Outer House judge grants decree for payment in full plus adjudication fees to company hired to build house extension
A building company that was hired to build an extension for a house has been successful in an Outer House action in which it sought over £370,000 from a client following adjudication in its favour.
AGB Scotland Ltd sought £367,808.84 plus VAT from defender Darren McDermott, along with adjudicator’s fees of £7227.50 plus VAT. The pursuer lodged a motion for summary decree, while the defender claimed that the adjudicator’s decision was a nullity and should be set aside ope exceptionis.
The case was heard by Lord Sandison, with G Walker KC appearing for the pursuer and Hawkes KC for the defender.
In November 2016, the pursuer contracted with the defender for the carrying out of alterations and an extension to the defender’s home. The contract was in the form of the SBCC Standard Building Contract with Quantities for use in Scotland, together with various ancillary documents. The contract price was £1,049,631.03 exclusive of VAT.
On 14 October 2022 the pursuer submitted an interim payment notice to the Quantity Surveyor nominated by the defender, which referred to a letter of 14 March 2022 sent to the Contract Administrator in which it set out a claim for loss and expense. A Pay Less Notice was later served on the pursuer, which sought adjudication arguing it was entitled to payment of the whole sum as the Pay Less Notice had not been issued timeously.
The adjudicator’s decision was that the sum sought by the Interim Payment Notice, net of VAT and along with pactional interest, was due, the March letter having been incorporated into the Interim Notice. He also determined that the burden of his fee, which was paid by the pursuer, should fall upon the defender. Counsel for the defender submitted that this decision did not properly address his line of defence that proper specification of the sums claimed in the Notice had not been given.
On behalf of the pursuer it was submitted that it was plain from the terms of the decision that the adjudicator had adequately considered the defender’s argument. The adjudicator’s decision had summarised the lines of argument advanced by the defender, including that the Interim Payment Notice had not provided a basis for calculation of the sums said to be due, and had addressed it. He had rejected the defender’s argument and accepted the pursuer’s argument, setting out brief reasons for doing so.
In his decision, Lord Sandison began: “There is no material difference between the parties as to the law applicable to the dispute. Put short, the Court will be slow to refuse to enforce an adjudicator’s decision. However, if the adjudicator’s decision plainly indicates that he failed in arriving at his conclusions to take into account and deal with a line of defence advanced before him, then that may (not necessarily will) lead to the conclusion that he failed to exhaust his jurisdiction and that his decision should be set aside.”
Examining the decision that was made, he said: “It is not possible to read the decision other than as the adjudicator deciding that the letter of 14 March 2022 was validly included by reference in the Interim Payment Notice sent to the Quantity Surveyor in October. Whether any of that can be criticised as a conclusion ill-founded in fact or law is of no consequence; the objection that the defender made, and which he maintains that the adjudicator failed to address, was plainly fully dealt with by the decision.”
He continued: “The question was whether specification to the contractual standard of the composition of the loss and expense claim had been provided to the Quantity Surveyor. The answer was in the affirmative, and the reasoning was that the Interim Payment Notice contained a reference to a document already in the hands of the defender’s agents which contained adequate specification.”
Lord Sandison concluded: “The question was fully answered and the reasoning exceeds the low bar of intelligibility which is required. The defender’s criticism amounts merely to the suggestion that the adjudicator’s reasoning was flawed and the resultant decision wrong. That is an irrelevant assertion in this context. It follows that the defence to the action is irrelevant.”
Decree de plano was therefore granted in favour of the pursuer.