06 December 2019

Adjudicators often determine complex disputes in a short space of time and their decisions are frequently challenged. If a challenge is successful against only part of the decision, the question becomes whether the decision falls entirely, or only those elements that were subject to the challenge. A recent Scottish case provides useful guidance on when the court will be willing to ‘sever’ the adjudicator’s decision, allowing enforcement of only part of the original decision.

Dickie & Moore Limited v Trustees of Lauren McLeish Discretionary Trust (No 2) [2019] CSOH 87

Dickie & Moore, a building contractor, was engaged on behalf of the Trustees. Dispute arose over entitlement to payment and Dickie & Moore referred the matter to an adjudicator. The adjudicator found largely in their favour.

The Trustees refused to pay the sum awarded by the adjudicator and the matter was brought before the Court. Lord Doherty upheld the Trustees’ challenge on the basis that the dispute in the referral notice was of such a “different nature and order of magnitude” to what had previously been canvassed that it could not be said to have crystallised (and so fell outwith the adjudicator’s jurisdiction) ([2019] CSOH 71).

The matter returned to the court to determine whether any of the adjudicator’s decision stood as enforceable or whether it fell entirely.

It is well established, in general terms, that if a single adjudication contains multiple disputes, a successful challenge on one will not negate the others, as long as the matters are not inter-linked. Whether there is one or more dispute is a fact sensitive and often contentious exercise. However, the courts are also grappling with the question of whether distinct elements, within a single dispute, can be ‘severed’ in a similar manner.

In this case, there were a number of discrete issues referred to adjudication, for example, concerning variations and architect’s instructions. The principal area where there was no crystallised dispute was Dickie & Moore’s entitlement to an extension of time (and loss and expense that increased dramatically, without prior notice, in the referral notice). The question for the court was whether this would negate the adjudicator’s decision on the other issues.

Lord Doherty took the opportunity to review the authorities, with particular reference to whether there is a rule that prevents severance within a single dispute that has multiple issues. In the event, Lord Doherty found there were two disputes, one that had crystallised and one that had not (the extension of time). After assessing whether the two were inter-linked (so as to make severance problematic), he found there was a ‘core nucleus’ of a decision that could be enforced.

Determining what remains, if anything, of an adjudicator’s decision that has been partially challenged is far from straightforward. A concern of the court is that by allowing the entire decision to fall because of a challenge to one discrete element will encourage multiple speculative challenges on technical points in the hope that one ‘sticks’. Conversely, allowing individual issues to be severed could create a minefield of technical and fact-sensitive arguments that could significantly prolong what is intended to be a quick and efficient process.

The decision is something of a development of the position in Scotland and brings it more closely in line with the position in England and Wales. However, this is unlikely to be the end of the matter and further judicial consideration can be expected.

Contact: Matthew Raftery, Associate, mra@bto.co.uk T: 0141 221 8012