scheme or the contract provided for that possibility. However, whilst the failure to comply with the timing was a serious matter it did not render the decision a nullity.
On 9th January 2003 HBG issued a Notice of Intention to Refer a Dispute to Adjudication. The Second Respondent was appointed as Adjudicator. The Referral Notice was issued on 10th January 2003, and after various extensions of time the decision was required to be reached by 5th March 2003. HBG contacted the Adjudicator after 5.00 pm on 5th March 2003 because they had not received a decision. A secretary employed by the Adjudicator's firm stated that the Adjudicator had reached a decision but did not intend to release it until her fee had been paid. At that time an invoice in respect of her fee had not been issued. By fax dated 6th March 2003, HBG stated that it would pay the whole of the Adjudicator's fee in order to secure the release of the decision. The Adjudicator then released her decision by fax on 7th March 2003. The reasons for her decision were released to the parties on 10th March 2003. At no time did the Adjudicator seek a further extension of time beyond 5th March 2003.
St Andrews Bay Development Limited challenged the Adjudicator's decision, essentially claiming that she had no power to reach her decision after 5th March 2003. They claimed that the decision issued on 7th March 2003 was therefore not valid. They argued that a decision reached but not communicated was no decision at all. The provisions of the Standard Form of Contract stated that if an Adjudicator failed to produce a decision within the time provided then the Referring Party can instruct another Adjudicator and the original Adjudicator must resign.
Reliance was placed upon Bloor Construction (UK) Limited v Bowmer & Kirkland (London) Limited 2000 TCC 764. That case primarily concerned the rectification of those errors, but the Adjudicator in that case had reached his decision on the last day provided for under the agreement but had not published it for a further two days. Judge Toumlin said that the decision must be communicated immediately once it has been reached, and that a decision contains two elements. First, the reaching of that decision, and second the sending of that decision to the parties.
Lord Wheatley decided that the Adjudicator had not reached her decision within the time limits provided for either by the Act or by the Standard Contract. While the Act is silent on the question of communication of the decision, there is a contemporaneous duty to communicate the decision to the interested parties once it has been reached. Otherwise the purpose of the legislation would be meaningless. Rendering a decision "forthwith" means immediately by fax or similar and not by first class post which might be regarded as "archaic". Further, the Adjudicator was not entitled to delay communication of the decision until her fees had been paid because nothing in the Scheme or the contract provided for that possibility. However, whilst the failure to comply with the timing was a serious matter it did not render the decision a nullity.