HART v SMITH

The adjudicators decision in the first adjudication declaring the employers entitlement to certificates of non-completion under JCT 2005 should not be enforced by the contractor paying the sum in respect of liquidated damages claimed by the employers
 
 

Technology and Construction Court
His Honour Judge John Toulmin CMG QC
3 September 2009

 

The adjudicator’s decision in the first adjudication declaring the employers’ entitlement to certificates of non-completion under JCT 2005 should not be enforced by the contractor paying the sum in respect of liquidated damages claimed by the employers

 

The contract for the conversion of three barns into dwelling houses incorporated JCT 2005 with sectional completion. There were two separate adjudications begun by the contractor and the employers. The adjudicator in the first adjudication decided that the employers should pay the contractor a specified sum in respect of sums certified as interim payments where the employer failed to give any effective withholding notices in respect of those sums. The employers did not pay this sum by reason of what they asserted was their right of set off. The adjudicator in the second adjudication decided that the employers should have a declaration that they were entitled to certificates of non-completion under JCT 2005 due to the contractor’s failure to complete the sections by the contractual dates in the absence of any extensions of time having been granted, although he was unable himself to issue such certificates. The contractor and the employer applied to have the adjudicator’s decisions in the two adjudications enforced. The employers submitted that the contractor was liable to pay liquidated damages in the sum specified by their letter to the contractor in consequence of the adjudicator’s declaration in the second adjudication that they were entitled to certificates of non-completion under JCT 2005 in respect of the sections of the works and the subsequent issue of certificates of non-completion by the contract administrator. They further submitted that they were entitled to set off that sum against the sum awarded to the contractor in the first adjudication.

 

Judge Toulmin rejected the employer’s submissions. The adjudicator’s decision in the first adjudication awarding the contractor a specified sum should be enforced without any set off of the liquidated damages claimed by the employers subsequent to the issue of the decision in the second adjudication declaring that the employers were entitled to certificates of non-completion under JCT 2005. The declaration made in the second adjudication should not be enforced by ordering the contractor to pay the sum in respect of liquidated damages. This was because it did not follow logically from the adjudicator’s decision in the second adjudication that the employers were entitled to the sum they claimed subsequent to the issue of that decision in respect of liquidated damages allegedly in consequence of that decision.

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