Cases - Costain Ltd v Strathclyde Builders Ltd

Record details

Name

Costain Ltd v Strathclyde Builders Ltd

Date

[2004]; [2003]

Citation

SLT 102; Scot CS 316

Legislation

SBCC Form of Contract

Keywords

Construction contracts - adjudication - natural justice - fairness - parties given opportunity to present case

Summary

Costain had undertaken to construct 45 flats and other works for Strathclyde builders. Disputes arose as to entitlements to an extension of time and liability for liquidated damages, which Costain referred to adjudication. The adjudicator decided that Strathclyde Builders should repay the full amount withheld as liquidated and ascertained damages plus interest.

Costain commenced proceedings to enforce that decision, which were resisted by Strathclyde Builders on the basis that the adjudicator had breached the principles of natural justice and therefore his decision should not be enforced.

Shortly before the adjudicator's decision was due to be published the adjudicator wrote to the parties and asked for a four-day extension of time because he wished to discuss one point in particular with his appointed legal adviser. Costain granted such an extension and the adjudicator subsequently produced his decision. The results of the adjudicator's discussions with his legal adviser were not made known to the parties; nor was either party told of the terms of the discussions that had taken place; nor did either of the parties request to be told the terms of the discussions or to see the results.

Strathclyde Builders argued that the failure by the adjudicator to disclose the substance of that legal advice and to invite comments or submissions thereon prior to arriving at his decision was a breach of the principles of natural justice. They argued that it is possible that the decision might have been influenced by advice that was erroneous, incomplete, irrelevant or otherwise unexceptionable, but which the parties had no opportunity to counter or correct.

The judge concluded that he was of the opinion that the arguments of Strathclyde Builders were sufficient to disclose a breach of the principles of natural justice that had resulted in the possibility of injustice to the parties. The judge said that it was clear that advice was sought and given, and it was impossible to exclude the possibility that such advice went out with the terms of the parties' submissions. It is only if the possibility of injustice can be excluded that a contravention of the principles of natural justice will be irrelevant. In the judge's opinion, that could not be said of the present case.

Therefore the judge concluded that Strathclyde Builders had a relevant defence to Costain's claim and therefore refused Costain's application for summary judgment.