Contract – Dispute – Award – Adjudicator making award in building dispute – Claimant applying for summary judgment – Whether defendant entitled to set off liquidated and ascertained damages against sum due – Whether defendant entitled to stay pending second adjudication – Application granted
In September 2006, the parties entered into a contract for a housing development using the JCT private without quantities form of building contract. A subsequent dispute was referred to an adjudicator, who awarded the claimant the sum of £56,380 to be paid by 21 February 2008. The defendant refused to pay and the claimant therefore issued proceedings to recover that sum and applied for summary judgment.
The defendant argued that it was entitled to set off liquidated and ascertained damages (LADs) against the sum awarded. Alternatively, it sought a stay of execution or an order that the money should be paid into court and not distributed until the outcome of a second adjudication.
The claimant contended that the defendant had no underlying entitlement to LADs since the relevant clause failed according to the principle in Bramall & Ogden Ltd v Sheffield City Council (1983) 29 BLR 73 because the contractual provisions for partial possession and liquidated damages were inconsistent.
The defendant claimed that it would be wrong to allow the claimant to rely upon that principle since the court should take into account the claimant’s conduct, and the grant of partial possession was frustrated by the claimant’s action in barricading a show home and preventing public access to it. If the claimant were to be allowed to rely upon that defence, it had to be blameless.
Held: The application was granted.
There was no doubt that the defendant had taken partial possession of some elements of the claimant’s work and there was no provision in the building contract for sectional completion. Accordingly, the principle in Bramall & Ogden applied. It was a question of law as to whether, partial possession having been obtained, LADs were payable. The claimant’s defence to a claim for LADs was not an equitable defence but one available pursuant to the contract.
Even if the defendant had been entitled to LADs, it was not entitled to set them off against the sum that the adjudicator had awarded; the entitlement to LADs had not been determined either expressly or impliedly by the adjudicator’s decision. It was not appropriate to construe decisions of an adjudicator as closely as one might a judgment of the court He had merely made a statement of the normal remedy prima facie available to an employer for delay in completion. Accordingly, the question of whether the employer had been entitled to set off LADs against the sum awarded by the adjudicator depended upon the terms of the contract and the circumstances of the case. The contract did not contain an express provision entitling the defendant to deduct and withhold LADs. The parties were obliged to comply with the decision of an adjudicator; there was no reference to any right of set off against such decision: Balfour Beatty Construction Ltd v Serco Ltd [2004] EWHC 3336 (TCC).
In any event, the defendant’s withholding notice, dated 15 February 2008, was not served in time since it had been served only six days before the final date for payment of the sum awarded, which was outside the seven-day time limit prescribed by para 10 of Part 2 of the Scheme for Construction Contracts Regulations 1998 in accordance with section 111(3) of the Arbitration Act 1996.
Finally, the defendant was not entitled to a stay to await the outcome of a second adjudication in which it was the referring party. The court was not persuaded that the claimant would be unable to repay the judgment sum and r1 of RSC Order 47 contained no special circumstances rendering it appropriate to grant a stay: Interserve Industrial Services Ltd v Cleveland Bridge UK Ltd [2006] EWHC 741 (TCC) and Wimbledon Construction Co 2000 Ltd v Vago [2005] EWHC 1086 (TCC); [2005] BLR 374 considered.
James Thompson (instructed by Shakespeare Putsman, of Birmingham) appeared for the claimant; Andrew Maguire (instructed by New Hampton Law) appeared for the defendant.
Eileen O’Grady, barrister
