2) Effect of Final Certificate – effect of adjudicator’s decision after final certificate – D McLaughlin & Sone v East Ayrshire Council [2021] CSOH 122 The Court of Session found that, under a Standard Building Contract with Quantities for use in Scotland, (SBC), the Final Certificate was not conclusive evidence for the purpose of a counterclaim raised by the employer in an adjudication enforcement action. Separate court proceedings challenging the Final Certificate were already underway, and the employer could not rely on the alleged conclusivity of the Final Certificate in relation to its counterclaim, to obtain interim payment pending resolution of those original proceedings. Further, the counterclaim related to matters decided in the adjudication, and the employer had failed to challenge the adjudicator’s decision within the time limit specified in the contract meaning the decision was final. Following the issue of the FC on 17 July 2019, the Contractor, DMS, raised proceedings in the Sheriff’s court on 19 September 2019 (within the 60-day time limit) as to the sums payable to them. In March 2020 DMS commenced adjudication proceedings claiming entitlement to an interim payment pursuant to its payment notice issued in August 2017. In the absence of a pay less notice the adjudicator awarded them some £500,000 finding that the issue of the FC after the interim payment notice did not affect the dispute over the interim payment. DMS raised an action to enforce that decision which was heard in December 2020 and the decision was enforced and payment made by the Council.
In the adjudication enforcement the Council had raised a counterclaim to avoid enforcement and now sought final determination of issues as to (i) the effect of the FC on the Council’s counterclaim; (ii) the validity of the interim payment notice; (iii) repayment of interest awarded by the adjudicator if its counterclaimwas upheld.
This court had to resolve these main issues:
(1) The conclusive effect of the final certificate
The SBC provided at clause 1.9.1 that if adjudication or other proceedings were commenced by either party within 60 days after the Final Certificate (FC) had been issued, the FC was to have effect as conclusive evidence … save only in respect of the matters to which the proceedings related. Both the adjudication and the enforcement proceedings (in which the counterclaim was raised) were commenced more than 60 days after the FC was issued so that the exception did not apply to the dispute referred (the interim payment notice) or the counterclaim. Raising the same matters in later proceedings outside the 60 days, did not engage the exception. On the fact of it this finding supported the Council’s contention that the FC was conclusive as to the sum due upon its counterclaim. However two obstacles stood in the Council’s way.
(2) The effect of the adjudicator’s decision
Under clause 1.9.4 of the SBC where an adjudicator made a decision after the FC, that decision could only be challenged if proceedings were commenced within the time limit of 28 days. The Council’s failure to failure to bring proceedings to finally determine that dispute was fatal to the Council’s case. The adjudicator’s decision became final (Jerram Falkus v Fenice Investments) [8]. That alone was fatal to the counterclaim in the current proceedings.
[8] [2011] EWHC 1935 (TCC)
Made with FlippingBook Learn more on our blog