High Court Success for Adam Beaumont

August 22, 2024

Hurdles to adjudication set off…

As the coverage of the Paris Olympics draws to a close, the TCC has recently provided a reminder of one of the most important idioms in both competitive sport and the setting off of adjudication awards (who would have thought…) in CNO Plant Hire Ltd v Caldwell Construction Ltd [2024] EWHC 2188 (TCC)

The Facts

The Claimant Sub-contractor was asked to provide earthworks at a site in Maghull, Sefton for the Defendant Contractor. The parties entered into an agreement for the same, which was non-compliant with the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA“), requiring the Scheme for Construction Contract (England and Wales) Regulations 1998 (“Scheme“) to be applied.

The works were undertaken and completed by mid-2023. Following completion, the Claimant had issued an Interim Payment Application (“IPA“) on 30 December 2023 for £253,425.56. The Defendant failed to issue a payment notice or pay less notice. The Defendant did not pay the notified sum, and the Claimant referred the matter to adjudication, with Mr Latham appointed.

Following submissions from both parties, Mr Latham determined that the Claimant was entitled to the notified sum. However, the Defendant did not comply with the decision, instead it referred a further matter to adjudication, with Mr Lord appointed.

The Mr Lord referral was in respect of an IPA in September 2023. Curiously, the works under the IPA and all the sums applied for were the same as those under the December IPA. In any event, despite a jurisdictional challenge from the Claimant that the dispute referred had already been the subject of an earlier adjudication, Mr Lord found that the Defendant owed the Claimant the sum of £63,695.38 (i.e. a much lower sum for what appeared to be the same works).

Upon the Defendant failing to make payment following the Mr Latham decision, the Claimant commenced enforcement proceedings in the TCC. In response, the Defendant did not raise the usual defences in respect of a breach of natural justice of jurisdiction, but rather invited the court to set off the Mr Latham decision with the Mr Lord decision. Note, the Defendant did not apply to enforce the Mr Lord decision, but instead raised it in its witness evidence and submissions to the enforcement of the Mr Latham application.

The Decision

HHJ Kelly, sitting as a Judge of the High Court in the TCC found as follows;

  • The guidance to setting off adjudication decisions is clear following HS Works Ltd v Enterprise Managed Services Ltd [2009] EWHC 729 (TCC) and FK Construction Limited v ISG Retail Limited [2023] EWHC 1042 (TCC); adjudicators’ decisions are to be enforced summarily and expeditiously, without set off or withholding. An exception being, in the discretion of the court, where there are two valid and enforceable adjudication decisions before the court.
  • In order to consider the validity and enforceability of a decision, a party must have commenced enforcement proceedings so the arguments are before the court.
  • In the words of Joanna Smith J in FK Construction, a failure to apply to enforce a decision would mean the party would fall at the first hurdle; the court cannot determine validity or enforceability without enforcement proceedings of both adjudication decisions.
  • Applying the foregoing, the Defendant fell at the first hurdle; the guidance from the authorities is clear and based upon the principal that both decisions will be scrutinised as to validity and enforceability via the path of enforcement proceedings.
  • Whilst obiter, applying the Grove principle (as well as Broseley London Limited v Prime Asset Management Limited [2020] EWHC 944 (TCC) and Lidl Great Britain v  Closed  Circuit  Cooling  Limited  [2023]  EWHC  3051  (TCC)) it appeared that both adjudications were for the same works and for the same sums despite there being two payment cycles. The Claimant would be entitled to make this point, relying on Grove, that Mr Lord lacked jurisdiction as the works which were the subject of the referral had been the subject of a previous IPA which had not been satisfied by the Defendant.

Takeaways

The case is a reminder of the hurdles to be jumped before the court may embark upon setting off adjudication awards. The reasoning for doing so is to allow both decisions to be scrutinised as to their respective validity and enforceability. Only then may the court be satisfied that setting off may take place.

The Claimant was represented by Adam Beaumont of Exchange Chambers, ably assisted by Stephen Radcliffe and Joe Mills at Ward Hadaway LLP, as well as Mike Birchall of BEA.

The full judgment can be read here:
https://www.exchangechambers.co.uk/wp-content/uploads/2024/08/HT-2024-LDS-000009-C.N.O.-PLANT-HIRE-LTD-V-CALDWELL-CONSTRUCTION-LIMITED.Final-Judgment-210824.pdf

Back to News