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The facts

During August 2016 the respondents, acting in their capacity as the trustees of the Lauren McLeish Discretionary Trust, engaged D&M to build a large house at Armadale in Lothian. D&M started work in 2017 and in October 2018 submitted interim application no 17 claiming a gross valuation of 拢2,264,609.73. Application no 17 included a claim for an extension of time of 17 weeks with associated loss and expense of circa 拢67,000. 

In response, the trustees issued a final adjustment statement proposing a valuation of 拢1,894,186.92, which included some 拢22,934.10 for loss and expense. On 24 October 2018 D&M challenged the final adjustment statement on a number of grounds but later that same day the architect issued a final certificate that adopted the trustees鈥� valuation. 

On 19 December 2018 D&M commenced adjudication. Both the notice and the referral identified the responding party as 鈥淭he Lauren McLeish Trust鈥�. The claim set out in the notice and referral was based upon D&M鈥檚 application no 17 but also included two additional claims for extensions of time and loss and expense, respectively for 16.2 weeks and 拢116,000 and for 30.3 weeks and 拢174,000. The adjudicator was appointed by agreement and neither party objected to the adjudicator鈥檚 proposal to involve a pupil adjudicator 鈥� a QS 鈥� in the process. The trustees advanced an initial jurisdictional challenge on two grounds: that the Lauren McLeish Trust did not have legal capacity and that the dispute described in the notice had not crystallised. The adjudicator rejected this challenge. 

In a decision dated 15 March 2019 the adjudicator awarded D&M another 拢324,492.60 plus interest including a further extension of time of 11 weeks. He directed that the parties each pay 50% of his fee. The adjudicator鈥檚 invoice included charges for time spent by the pupil adjudicator working on the Scott Schedule, taking notes of a meeting on 20 February, producing action points and proofreading the decision. 

The trustees challenged the decision on four grounds: that it was not enforceable against them; that the adjudicator had failed to exhaust the jurisdiction he did have; that there had been a beach of natural justice where it appeared that the pupil adjudicator had assumed some of the responsibilities of the adjudicator; and, that the decision encompassed issues that had not crystallised at the date of the notice.   

The issue

Should the adjudicator鈥檚 decision be enforced?

The decision

The judge dismissed the trustees鈥� first ground: on a proper construction of the contract and during the execution of the works, references to 鈥淭he Lauren McLeish Trust鈥� had been taken as meaning the trustees and where both the notice and the referral had been sent to the trustees at their respective addresses, it would have been understood the trustees were the intended recipients. The judge likewise rejected the second ground finding that there was no suggestion the adjudicator had failed to exhaust his jurisdiction by not addressing as a discrete defence the legal incapacity of 鈥淭he Lauren McLeish Trust鈥�.

Having heard oral and written evidence from both the adjudicator and the pupil, the judge concluded that essentially the pupil had carried out administrative and checking tasks that did not amount to quantity surveying work on any material point. Albeit noting that the parties should have been told what the pupil was doing, the judge found there had been no breach of natural justice because all material decisions on the matters in issue had been made by the adjudicator on the basis of the information the parties had put before him. 

The judge did agree with the trustees that D&M鈥檚 claims for extensions of time and loss and expense as set out in the notice appeared to be of a different nature and order of magnitude to the preceding claims and as such could not be said to have been part of the crystallised dispute referred to adjudication. It was left up to D&M to apply for an order for severance. 

Commentary 

Questions were understandably raised when the adjudicator鈥檚 fee note suggested the pupil had been more than simply a passive observer. It took witness evidence from both the adjudicator and the pupil to show that while the pupil had provided significant assistance, that assistance had not comprised material input into the decision making process. 

It follows that adjudicators should always promptly inform the parties of the intended scope of the pupil鈥檚 role and also whether or not the pupil鈥檚 time will be invoiced. 

Ted Lowery is a partner at Fenwick Elliott