Introduction

AGB Scotland Ltd v Darren McDermott ([2023] CSOH 31) is a pivotal case adjudicated by Lord Sandison in the Outer House of the Scottish Court of Session. The dispute centers around a construction contract between AGB Scotland Limited (the pursuer) and Darren McDermott (the defender), specifically regarding the enforcement of an adjudicator's decision related to unpaid sums under the contract.

Summary of the Judgment

AGB Scotland Ltd sought enforcement of an adjudicator's decision demanding payment of £367,808.84 plus VAT and interest, alongside £7,227.50 plus VAT and interest for adjudicator fees. The defender contested the validity of the Interim Payment Notice (IPN) on the grounds that it lacked a proper basis for calculation. The adjudicator had previously ruled in favor of AGB Scotland Ltd, stating that the IPN was valid. The Court of Session ultimately upheld the adjudicator's decision, dismissing the defender's plea to set aside the decision, and granted decree de plano in favor of the pursuer.

Analysis

Precedents Cited

The judgment references several key precedents to support the enforcement of adjudicator decisions:

• Carillion Construction Limited v Devonport Royal Dockyard Limited [2005] EWCA Civ 1358 – Emphasizes that adjudicator decisions will be enforced unless there is clear evidence of jurisdictional overreach or unfairness.
• Gillies Ramsay Diamond v PJW Enterprises Limited 2004 SC 430
• Construction Centre Group Limited v Highland Council 2002 SLT 1274
• Connaught Partnerships Limited (in administration) v Perth & Kinross Council [2013] CSOH 149
• Barhale Limited v SP Transmission plc [2021] CSOH 2
• Hochtief Solutions AG v Maspero Elevatori SpA [2021] CSIH 19

These cases collectively establish a robust framework for the enforcement of adjudicator decisions, highlighting the necessity for clear jurisdictional adherence and thorough consideration of all defenses presented.

Legal Reasoning

The court's legal reasoning was anchored in the principle that adjudicator decisions should be respected and enforced unless there is a blatant miscarriage of justice. The defender argued that the adjudicator failed to properly address a critical defense concerning the calculation basis of the IPN. However, Lord Sandison found that the adjudicator had sufficiently addressed this issue by incorporating the letter of 14 March 2022 by reference, thereby satisfying contractual requirements.

The court emphasized that for an adjudicator's decision to be set aside, there must be clear evidence that the adjudicator did not exhaust their jurisdiction or breached natural justice principles. In this case, the court determined that the adjudicator's decision was clear, logical, and adequately addressed the defender's concerns.

Impact

This judgment reinforces the authority of adjudicators in construction disputes, emphasizing that courts will uphold adjudicator decisions barring any explicit jurisdictional errors or procedural unfairness. It underscores the importance of precise and detailed documentation in construction contracts and IPNs. Future cases will likely cite this precedent to support the enforcement of adjudicator decisions, encouraging parties to ensure that their submissions are comprehensive and in line with contractual obligations.

Complex Concepts Simplified

Interim Payment Notice (IPN)

An IPN is a formal request for payment issued during the course of a construction project, outlining amounts owed for work completed up to a certain date.

Adjudication

A rapid, interim dispute resolution process designed to provide quick decisions on payment disputes in construction contracts.

Summary Decree

A swift court order that enforces a decision without a full trial, typically used when the facts are undisputed and the law is clear.

Decree de Plano

A final judgment that conclusively settles the claims without further proceedings.

Conclusion

The AGB Scotland Ltd v Darren McDermott case reaffirms the judiciary's support for adjudicator decisions within construction contracts, provided they adhere to procedural and substantive fairness. By upholding the adjudicator's decision, the Court of Session highlighted the critical role of detailed contractual documentation and the limited circumstances under which adjudicator decisions can be overturned. This judgment serves as a significant reference point for future construction disputes, emphasizing the need for clarity and thoroughness in all contractual and adjudicative processes.