Quality Street Properties (Trading) Ltd v Elmwood (Glasgow) Ltd
Sheriff Principal Edward F Bowen QC
8 February 2002
After completion of the works a dispute arose over the sum due to the contractor. Notwithstanding that certain payments had (already) been made by the employer, the contractor began court proceedings claiming a (further) specified sum. The employer lodged detailed defences, the substance of which were that the contract price had been the subject of a compromise agreement and that all but a small sum by way of retention had been paid. The contractor sought to refer two disputes to adjudication which it described as an ascertainment of the amount properly due to it in terms of its final account (including loss and expense) and the payment of loss and expense sustained by it due to the regular progress of the works having been affected. The employer contended that there was no dispute which could be referred to adjudication by reason of the terms of the compromise agreement and in any event the contractor sought to refer more than one dispute to adjudication without its consent and contrary to the contractual prohibition. The sheriff at first instance rejected the employer's application to prevent an adjudicator being appointed and an adjudication from proceeding. The employer appealed.
Sheriff Principal Edward F Bowen held that notwithstanding that the approach adopted by the sheriff at first instance in deciding that the contractor's proposed adjudication proceedings should be allowed to continue was undoubtedly correct (in that he sought to determine whether the employer in applying to the court to prevent the proposed adjudication had shown a prima facie case and that he considered whether to grant the application on a balance of convenience), his decision was wrong. This was on the basis that the employer's defence to the contractor's claim brought in (separate) court proceedings for payment of certified sums, ie that the sum payable under the contract had been the subject of a compromise agreement (with the result that no such payment could be due), should be resolved in the contractor's court proceedings for reasons of expediency.
An adjudication may well be prevented from proceeding by the courts where there are already in existence court proceedings which will decide whether the dispute referred to adjudication was resolved by a compromise agreement.