David McLean Contractors Ltd v The Albany Building Ltd

The challenge to the enforcement of the adjudicator's decision in favour of the contractor on the grounds that the employer had become entitled to liquidated damages and that that entitlement should be set off against the sum awarded to the contractor failed
 
DAVID McLEAN CONTRACTORS LTD v THE ALBANY BUILDING LTD

Technology and Construction Court
His Honour Judge Gilliland QC
10 November 2005
 
 
The adjudicator made a decision in the second adjudication ordering the employer to pay the contractor a specified sum of money. Subsequent to the decision being issued, the architect issued certificates under clause 24.1 of the JCT standard form of contract that the contractor had failed to complete the works by the completion date. The employer contended that the issue of these certificates had the effect that it had become entitled to liquidated damages from the contractor and that the liquidated damages could properly be set off against the sum awarded by the adjudicator. The employer therefore refused to pay the sum awarded on the ground that it had a valid cross claim which should be set off against the sum awarded with the result that the decision should not be enforced by the court by way of summary judgment.
 
Judge Gilliland rejected the employer's challenge to the enforcement of the decision by way of set off on the basis that the parties had agreed that they would comply with an adjudicator's award and that a genuine cross claim, such as the employer's alleged entitlement to liquidated damages, which would normally have operated as a defence by way of equitable set off, should not prevent enforcement of the adjudicator's decision.
 
Judge Gilliland referred to his previous decision in MJ Gleeson v Devonshire Green Holdings (2004) in this connection. The judge in that case held that (1) a contractual provision in relation to adjudication had the effect of excluding a claim to set off which, as in the instant case, was in relation to a future sum which might or might not become payable (2) it would be inconsistent with the policy of the adjudication scheme to allow an adjudicator's award to be rendered nugatory simply by raising a cross claim which might or might not succeed at the end of the day and (3) whilst a genuine cross claim normally operated as a defence by way of equitable set off and would normally prevent summary judgment from being given, that reasoning did not apply to adjudication where the parties had agreed that they would comply with an adjudicator's award.