Building dispute – Adjudicator’s award – Payment – Claimant sub-contractor seeking compensation following flooding – Adjudicator making award in its favour – Defendant failing to pay – Claimant applying to enforce payment — Whether adjudicator making declaration as to availability of compensation or directing payment — Application granted
The council had retained the defendant was a main contractor to carry out civil engineering works. The defendant employed the claimant as a subcontractor to provide an in-vessel composting facility. The subcontract incorporated the NEC3 form of engineering and construction contract and provided that the date on which payment became due was 21 days after the date on which the contractor’s statement was received, and the final date for payment was seven days after the date on which the payment became due. If the employer intended to withhold payment, it had to notify the contractor not later than one day before the final date for payment. Those requirements were included to satisfy sections 109 and 110 of the Housing Grants, Construction and Regeneration Act 1996.
Provision was also made for compensation events that, subject to various notice requirements, entitled the contractor to an extension of time and financial compensation when those events occurred. Disputes arising under or in connection with the contract were to be referred to adjudication. The procedures were set up to enable adjudication to take place in accordance with the 1996 Act. The adjudicator’s decision was binding on the parties unless and until revised by the tribunal and was enforceable as a matter of contractual obligation between the parties and not as an arbitral award. The adjudicator’s decision was final and binding if neither party had notified the other within the time required by the contract that it was dissatisfied with the decision and intended to refer the matter to the tribunal.
The claimant served a notice of adjudication in respect of the dispute over flooding, followed by its referral to adjudication. An adjudicator was appointed and it was accepted that he had full jurisdiction to deal with the dispute. He decided that the flooding was a compensation event and that the claimant was entitled to a specified sum plus interest up to the date of his decision with a daily rate thereafter.
The defendant failed to pay. The claimant applied to the court to enforce the adjudicator’s decision. The defendant submitted that the fact that the adjudicator had not directed payment within a particular period indicated that he had not intended it to be made promptly or at all.
Held: The application was granted.
It was well-established that valid adjudicators’ decisions were to be enforced without set-off or cross-claims; they were to be raised in the adjudication and the adjudicator either allowed or disallowed them. It was not appropriate for the losing party to raise on enforcement proceedings either the same set-offs or cross-claims (which had already been adjudicated) or new ones that could have been but were not raised. The policy of the 1996 Act was that decisions were binding. The adjudicator’s decision, if it required payment, should be enforced and it was not subject to diktat, approval or further certification under the construction contract: William Verry Ltd v Camden London Borough Council [2006] EWHC 761 (TCC) considered.
An adjudicator’s decision did not generally create or modify a right or liability, and an action to enforce an adjudicator’s decision was an action to enforce the right or liability that had been held by the decision. The court had to interpret adjudicators’ decisions, not only from the words used by the adjudicator but also in the context of the dispute. In some cases, the parties might dispute whether money should be paid or should have been paid; in others, the true value of elements in a previous valuation might be in issue. The issue in any given case depended on the facts of the case and the wording used in any given decision: David McLean Housing Contractors Ltd v Swansea Housing Association Ltd [2002] BLR 125 applied.
In the instant case, the adjudicator gad clearly requested the defendant to pay the sums in question. He had not merely stated what the value of the claimant’s claims for compensation and interest were with a view to them being subject to subsequent adjustment in the certificate. Although many adjudicators called for payment within a specified period, that was not essential if it was clear from the decision and in context that payment was required to be made. If, as in the instant case, it was clear that an adjudicator’s decision was binding and was to be implemented, the absence in the decision of a specific period for payment did not undermine the requirement that the sum was to be paid. Properly construed, the adjudicator was requiring immediate payment but legislating for continuing interest to be payable should payment be delayed beyond 7 September 2009.
Accordingly, the adjudicator’ decision should be enforced with a requirement that the sum found to be payable should be paid without set-off within 14 days of the date of the hearing.
Patrick Clarke (instructed by Ashfords LLP, of Exeter) appeared for the claimant; Michael Murray, company secretary, appeared for the defendant.
Eileen O’Grady, barrister