Border skirmishes

The case of Beaufort Developments NI Ltd vs Gilbert Ash NI Ltd, delivered by the House of Lords last year, was widely welcomed in that it overturned the long-standing decision of Northern Regional Health Authority vs Derek Crouch Construction Company Ltd, a case that had been criticised for years. Crouch had driven the courts into the view that they, unlike an arbitrator, had no power to review or revise architects’ certificates issued under the JCT conditions.

Accordingly, a contractor that did not agree with sums certified by an architect had no choice but to seek redress through the arbitration clause. To raise court proceedings would be met with the fatal defence that the court, following Crouch, had no power to deal with the claim as it did not have the power to revisit the architect’s certificates. The case of Beaufort was, therefore, important to the construction industry, and now the Scottish courts have considered the impact of Beaufort for the first time.

It was thought the Beaufort decision would have the same effect in Scotland as it had in England and Wales. Beaufort was an appeal from the Northern Irish courts. Decisions of the House of Lords in Northern Irish appeals, while not binding, are regarded as being highly persuasive by the courts in Scotland. Accordingly, many were of the view that Beaufort also gave the Scottish courts the go-ahead to open up, review or revise architect’s certificates.

Beaufort dealt with the JCT standard form contract. The Scottish Building Contract Committee publishes a Scottish supplement to be used with Scottish contracts. The arbitration provisions in Scottish contracts, while not identical, are similar in their terms to their JCT counterparts.

Remarkably, a Scottish sheriff has held that the Beaufort decision has no import in Scotland. He has held that a court, unlike an arbitrator, has no power to open up, review or revise architect’s decisions.

The matter before the sheriff was a claim under the conditions of the standard form JCT80, Local Authorities with Quantities. The claim relates to whether a drawing constitutes a variation and the consequent valuation of both measurement and loss and expense.

A Scottish sheriff has upheld the decision that the court, unlike an arbitrator, has no power to open up, review or revise an architect’s certificate

At a debate (when legal submission only is heard by the sheriff), it was argued on behalf of the defenders that the court had no power to deal with the matter as the sums claimed had to be included in the architect’s certificate or, alternatively, to be the subject of an arbitrator’s award.

In this instance, neither a certificate nor an arbitrator’s decision relating to the sums claimed existed. A final certificate had been issued but did not include any sums relating to the variation as the design team did not accept the issue of the drawing constituted a variation.

In issuing his decision, the sheriff categorically stated that, in his view, he was bound by a full bench decision of the Inner House of the Court of Session (sitting as an appeal court) delivered by the court in the case of Costain Building & Civil Engineering Ltd vs Scottish Rugby Union Plc. The case of Costain is more familiar to those of us north of border in relation to arrestments (the ability to freeze assets in the hands of a third party as security for sums claimed in court proceedings).

In Costain, the lord president of the court of session, Lord President Hope (who also sat on the bench in Beaufort), said that the observations in the case of Crouch were consistent with the approach that had always been taken by the law of Scotland – that the court has no ability to deal with matters that are the subject of an arbitration clause.