In Pentland Investments Limited v Aitken Turnbull Architects Ltd the court considered the interpretation of paragraph 8(2) of the Scheme for Construction Contracts (Scotland) Regulations 1998 (“the Scheme“).
Although these are Scottish proceedings, they have broader significance given that paragraph 8(2) is similar in the Scheme for Construction Contracts (England and Wales) Regulations 1998. The relevant paragraph deals with two related disputes (not necessarily involving the same parties); which arise under different contracts; and which an adjudicator is to hear at the same time. In such circumstances, the Scheme states that the adjudicator must obtain the consent of all parties involved in those disputes.
Pentland Investments Limited (“Pentland“) had appointed Aitken Turnbull Architects Limited (“Aitken“) as the architect and McColl Associates (“McColl“) as the structural engineer for works at the Raeburn Hotel. Following the discovery of defects, Pentland began proceedings against Aitken in August 2017 and appointed Mr Hunter as the adjudicator.
Mr Hunter had already been appointed as the adjudicator in a separate, but related, dispute between Pentland and McColl. Mr Hunter wrote to Pentland and Aitken in September 2017 to confirm his willingness to act and to notify Aitken of his existing appointment in the related dispute running at the same time.
Aitken immediately responded to Mr Hunter, expressing disapproval at Mr Hunter’s appointment to the two simultaneous disputes and inviting Mr Hunter to resign. Mr Hunter refused to resign, stating: “As the other adjudication is quite separate I do not require the consent of the Respondent in this adjudication [and] will therefore not resign.”
Famous last words
The adjudication commenced and Mr Hunter found Aitken liable to make payment to Pentland. Aitken did not comply. The matter then escalated to enforcement proceedings before Sheriff Ross in the Sheriff Court, Edinburgh.
Sheriff Ross had to interpret paragraph 8(2) – i.e. whether or not, the disputes were related albeit under separate contracts and if so, did Mr Hunter need the consent of all parties to the disputes before he could hear them simultaneously.
Sheriff Ross found that the phrase was wide enough to encompass a related dispute under a different contract within a separate adjudication. He decided that paragraph 8(2) of the Scheme did require Mr Hunter to obtain the consent of all parties involved in the disputes before he could act for them. He therefore declined to enforce Mr Hunter’s decision.
Following previous examples
This reading of paragraph 8(2) of the Scheme follows that in the 2002 English judgment in Pring & St Hill Ltd v Hafner (t/a Southern Erectors). Where an adjudicator is appointed to hear two disputes simultaneously, which involve related disputes albeit under different contracts, he will not have jurisdiction unless he obtains the consent of the parties involved. Parties in adjudication should note the broad interpretation of paragraph 8(2) and ensure that the other party consents to the appointment of the adjudicator, to avoid a jurisdictional challenge and wasted costs later on.