Balfour Beatty Construction Ltd v Serco Ltd

Principles of law governing an employer being entitled to set off liquidated damages against the amount awarded by an adjudicator in his decision in favour of a contractor
 
BALFOUR BEATTY CONSTRUCTION LTD v SERCO LTD

Technology and Construction Court
Jackson J
21 December 2004
 
 
The adjudicator's decision was that the contractor should be awarded an interim extension of time and associated loss and expense. The employer refused to pay the sum awarded on the ground that it was entitled to set off a sum representing liquidated damages in respect of the period of time up to completion from the extended date for completion. The contractor brought court proceedings to enforce the decision.
 
Jackson J held that the employer was not entitled to set off the liquidated damages on the basis that the adjudicator had reached no definitive conclusion as to the total extension of time to which the contractor was entitled and that the contract provided that the parties were to give effect forthwith to adjudicators' decisions and that a party was entitled to the relief and remedies awarded by the adjudicator and summary enforcement of such relief and remedies.
 
The judge went on to state that the two relevant principles of law that could be derived from caselaw were that: (1) If it followed logically from a decision that the employer was entitled to recover a specific sum by way of liquidated damages, it could set off that sum against monies awarded in the decision to the contractor and (2) If the employer's entitlement to liquidated damages had not been determined expressly or impliedly by the decision, whether the employer was entitled to set off such damages against monies awarded in the decision to the contractor depended on the contractual terms and circumstances of the case.
 
In the absence of any definitive conclusion by the adjudicator in his decision as to the total extension of time to which the contractor was entitled, the relevant contractual provisions (which were consistent with the adjudication provisions of the Construction Act 1996 and with the Parliamentary intention referred to in caselaw) were that: (1) The parties were to give effect forthwith to adjudicators' decisions and (2) A claimant in adjudication was entitled to the relief and remedies awarded by the adjudicator and to summary enforcement of such relief and remedies. It was therefore not necessary to decide whether the letters on which the employer relied constituted effective withholding notices under section 111 of the Act.
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