Latest ruling demonstrates effectiveness of adjudications in preserving cashflow

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The lack of a valid order for payment does not prevent the enforcement of an adjudication decision by the TCC.

In WRW Construction v Datblygau Davies Developments [2020] EWHC 1965 (TCC), the Technology and Construction Court allowed an application for summary judgment to enforce an Adjudicator’s decision of a final account, despite the absence of a valid order for payment.

Background

The parties entered into an undated Contract incorporating the Conditions outlined in the JCT 2011 Design and Build Contract,, for the design and build of nine dwellings for a contract sum of £2.2 million.

Following the termination of the contract, a dispute arose as to the value of the final account which was referred to Adjudication by the Employer. The Adjudicator was required to provide a valuation of the final account in accordance with the claims made by both parties to the adjudication.

The Employer contended that the sum of almost £3.5 million was due to be paid by the Contractor due to completion of works by another contractor and subsequent defects in the works. However, the Contractor opposed the sum due and contended that it was owed £700,000 by the Employer for works completed and invited the Adjudicator to value the final account.

The Adjudication

The Adjudicator decided that the Employer was required to pay the Contractor some £600,000 and ordered the Employer to pay the same. However, the Employer argued that the adjudicator did not have the jurisdiction to order the Employer to pay the decided sum.  The Employer requested that the Adjudicator should amend his decision pursuant to the slip rule which allows for the correction of accidental mistakes or errors in the outcome of proceedings but this made no difference to the Adjudicator’s decision.

The Employer refused to pay the sum ordered by the Adjudicator on the basis that there was no valid order for payment, as the Adjudicator did not have the jurisdiction to order such payment in respect of the valuation. The Employer argued that a further Adjudication was required before a Court could give effect to the temporarily binding valuation.

The Enforcement Proceedings

The issue before the Court was whether the Adjudicator had the jurisdiction to order payment and whether payment was due as a result of the Adjudicator’s payment valuation.

However, the Court held that although the Adjudicator did not have jurisdiction to award a monetary sum to the Contractor, it was not the relevant issue in this case, nor was it an issue which arose for determination. The issue was whether on the basis of a valid, binding valuation of the post-termination account, a court’s enforcement of that valid award can include an order for payment of the sum due as a consequence of the binding valuation, or not.

Outcome

The Court followed the decisions in Aspect v Higgins [2015] UKSC 38 and Bresco v Lonsdale [2020] UKSC 25 and agreed with the Contractor that a further adjudication was unnecessary.

The Court decided that the Adjudicator’s decision was valid and temporarily binding as to the value of the post-termination account and accordingly granted summary judgment in favour of the Contractor. The Employer sought a stay of execution to which the Court declined.

Commentary

This case clearly highlights the Court’s reliance on the temporarily binding nature of adjudication and the enforcement of the adjudicator’s decision would preserve cash flow as is the main purpose of construction adjudication. It also confirms how Adjudication can be an effective means to determine any payment or final account dispute with the ability to enforce an Adjudicator’s decision promptly despite the on-going Covid-19 pandemic.

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