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Transform Schools (North Lanarkshire) Limited v Balfour Beatty Construction Limited & Anr [2020] CSOH 19

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Transform Schools (North Lanarkshire) Limited v Balfour Beatty Construction Limited & Anr [2020] CSOH 19

24 February 2020

The commercial court (Lord Ericht) has enforced an adjudicator’s award of just over £4million in a dispute arising from the construction of a school in North Lanarkshire.

Enforcement was resisted by Balfour Beatty on the basis that the adjudicator had breached the rules of natural justice and/or displayed apparent bias by having regard to correspondence marked “without prejudice” in arriving at his decision.  

The adjudicator, an English barrister, had identified that certain correspondence between the parties’ representatives produced by the referring party in the adjudication was marked “without prejudice”. He invited parties to make submissions on its admissibility. Having considered those, the adjudicator held that, when read in context, inclusion of the phrase “without prejudice” had simply meant that no binding admission of liability was being made by Balfour Beatty. The correspondence was held to be admissible in the adjudication.

The adjudicator held that a chain of correspondence from Balfour Beatty, including the “without prejudice” letters, had induced the pursuer to refrain from raising proceedings so as to engage section 6(4) of the Prescription and Limitation (Scotland) Act 1973.

In the Court of Session action, the pursuer sought (i) enforcement of the adjudicator’s decision and (ii) additional damages. Lord Ericht’s recent decision was restricted to the issue of enforcement. Lord Ericht made it clear that nothing in his opinion was to be taken as expressing a binding view as to whether the adjudicator was correct in his conclusions on prescription or admissibility of the “without prejudice” letters.

Lord Ericht’s conclusion on the issue of enforcement is stated as follows (at paragraph [32]):

“In my opinion the adjudicator was entitled to consider the question of whether the letters were admissible. He was entitled to consider the submissions which the parties had made to him in that regard. A court would be entitled to look at the “without prejudice” documents and make a decision as to whether they were admissible. There is no reason why an adjudicator should not be entitled to do likewise. The adjudicator in this case may or may not have been right to decide they were admissible. But if he was wrong, then that was an error of law, and errors of law on the part of the adjudicator do not justify this court in refusing to enforce the adjudicator’s decision…”

A number of members of Axiom Advocates were instructed in this case. Gavin Walker QC and Adam McKinlay appeared on behalf of the pursuer. Garry Borland QC and Scott Manson were instructed on behalf of Balfour Beatty.