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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Ballast Plc v The Burrell Company (Construction Management) Ltd [2001] ScotCS 159 (21 June 2001) URL: http://www.bailii.org/scot/cases/ScotCS/2001/159.html Cite as: [2001] ScotCS 159, 2001 SCLR 837

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[1] During 1998 the respondents were involved in a construction project in Glasgow known as "Homes for the Future". They employed the petitioners to act as the management contractor for the project under a standard JCT form of management contract. A dispute arose between the petitioners and the respondents. It was referred by the petitioners to adjudication, under the provisions contained in Part 1 of the Schedule to the Scheme for Construction Contracts (Scotland) Regulations 1998 (S.I.1998 No. 687). On 28 December 2000 the adjudicator issued what he described as a decision. That decision is the subject of the present application for judicial review.

[2] The statutory context of the adjudication derives from Part II of the Housing Grants, Construction and Regulation Act 1996. Section 108 of the Act provides:

For this purpose 'dispute' includes any difference.

[3] In the present case, the contract contained an arbitration clause, but did not comply with the requirements of section 108(1) to (4). By virtue of section 108(5), the adjudication provisions of the Scheme for Construction Contracts applied, taking effect (by virtue of section 114(4) of the Act) as implied terms of the contract. In relation to Scotland, the Scheme is that contained in Part I of the Schedule to the 1998 Regulations.

[4] Under the Scheme, the adjudication procedure is initiated by a "notice of adjudication", given in accordance with paragraph 1:

It is accordingly the notice of adjudication which identifies the dispute.

[5] Paragraphs 2 to 6 are concerned with the selection of an adjudicator. Paragraph 7 provides:-

[6] Paragraph 9 is of some significance to the issues raised in the present case. It provides:

[7] It appears from paragraph 9(2) that the taking of "a decision" in an adjudication prevents a second adjudication from being held in respect of the same dispute: "a decision" renders the dispute in effect res judicata, so far as adjudication proceedings are concerned. That is a provision which can readily be understood if it envisages that "a decision" will always determine the matter in dispute.

[8] Paragraph 12 provides:

[9] Paragraph 13 empowers the adjudicator to adopt an investigative role and to determine the procedure to be followed:

[10] Paragraph 17, like paragraph 12, concerns the adjudicator's duty to act fairly in the procedure he follows and also his duty to take relevant information into account:

[11] Paragraph 19 imposes a tight timetable on the adjudicator, which can be extended by agreement:

[12] Paragraph 20 is central to the present case:

[13] Paragraph 20(1) makes explicit what was implied in section 9(2): that the adjudicator's decision must determine the matters in dispute.

[14] Of the remaining provisions of the Scheme it is necessary to mention only paragraph 23(2):

This makes clear the provisional nature of the adjudicator's decision, and the understanding that it may be superseded by a different decision taken by a court or an arbiter after further consideration of the matters in dispute.

[15] In the present case the petitioners gave a notice of adjudication to the respondents on about 16 November 2000. The notice described the dispute as follows:

The notice also set out details of the previous history of the dispute:

Finally, the notice set out the nature of the redress which was sought:

[16] On 16 November 2000 Mr J H Atkinson was appointed as adjudicator. The dispute was then referred to him by a notice of referral dated 21 November 2000. That notice of referral gave further details of the dispute, and repeated what had been said in the notice of adjudication as to the redress sought. The details of the dispute were not discussed at the hearing before me, and no reference was made to the other documents which had been submitted to the adjudicator.

[17] The adjudicator had been appointed on three previous occasions as an adjudicator in respect of disputes concerning the same project. In November 1999 he had been appointed in respect of a different dispute which had arisen between the petitioners and the respondents. He had issued a decision in respect of that dispute in December 1999. In September 2000 he had been appointed in respect of a dispute between the petitioners and one of the contractors, Burnhead Contracts Ltd. He had issued a decision in respect of that dispute in November 2000. In September 2000 he had also been appointed in respect of a dispute between the petitioners and the respondents, the dispute being identical to that with which the notice of adjudication of 14 November 2000 was concerned. He had resigned in respect of that appointment (of September 2000) on 3 November 2000, under paragraph 9(1) of the Scheme, as a consequence of the respondents' refusal to consent to an extension of the period allowed for a decision, under paragraph 19(1)(c) of the Scheme.

[18] The adjudicator issued his decision in respect of the present dispute on 28 December 2000. The critical part of the document is in the following terms:

[19] Although the decision is not clearly expressed, it is apparent that the adjudicator has refused to grant the redress sought. If one reminds oneself of the matters in dispute, as described in the notice of adjudication - namely the amount of the payment due and payable - it is clear that the adjudicator has not decided that amount. In relation to the central request made by the petitioners as referring party - that "the adjudicator assess the value of work done, the common services, the management fee, loss and expense and other appropriate amounts due and payable to the Referring Party and... make directions as to the amounts due and payable to Works Package Contractors" - his decision is: "Not valid".

[20] Elsewhere in the document the adjudicator has included a section entitled "Commentary", which he states has been included to meet a request for the reasons behind his decision. In the discussion before me, it was agreed that the important part of the Commentary was that headed "Contractual Matrix". This is in the following terms:

[21] So far as I can understand that passage, it appears that the adjudicator was concerned about the parties' failure to abide strictly by the terms of the JCT contract which they had entered into, in their dealings with each other and with third parties. For example, it appears from the notice of referral that one of the areas of contention concerns work which was carried out without the issue of a formal architect's instruction but which, according to the petitioners, was informally instructed or approved by the respondents:

Another example is that it appears that, in issuing contracts for some at least of the individual works packages, the petitioners may have used a bespoke contract rather than the standard form envisaged by the JCT contract which they had entered into with the respondents. Such matters are a common feature of building contract disputes, and raise issues (such as waiver, personal bar or variation of contract) with which any practitioner in that field will be familiar.

[22] It appears that the adjudicator formed the view that these problems rendered the dispute incapable of determination by adjudication. I draw that conclusion from, for example, his statement:

Before me, the parties agreed that this meant that, in the adjudicator's view, the problem could only be resolved by alternative dispute resolution, unless otherwise settled by agreement. The adjudicator's view that he cannot decide the matter referred to him is perhaps more clearly expressed in his statement: "I have found it impossible to reach what I can substantiate as reasonable legally based decisions." The same viewpoint is apparent in his statement: "Where the parties have departed from the strict pre-agreed code then they have to accept that it is, as with Courts, not the Adjudicator's place to make decisions..." These statements indeed suggest that the dispute is, in the adjudicator's view, equally incapable of resolution by litigation.

[23] In response to a request for clarification of his reasons, the adjudicator provided a letter dated 29 December 2000 which stated inter alia:

Accordingly, it is clear that the adjudicator considered that he was unable to determine the matter which had been referred to him as being in dispute, namely the amount due and payable by the respondents to the petitioners.

[24] In the discussion before me, the submission on behalf of the petitioners was straightforward. In terms of paragraph 20(1) of the Scheme the adjudicator was under a duty to decide the matters in dispute. He had failed to do so. He was not entitled to decide that he was unable to decide. It could not have been intended that that would be a "decision" within the meaning of the Scheme. In the first place, the adjudication was meant to produce a rough-and-ready answer as a stop-gap solution. Secondly, it would be absurd if an adjudicator could "decide" that he had too little information to make a determination, thereby preventing - by virtue of paragraph 9(2) - the bringing of a second adjudication if additional information became available. Reference was made to Karl Construction (Scotland) Ltd v Sweeney Civil Engineering (Scotland) Ltd, 2001 SCLR 95. I was requested to grant declarator that the adjudicator had failed to make any decision in respect of the matter set out at paragraph 6.1 of the referral notice, and to grant reduction of the decision as a whole. Although it might be said that the adjudicator had issued a decision in respect of the matter raised in paragraph 6.2 of the referral notice, that decision was itself plainly wrong in law and was in respect of a point which did not arise unless a decision had been taken in respect of paragraph 6.1.

[25] On behalf of the respondents, on the other hand, it was submitted that the adjudicator had implemented his duty under paragraph 20(1) of the Scheme. He could validly decide that he was unable to exercise his statutory jurisdiction. The import of what the adjudicator had said was that the petitioners' claims did not arise under the contract - ie. "the strict contract matrix", as the adjudicator described it - and that he therefore had no jurisdiction to reach a decision on those claims under paragraph 20(2)(b). If he was in error in equating the expression "the contract", in the Scheme, with the written terms of the JCT contract, regardless of any question of waiver, variation or the like, that was an error falling within his jurisdiction, with which the court could not interfere. Similarly, the adjudicator's statement that "where the parties have departed from the strict pre-agreed code then they have to accept that it is, as with Courts, not the Adjudicator's place to make decisions" meant that, in his view, there could be no legal liability to make payment if there was a departure from the terms of the written contract. That was not a failure to decide, but an error within jurisdiction. The adjudicator had taken the view, rightly or wrongly, that he was empowered only to reach a valuation in accordance with the terms of the JCT contract. He had therefore taken the view that he was not in a position to undertake any valuation in respect of the petitioners' claim, which relied on departures from those terms. That was the import of his decision: the redress sought was "not valid", because there was no valid basis on which he could undertake a valuation, which was what he was being asked to do. If that was an error, it was not one which would lead a court to interfere with his decision. Reference was made to Watson Building Services Ltd, Petitioners, 13 March 2001, unreported, at paragraph 24, where the Lord Ordinary quoted, as giving guidance as to the appropriate approach to be taken by the courts, principles formulated by His Honour Judge Thornton, QC in Sherwood & Casson Ltd v Mackenzie, 30 November 1999:

Counsel relied especially upon the first of these "principles".

[26] In a brief reply, counsel for the petitioners submitted that, on the respondents' approach, the adjudicator had plainly erred as to the extent of his own jurisdiction, which was not confined to determining liabilities arising under the strict terms of the written contract regardless of issues of personal bar and waiver, any more than was that of a court or an arbiter. Such an error was reviewable. Reference was made to Homer Burgess Ltd v Chirex (Annan) Ltd, 2000 SLT 277, 284K.

[27] It appears from the cases cited to me that different views have been taken as to the appropriate legal framework within which to address the issues raised by adjudicators' decisions: in particular whether the adjudicator is to be regarded as a statutory decision-maker, albeit one whose statutory powers and duties have been clothed in contractual form (the approach adopted by Lord Macfadyen in Homer Burgess Ltd v Chirex (Annan) Ltd, as I understand his Opinion), or whether adjudication should be regarded as a contractual procedure (as Dyson J. appears to have regarded it in, for example, Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93).

[28] Section 108 of the 1996 Act envisages that adjudication procedure may be agreed between the parties, provided that their agreement fulfils the requirements of sub-sections (1) to (4); or, in default, it will be imposed under the Scheme promulgated by the responsible Minister, in which event the procedure is deemed to be a matter of implied agreement, by virtue of section 114(4). In either event, although the provisions have contractual effect, they cannot be regarded as terms to which the parties have freely agreed: in one form or another, they are compulsory contract terms imposed by statute. Nevertheless, I do not propose to approach the issue in this case on the footing that the adjudicator was exercising a jurisdiction created by statute (or, in other words, exercising statutory powers and bound by statutory duties). First, such an approach would not be warranted if the adjudication procedure had been one expressly incorporated into the contract, since the adjudicator's powers and duties would then be created and defined by contract; and I would not regard it as appropriate or desirable to draw a fundamental distinction between adjudication under contract terms complying with section 108(1) to (4) and adjudication under the Scheme. It is indeed possible that an adjudication might be governed partly by express contract terms and partly by the Scheme, since the contract might comply only in part with the requirements of section 108(1) to (4); and that is reflected in the terms of section 114(4) ("Where any provisions of the Scheme for Construction Contracts apply...": emphasis added). In that event, it would be unrealistic to treat differently the Scheme provisions from the express contractual provisions. Secondly, section 114(4) itself requires the court to give effect to the Scheme provisions as implied terms of the contract between the parties.

[29] Each party to the contract is therefore to be regarded as having a contractual right to refer a dispute to adjudication; and each party equally has a contractual duty to comply with the adjudicator's decision. These rights and duties only exist, however, within limits which are set by the terms of the contract. The right to refer a dispute, for example, is confined to disputes arising under the contract: paragraph 1(1) of the Scheme. Since adjudication has a contractual basis, the construction and effect of paragraph 23(2), and in particular the words - "The decision of the adjudicator shall be binding on the parties, and they shall comply with it" - depends on the construction of the express and implied terms of the contract.

[30] A number of significant features of adjudication are apparent from the express terms of the Scheme. First, it is apparent from section 108(3), and from paragraph 23(2) of the Scheme, that adjudication does not oust the jurisdiction of the courts (or of an arbiter) to determine the merits of the same dispute. In that respect it differs from arbitration. On the other hand, the adjudicator's decision is binding, pending a final determination of the dispute by the courts (or by arbitration). In other words, the adjudicator's decision is of a provisional nature, and not intended necessarily to be the same as the decision which will eventually be reached by litigation or arbitration. As appears from section 108(2) and from paragraphs 13 and 19 of the Scheme, adjudication is intended to be an expeditious means of reaching a decision: the timetable envisaged is too short to allow for the type of procedure, or the type of hearing, which would in most cases be necessary for the issues of fact and law involved in the dispute to be explored as fully as in an arbitration or in court proceedings; and the adjudicator is therefore entitled to adopt a more inquisitorial role than that of a judge or an arbiter. These aspects of adjudication - the short timetable, the scope for inquisitorial procedure, and the provisional nature of the decision - fit together as elements in a coherent scheme. Notwithstanding the provisional nature of the decision, however, the parties agree to comply with it: an obligation which can be enforced by application to the court. On such an application being made, it cannot be appropriate for the courts to undertake an investigation into the merits of the dispute in order to ascertain whether the adjudicator has reached the same decision as a court would have done: were the courts to do so, section 108 and the Scheme would be rendered pointless. To some extent, therefore, the adjudicator's decision must be binding, temporarily, notwithstanding that a court would not agree with it; and to the extent that the adjudicator's decision is binding, it might be said that there is, in effect, a temporary ouster of the court's jurisdiction to determine the matters in dispute.

[31] The contract imposes a number of express requirements with which the adjudicator "shall" comply: for example, he must act impartially (paragraph 12(a)); he must carry out his duties in accordance with the contract (ibid); he must reach his decision in accordance with the applicable law (ibid); he must avoid incurring unnecessary expense (paragraph 12(b)); he must consider any relevant information submitted to him by any of the parties to the dispute (paragraph 17); he must make available to them any information to be taken into account in reaching his decision (ibid); and he must decide the matters in dispute (paragraph 20(1). The consequences of any failure to comply with those requirements are not stated in the contract, and therefore have to be determined by interpretation of the contract.

[32] Since the adjudicator is not, in the absence of bad faith, liable for anything done or omitted to be done in the discharge or purported discharge of his functions (section 108(4), and paragraph 26 of the Scheme), he is not liable in damages for any breach of the requirements of the contract. For his decision to be held up by applications to the court for the enforcement of those requirements (eg by interdict) would generally be incompatible with the contractual timetable and with the intention that the procedure should be expeditious. If the requirements are intended to be enforceable, therefore, the means of enforcement would appear to be the release of the parties from obligations which would otherwise be binding upon them: notably the obligation to comply with the adjudicator's decision, or the obligation to pay his fees and expenses. It cannot however be taken for granted that the requirements in question are necessarily intended to be enforceable. Another possibility is that the requirements may be stated for the guidance of the adjudicator and the parties but without the intention that non-compliance should affect the binding character of his decision; or the consequences of a failure to comply with the requirements may depend on the specific nature of the failure. The choice between such possibilities is perhaps more often encountered in the context of statutory provisions, where the question sometimes arises whether the use of the word "shall" is intended to mean that non-compliance deprives the subsequent decision of binding effect. In the statutory context, it is clear that there is no uniform answer: it depends on the construction of the particular statute (see e.g. London and Clydeside Estates v Aberdeen District Council, 1980 SC (HL) 1). As was observed by Lord Justice General Hope in Carruthers v HM Advocate 1993 SCCR 825 at p.803:

In London and Clydeside Estates Ltd Lord Keith of Kinkel also observed at p 42 that:

In the present context, the provisions of the Scheme have to be interpreted in the light of the intention of Parliament in enacting the 1996 Act, and more particularly the intention of the Minister in making the Scheme: an intention which has to be imputed to the parties to the contract, given the incorporation of the Scheme provisions as implied contractual terms. That general intention was aptly summarised by Dyson J. in Macab Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93 at p 97:

Having regard to that intention, Dyson J. concluded, if I understand his judgment correctly, that an adjudicator's decision was intended to be binding notwithstanding any failure to comply with the requirements of the Scheme, provided the decision was of the dispute which had been referred to him. He said at p. 98:

It appears to have been argued before Dyson J. (as recorded at p 97) that "where there is a decision whose validity is challenged, that is not a decision which is binding or enforceable as a contractual obligation until it has been determined or agreed that the decision is valid". This argument was rejected (at pp. 97-98):

[33] One observation I would make is that I am not sure that I understand the usage of the words "valid" and "invalidates" in the passages I have quoted. I would myself have regarded an error which "invalidates" a decision as one which ipso facto renders the decision non-binding. The issue, in the way in which I would have used the terminology, is whether a given error does or does not "invalidate" the decision.

[34] It is of course true that, to the extent that any breach of the requirements of the Scheme renders a decision non-binding, scope exists for such breaches to be alleged by the party which has been unsuccessful before the adjudicator, and for the successful party thus to be prevented from enforcing the adjudicator's decision until the allegation has been examined by the court. The delay in enforcement which could be caused by an unmeritorious challenge, and the scope for such challenges, would depend to some extent upon the grounds upon which a decision could relevantly be challenged, and to some extent upon the procedures followed by the court. If the relevant grounds for challenge were confined to the sort of matters which can be raised under Scots law in the context of challenges to the decisions of other jurisdictions created by contract (eg arbiters and disciplinary bodies) - what might broadly be summarised as Wednesbury grounds - then experience in other contexts suggests that such challenges are generally capable of speedy resolution, since they do not normally require any detailed or prolonged investigation into complex issues of fact. Moreover, if one construed the Scheme as conferring upon the adjudicator a jurisdiction to take decisions which, albeit provisional, excluded pro tanto the ordinary jurisdiction of the courts to determine parties' rights and obligations, then under Scottish procedure such decisions would be capable of challenge (on limited grounds) by an application for judicial review (the alternative being to raise the invalidity of the decision by way of defence to proceedings for its enforcement). That approach is implicit in the present proceedings, which have been brought, by way of judicial review, by the unsuccessful party to the adjudication proceedings; and it has also been implicit in other proceedings which have been brought in Scotland (eg. Allied London and Scottish Properties Plc v Riverbrae Construction Ltd [199] BLR 346; Karl Construction (Scotland) Ltd v Sweeney Civil Engineering (Scotland) Ltd, 2001 SCLR 95; Watson Building Services Ltd, Petitioners, 13 March 2001, unreported). Under that procedure, the merits of the challenge would, in most cases at least, be determined at a first hearing held relatively soon after the presentation of the application. Any issues of fact which might arise could be dealt with speedily under the procedures available under judicial review procedure. If, on the other hand, a challenge could relevantly be based upon any error of law, with the court exercising its ordinary jurisdiction to determine such issues on their merits, then it would be necessary for any action for enforcement of a disputed decision to proceed to a full hearing under ordinary procedure, unless the defence was so manifestly unmeritorious that summary decree could be granted (something which, in practice, would be likely to be rare). In other words, the proceedings, if raised in the Sheriff Court, would proceed to a debate; if raised in the Court of Session, they would proceed to a hearing on Procedure Roll (unless the proceedings had been raised as a commercial action, in which event the case would proceed to a debate). Any issues of fact which might arise would require to be determined after proof (subject, again, to qualification in the case of a commercial action in the Court of Session). In other words, unless the party seeking to enforce the decision had elected to raise a commercial action (in which event an expedited and flexible procedure would apply), the enforcement of the decision would in practice be likely to be held up by a period of at least several months, and possibly for a longer period. I doubt whether that can have been the intention of the Scheme, for the reasons discussed by Dyson J. in the passages I have quoted.

[35] At the same time, however, it does not appear to me necessarily to follow that adjudicators' decisions were intended to be entirely immune from challenge, particularly bearing in mind the capacity of the Scottish legal system to address rapidly the type of challenge, on limited grounds, which would require to be raised by way of an application to the supervisory jurisdiction of the Court of Session. In other contexts where provisional decisions have to be taken (eg. on an application to a court for interim interdict, or for the appointment of a provisional liquidator), or where summary remedies are provided (eg. summary enforcement of a debt), or where it is important to avoid delay in the application of decisions (eg. decisions of general importance taken by central or local government), the law does not dispense with judicial protection, although it is likely to place limits upon it. It also appears to me to be necessary to remember that, although both parties to the contract undoubtedly have a strong interest in the enforceability, without delay, of adjudicators' decisions, they also have an interest in being protected against decisions which are unjust. The potential significance of adjudicators' decisions is plain. As was observed by His Honour Judge Bowsher, Q.C. in Austin Hall Building Ltd v Buckland Securities Ltd 11 April 2001, unreported, T & C Ct, at paragraph 22:

The potential for irremediable injustice is equally apparent. Dyson J. commented in Bouygues v Dahl Jensen [2000] BLR 49, at page 55:

Notwithstanding the ephemeral and subordinate character of an adjudicator's decision, and the deemed intention that adjudication should be an expeditious procedure rooted in commercial common sense, I would be slow to attribute to the parties an intention that the adjudicator's decision should always be binding notwithstanding errors of law, procedural unfairness or lack of consideration of relevant material submitted to him by the parties, no matter how fundamental such a breach of the adjudicator's obligations might be.

[36] Like Dyson J. I have approached the issues raised by adjudication within a contractual framework, for the reasons I have explained. One difference between Scots and English law (in procedure at least), howeve , is (as I have already mentioned) that judicial review is not confined under Scots law to issues of public law, but extends to powers conferred by a contract upon a third party to determine the rights of the parties to the contract inter se. In particular, judicial review under Scots law extends to arbitration and is not uncommon in the context of arbitration under building and engineering contracts. This is a factor which appears to me to be potentially relevant, as those responsible for the Scottish Scheme can be taken to have been aware both of the possibility, under Scots law, of a relatively rapid determination of questions as to the compatibility of a decision with what might be described as Wednesbury standards; and they can also be taken to have been aware of the role played by judicial review under existing Scots law and practice in relation to construction contracts.

[37] The contractual approach which I have adopted may differ to some extent, in emphasis at least, from the approach adopted by Lord Macfadyen in Homer Burgess Ltd v Chirex (Annan) Ltd, 2000 SLT 277. Lord Macfadyen regarded adjudication procedure as "clothed in contractual form" (at p.284A), but as essentially statutory (at p. 284L):

[38] Although I have not treated the adjudicator as a "statutory decision maker" - primarily because of the statutory requirement to give effect to the Scheme provisions as implied contractual terms - the authorities on judicial review to which Lord Macfadyen referred may nevertheless be relevant, since the scope of such authorities is not restricted, under Scots law, to inferior jurisdictions of a statutory nature. In other words, the adjudicator may be, in Lord Macfadyen's words, "in substantially the same position" as a statutory decision maker. In particular, if the decision of an adjudicator is susceptible to challenge on what I have been describing as Wednesbury grounds, under judicial review procedure, but is not otherwise open to challenge on the basis of error of fact or law, then the guidance given by Lord Reid in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 at p.171 is helpful:

Homer Burgess Ltd v Chirex (Annan) Ltd is itself an example of a case where the adjudicator had no jurisdiction to enter on the inquiry: the contract was not a "construction contract" within the meaning of the 1996 Act. There have been other examples of the same kind of case (eg. The Project Consultancy Group v The Trustees of the Gray Trust [1999] BLR 377). In other English cases it has been held that the adjudicator must also, in the course of proceedings falling within his jurisdiction, comply with the requirements of natural justice, or act fairly, as it might tend to be expressed (eg. Austin Hall Building Ltd v Buckland Securities Ltd, cit supra, at paragraphs 43-47, and authorities cited there). In Bouygues v Dahl Jensen Dyson J. accepted that an adjudicator's decision was of no effect in law if he had "decided the wrong question rather than given a wrong answer to the right question" (at p. 56), a test which, if I understand the judgment correctly, could equally well be expressed, in Lord Reid's words, as asking whether the adjudicator had misconstrued the provisions giving him power to act so that he failed to deal with the question remitted to him and decided some question which was not remitted to him. The decision of the Court of Appeal in the same case ([2000] BLR 522) similarly distinguishes between error within jurisdiction and jurisdictional error (see e.g. per Buxton LJ at paragraph 14).

[39] Balancing the various considerations to which I have referred, I have come to the conclusion that the Scheme should be interpreted as requiring the parties to comply with an adjudicator's decision, notwithstanding his failure to comply with the express or implied requirements of the Scheme, unless the decision is a nullity; and it will be a nullity if the adjudicator has acted ultra vires, (using that expression in a broad sense to cover the various types of error or impropriety which can vitiate a decision), for example because he had no jurisdiction to determine the dispute referred to him, or because he acted unfairly in the procedure which he followed, or because he erred in law in a manner which resulted in his failing to exercise his jurisdiction or acting beyond his jurisdiction.

[40] Applying that general approach to the circumstances of the present case, it seems to me that the adjudicator was bound to determine the dispute referred to him, provided the dispute fell within his jurisdiction. Paragraph 20(1) of the Scheme expressly provides that "the adjudicator shall decide the matters in dispute" (subject to his power to issue separate decisions on different aspects of the dispute); and that is reflected in paragraph 9(2). The adjudicator cannot determine with binding effect the extent of his own jurisdiction: the limits of his jurisdiction are determined by the notice of adjudication and the provisions of the Scheme, and cannot be narrowed or extended by the adjudicator's misconstruing those limits. I refer to Lord Reid's example of the tribunal which "may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it" Anisminic at page 171); and also to his observation that "[i]t cannot be for the commission to determine the limits of its own powers" (at page 174; see also per Lord Pearce at p 194F and per Lord Wilberforce at p 209A). I need not address, in the present case, the type of situation with which the decision in Watson Building Services Ltd, Petitioners was concerned, where the parties had requested the adjudicator to determine the validity of his own appointment and in effect his own jurisdiction: a situation which I would be inclined to regard as raising specific issues as to the effect of the parties' agreement, rather than as illustrating any general point as to the extent to which an adjudicator's decision will have binding effect.

[41] In the present case I find it difficult to understand the adjudicator's decision, and to determine on what precise basis he reached his decision that the remedies sought were "not valid".

[42] So far as I can make sense of what he has written, he appears to have decided that he could not carry out any valuation, or find any payment due, because the parties had departed from the terms of the pre-printed contract in a number of respects. There is no indication that he had in mind section 107 of the 1996 Act, which applies the relevant provisions only to agreements in writing; nor did that provision feature in the discussion before me. His approach seems to have been (as the respondents' counsel submitted) that he was empowered only to order payment under "the contract" (paragraph 20(2)(b)), and that the expression "the contract" meant, in this case, the standard JCT form entered into at the outset, regardless of anything else that might subsequently have been agreed, whether in writing (within the meaning of section 107) or otherwise, and regardless in particular of any issue of, for example, waiver or personal bar or variation of the contract. In other words, he appears to have considered that it was impossible, as a matter of construction of his own powers, for him to take into consideration, within the framework of adjudication, even the possibility that the parties might depart from the terms of the JCT conditions. Such an approach was in my view wrong in law; nor did I understand counsel for the respondents to argue the contrary, his submission being directed rather to the proposition that the error was one with which the court could not interfere. As I have mentioned, I was not addressed on the details of the dispute or referred to any of the documentation submitted to the adjudicator, apart from the notice of adjudication and the referral notice. Even from the terms of the referral notice, however (from which I quoted earlier), it is apparent that there were allegations that variations had been instructed by or on behalf of the respondents otherwise than in the form stipulated in the JCT conditions, and that the respondents had in bad faith prevented the issue of certificates. Given that allegations of that nature were being made, the adjudicator's error was material. As a result of that error, the adjudicator misconstrued his powers, and in consequence failed to exercise his jurisdiction to determine the dispute. His decision is therefore a nullity. In reaching that conclusion I do not in any way pre-judge the decision that might be taken by another adjudicator properly directed as to the law. I cannot and do not express any opinion as to whether or not the JCT conditions remained the sole source of the parties' rights and obligations, or as to whether or not any sum is due or payable to the petitioners. The error which I have identified (so far as any conclusion can confidently be derived from the somewhat obscure language used by the adjudicator) is merely the belief that, as a matter of law, a departure from the JCT conditions necessarily entails that no adjudication can be carried out.

[43] I shall therefore sustain the petitioners' pleas-in-law, repel the respondents' pleas-in-law, grant the declarator sought and reduce the decision. I shall not withhold reduction of Decision 2, given that that matter did not arise for decision in the light of the earlier (erroneous) Decision 1, and that the adjudicator's decision on that matter cannot sensibly be severed from the remainder of his decision.