4) Jurisdiction – failure to exhaust – no distinction between deliberate and inadvertent failure Barhale Ltd v SP Transmissions plc [2021] CSOH Lord Tyre The pursuer, Barhale Ltd, (‘P’) brought an action to enforce an adjudicator’s decision in its favour. SP Transmissions, the defender (‘D’) applied to set aside the decision on the grounds that the adjudicator had (i) failed to exhaust his jurisdiction by not considering a critical issue raised in their defence and or (ii) had failed to give adequate reasons for his decision. In February D had engaged P to carry out and construct certain civils works at an electricity sub-station under an NEC3 form of contract, Main Option B, Third Edition, April 2013. The Contract Data provided for measurement using CESMM3. By the Works Information, the work included foundations which in turn required the excavation and re-use of made ground, and levelling with imported fill. P had to excavate to low levels beyond the area of the foundations to achieve adequate bearing capacity and sought payment for the actual quantities of ground excavated and disposed of and the fill imported at Bill of Quantities (“BQ”) Rates. D said P was only entitled to be paid for the net volume excavated and fill used directly below and above the foundations excluding the remaining areas. In its Referral P had contended that its entitlement was supported by its construction of the BQ and clause 11.2(28) of NEC3. It explained why rules M6 and M16 were “irrelevant”. In its Response, D relied on Class E (Earthworks) in Section 8 of CESMM3. It raised 5 “Significant Points”.
Point 1 was based on rule M6; point 3 dealt with the issue of the interpretation of the BQ; and point 5 was based on rule M16. P’s Reply addressed all 5 points. D’s Rejoinder again referred to and relied on CESSM rules M6 and M16. But it began by addressing a question posed by the adjudicator after the service of the Reply. He said the question he had to answer was: “Does the Works Information instruct Barhale to undertake bulk earthworks or not?” D rephrased the question and proposed there be added a second question: “what does the contract provide for P to be paid for its works?” This was the measurement issue raised under CESMM3. There was a Surrejoinder which focused on the first question. The adjudicator then sent a further email reiterating his earlier question and seeking clarification of the parties’ positions on the quantities to be measured. When D tried to suggest that the adjudicator’s question did not fully address the issue, the adjudicator sent a terse response saying that D must not have understood his question. The adjudicator went on to decide that the Works Information instructed P to undertake bulk excavation disposal and filling and the work should be measured and valued in accordance with their Method of Working. He accepted P’s quantities and awarded them £169,606.33. D now complained that the adjudicator had failed to address the intermediate question of the proper contractual basis for assessment and payment in particular the application and effect of CESMM3 rules M6 and M16 (i.e. Points 1 and 5 of its Response). P said it was obvious he had addressed the arguments, and if necessary, applying the presumption of regularity.
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