EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lady Paton Lord Woolman Lady Cosgrove	[2009] CSIH 72 OPINION OF LADY PATON in the Petition of MACDONALD ESTATES PLC Petitioners; For a review of a decision of Gordon Murray, architect dated 27th August 2009 _______

Petitioner: Lake QC; Brodies LLP

Respondent: Clark QC, Davies; Harper McLeod LLP

18 September 2009

[1] In view of the shortage of time, I do not propose to rehearse the background or to record the arguments presented on Thursday 17 September 2009.

[2] The petitioners seek interim orders in terms of paragraphs (b) and (c) of Statement 3 of the Petition. There is no dispute over paragraph (b). Accordingly we shall grant interim suspension in terms of paragraph (b).

[3] In relation to paragraph (c), I acknowledge that the clear and fully-reasoned opinion of the Lord Ordinary supports the petitioners' contention that they have a prima facie case. In view of the conflicting opinion known to have been provided by an experienced senior counsel who advised Mr Murray, I am not minded to explore the strength of that prima facie case. I am content simply to confirm that there is indeed a prima facie case.

[4] I turn therefore to the balance of convenience. First, it was submitted that the grant of the interim order in terms of paragraph (c) would preserve matters entire pending the outcome of the current reclaiming motion concerning Mr Murray's status and obligations. I do not agree. In my opinion, on a proper construction of the missives, the contracting parties' intention was that satisfactory planning permission (unencumbered and unqualified by disagreements, disputes, referrals to experts, arbitrations, or litigations) would be in place by 26 September 2009 as a prerequisite of the continuance of the project, otherwise parties would be free to resile. The significance of that contractual condition should not be underestimated in a commercial project of this nature, as parties to the project have agreed a precise timetable including dispute-resolution procedures. Were this court to accede to the petitioners' motion and to grant the interim order sought in terms of paragraph (c), far from preserving matters entire, the court would be innovating upon the parties' contract by putting to one side the existing fundamental dispute over planning permission, and ordering the production of a final determination from Mr Murray which would result in the purification of the suspensive condition such that neither party would be entitled to resile. In my opinion, that approach would result in a major departure from the parties' intention as evidenced by the missives.

[5] Secondly, it was contended on behalf of the petitioners that any prejudice suffered by NCP as a result of the granting of the interim order would be outweighed by the prejudice suffered by the petitioners were the interim order not granted. Inter alia, the following points were made:

[6] The project involved other parties, namely SECC and another party who acted as both funder and developer. If the interim order were granted and the final determination issued confirming that satisfactory planning permission had been granted prior to 26 September 2009 such that the suspensive condition in the Macdonald/NCP missives was purified, then those other parties would, in terms of their contracts, proceed with the project. However if the interim order were not granted, and if the suspensive condition in the Macdonald/NCP contract were not purified by 26 September 2009, the whole project would founder, as those other parties would be contractually entitled to (and would be likely to) withdraw. That would involve considerable prejudice to the petitioners.

[7] By contrast, it was contended that the grant of the interim order would result in no prejudice to NCP. NCP would simply be held bound by an agreement which they had entered into. NCP would not have to carry out any works meantime. Even if NCP carried out some work and incurred loss, they would be protected by their right to claim damages from the petitioners, who sought the interim order periculo petentis. If NCP were ultimately successful in their contention that Mr Murray was an arbiter, then matters would revert back to the stage when Mr Murray was requested to state a case for the court. Mr Murray's final determination (issued in compliance with this court's interim order) could be reduced. Few difficulties were envisaged in such a reduction, as (a) it would be procedurally competent within the judicial review process (Rule of Court 58.4(b), the Answers being amended if necessary); (b) the other contracting parties would have no locus to enter the process to oppose reduction; and (c) counsel for the petitioners ultimately gave an undertaking that if NCP were successful in their argument that Mr Murray was an arbiter who was required to state a case, the petitioners would not oppose the reduction. Matters would then revert to the stage when Mr Murray was about to state a case, as if the final determination had never existed: cf Lord Pearson at page 397 of Miller & Son v Oliver & Boyd (1906) 8F 390 (although the Inner House in that case expressly reserved its opinion on the matter); Russell on Arbitration (23^rd ed) para 8-068; Hussman (Europe) Limited v Pharaon [2003] 1 All ER (Comm) 879 at paras [81] to [83]; and Lord Hope's article on Arbitration in the Stair Encyclopaedia (reissue) paragraph 75. It was contended that the concern which arose in Fairlie Yacht Slip Limited v Lumsden 1977 SLT (Notes) 41 did not arise.

[8] In my opinion, however, the issuing of the final determination prior to 26 September 2009 in compliance with an interim order of this court would result in a substantial risk of prejudice to NCP which might be irreversible and might not be curable by any future award of damages against the petitioners. The issuing of the final determination (a) rules that the planning permission granted is satisfactory (a matter disputed by NCP); and (b) by purifying the suspensive condition, removes NCP's right to resile from the missives on the basis of dissatisfaction with the planning permission granted. Thus in the future, if for any reason the final determination were not reduced despite NCP's success in their reclaiming motion, NCP would find themselves contractually bound to a project governed by planning permission which was unacceptable to them. That situation would be highly prejudicial to NCP, bearing in mind the parties' intention as recorded in the missives that NCP should have the right to resile in the event that satisfactory planning permission were not in place by 26 September 2009. In view of the uncertainties of litigation, arbitration, and other dispute-resolution procedures, in respect of the passage of time, arguments presented, and decisions issued, and also in view of the fact that the project would presumably be proceeding over the years on the basis (albeit subject to challenge) that the planning permission granted was satisfactory, it cannot in my view be said with any certainty that even if NCP were successful in their reclaiming motion, the final determination would at some future time be reduced by a court with the effect that matters should proceed as if that final determination had never existed. Thus the interim order sought by the petitioners would in my view give rise to a substantial risk of major prejudice to NCP, a prejudice which would be in direct conflict with the express terms of the parties' contract. By contrast, the possibility that the project might not survive beyond 26 September 2009 was envisaged and provided for by the contracting parties, on one view on the basis that if a fundamental prerequisite (namely satisfactory planning permission) was not in place by that date, unchallenged by disagreements, disputes, referrals to experts, arbitrations or litigations, then parties should be entitled to withdraw from the project.

[9] In the result, for all the above reasons, I am of the opinion that the balance of convenience favours NCP, and that this court should refuse to make the interim order sought in terms of paragraph (c).

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lady Paton Lord Woolman Lady Cosgrove	[2009] CSIH 72 OPINION OF LORD WOOLMAN in the Petition of MACDONALD ESTATES PLC Petitioner; For a review of a decision of Gordon Murray, architect dated 27th August 2009 _______

Petitioner: Lake QC; Brodies LLP

Respondent: Clark QC, Davies; Harper McLeod LLP

18 September 2009

[10] National Car Parks Limited ("NCP") has marked a reclaiming motion against the decision of the Lord Ordinary dated 15 September 2009. Although the case has been listed for early disposal, no date for the hearing in the Inner House has yet been fixed. It is almost certain that no decision will be issued prior to 26 September 2009, which is the Longstop Date set out in the missives.

[11] As the reclaiming motion suspends the Lord Ordinary's interlocutor, Mr Murray cannot presently issue his final determination. That means that the suspensive condition in the missives will not be purified before the Longstop Date. NCP has, however, provided an undertaking that it will not resile prior to the issue of the final determination.

[12] Macdonald Estates Plc ("Macdonald") does not accept that the undertaking sufficiently protects its position. Pending the resolution of these proceedings, it seeks interim orders to regulate the position. They are in the following terms:

"On behalf of the petitioners (1) to grant interim suspension of the decision of the first respondent dated 27 August that in determining the dispute between the parties he is acting as an Arbiter; and (2) for decree ad interim in terms of section 47 (2) of the Court of Session Act 1988 ordaining the first respondent to issue a determination in terms of his draft findings dated 6 August 2009 on a business day following that on which judgment is given prior to 10 am."

[13] NCP does not oppose the first order and interim suspension can therefore be granted.

[14] With regard to the second order, the parties directed their respective submissions toward the balance of convenience. In my view, there are three factors to take into account.

[15] First, there is the question of prima facie case. While Mr Clark accepted that there is one, he invited the court not to look at its strength in determining the balance of convenience. He pointed out that Mr Murray had acted on the opinion he had received from experienced senior counsel. In my view, however, as the Lord Ordinary has found in Macdonald's favour after hearing detailed argument over the course of three days, it is in a stronger position than the normal litigant seeking interim orders. It has a judicial determination in its favour. That is therefore a factor which points toward the granting of the order.

[16] Secondly, Mr Lake stated that if the order is not granted, the transaction will fall. He explained that three further contracts have been entered into relative to the development. They are also conditional upon the purification of the suspensive condition prior to the Longstop Date. In two of the contracts, the third party will not agree to an extension of time beyond 26 September 2009. I regard this as a very important factor to take into account. By refusing to grant the order, the practical effect would be to bring the development and the missives to an end. In that event, Macdonald would suffer very great prejudice.

[17] Thirdly, there is the question of the prejudice to NCP. If the reclaiming motion is refused, the contract will simply proceed in accordance with the timetable set out in missives. If it is granted, then the order will be recalled and NCP will have a claim against Macdonald for any loss arising from its grant.

[18] Mr Clark submitted that if NCP succeeds in the reclaiming motion , there could be uncertainty about setting aside any determination issued in terms of the interim order. He pointed out that reduction is an equitable remedy and that third party interests might be involved. In response, Mr Lake gave an undertaking at the bar that in such circumstances, Macdonald would not oppose the reduction of the determination. In respect of third parties, Mr Lake pointed out that they would have no locus to oppose reduction. He also informed the court that they had been kept fully aware of the current proceedings.

[19] Having regard to all these factors, in my view the balance tips decisively in favour of Macdonald. If the interim order is not granted, the practical consequence will be very significant: the transaction will fall. The grant of the order will keep matters entire. Any detriment suffered by NCP is outweighed by the prejudice to Macdonald. I would therefore be prepared to make the order sought in terms of section 47 (2).

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lady Paton Lord Woolman Lady Cosgrove	[2009] CSIH 72 OPINION OF LADY COSGROVE in the Petition of MACDONALD ESTATES PLC Petitioner; For a review of a decision of Gordon Murray, architect dated 27th August 2009 _______

Petitioner: Lake QC; Brodies LLP

Respondent: Clark QC, Davies; Harper McLeod LLP

18 September 2009

[20] I agree with your Ladyship in the chair for the reasons given. I have nothing to add.