Ardmore Construction Ltd v Taylor Woodrow Construction Ltd

In this Scottish case the decision of an adjudicator was set aside on the basis that he had not afforded natural justice to the parties to the adjudication.

The adjudication arose out of a subcontract for works at Glasgow Harbour, where the Scottish edition of the Standard Form of Sub-Contract Agreement, 1998 edition, was used.

• The underlying dispute between the parties concerned the subcontractor’s entitlement to overtime payments.
• The subcontractor contended that it had been instructed by the main contractor to accelerate its works, where the need to accelerate did not arise out of any breach of contract by the subcontractor. It was contended by the subcontractor that, in reliance on the instruction, it did accelerate its works, and was entitled to compensation for having worked overtime.
• The main contractor disputed these contentions. It said that an acceleration instruction was not given in accordance with the requirements of the contract, and accordingly the subcontractor was not entitled to compensation under the contract for acceleration. Furthermore, it said that the subcontractor had not adequately substantiated its claim for acceleration costs. Meeting no success with the main contractor, the subcontractor commenced an adjudication. The dispute which was referred to the adjudicator was identified by the referring party as whether the main contractor had given to the subcontractor an instruction, under the subcontract, to work overtime. The subcontract provided for the making of written instructions to accelerate. But in his decision, the adjudicator found that there was either a verbal instruction given by the main contractor to the subcontractor to work overtime, or the main contractor had acquiesced or agreed to the subcontractor working overtime. The significance of this finding was that neither party in the adjudication had made any contentions to the adjudicator concerning the making or effect of any verbal instruction, or whether the main contractor had acquiesced or agreed to overtime being worked.

In short, the adjudicator’s decision was tainted because he had made his decision on a basis for which neither party had contended, and in respect of which the unsuccessful party (the main contractor) had neither notice nor the opportunity to make representations. When the decision came before the Court of Session for enforcement, Lord Clarke held that there had been a “clear and substantial breach of natural justice” by the adjudicator, and that his decision should be set aside.

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