Highland Council v Construction Centre Group Ltd [2003] Scott CS 221

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

On the facts of this case, one party could not deduct the amount awarded to it by an adjudicator from the amounts that it owed the other party as awarded by a previous adjudicator that had been upheld by the Court. 

Lord Carloway, Outer House, Court of Session

1 August 2003

HC engaged CCG to design, construct and maintain works.  The Contract incorporated conditions based on the ICE Conditions of Contract, 5th ed., 1973 (Jan. 1979 revision), with amendments.  An Adjudicator awarded CCG £245k, which HC was decreed to pay at first instance.

HC referred a claim for liquidated damages ('LDs') to a second Adjudicator.  That Adjudicator decided that HC was entitled to LDs of £638k.  Also, 'for reasons not immediately clear from his written decision' (as the Judge put it) the Adjudicator went on to find that CCG was 'liable to pay' only £360k (being the balance after deduction of amounts withheld by HC, including the £245k it owed CCG).

HC applied to court to suspend the decree that it pay CCG £245k.  HC said that it had effectively paid CCG the decreed sum of £245k because CCG had directed the Adjudicator to act as he did by its submissions in the adjudication (i.e. that any LDs awarded by the Adjudicator to HC could be set off against the decreed sum of £245k).

HC said that the 'balance of convenience' in the court suspending payment of the £245k favoured HC as CCG was now in receivership and if any money was paid to CCG it would be likely to fall into a 'black hole' and was unlikely ever to be recovered. 

The Judge rejected HC's case holding that although the phraseology adopted by CCG in its submissions in the adjudication 'was perhaps a little unwise', CCG had not surrendered its right to payment of the sum decreed to be paid by the court. 

Thus, there was no basis for considering suspending payment of the £245k and the Judge did not have to decide whom the 'balance of convenience' favoured.  However, the Judge did go on to say that he would still have tended to the view that the balance of convenience favoured CCG.  Although any money paid to CCG might be lost forever, 'the whole process of adjudication procedure is to secure quick payment'.  It was over a year since the court had first decreed that HC should pay CCG £245k.  The Judge concluded: 'The Court is bound to be less than impressed with a public authority failing to respond with reasonable expedition to the Court's determinations on matters of law governing its relations with private contractors'.

On the facts of this case, one party could not deduct the amount awarded to it by an adjudicator from the amounts that it owed the other party as awarded by a previous adjudicator that had been upheld by the Court.   

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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