HS Works Ltd V Enterprise Managed Services Ltd
The decisions of the adjudicators in the two adjudications should both be enforced
8 April, 2009
Hs Works Ltd V Enterprise Managed Services Ltd
Technology and Construction Court
8 April 2009
8 April 2009
Issues arose between the contractor and the sub-contractor following the completion of the sub-contract works or the termination of the sub-contract in relation to the evaluation of the sub-contractor's final account and a number of contra charges raised by the contractor. There were two different adjudications before two different adjudicators who made two separate decisions a month apart from each other. The adjudicator in the first adjudication decided that a specified sum should be paid by the contractor. The adjudicator in the second adjudication decided and declared that the proper valuation of the sub-contract works, allowing for the contra charges, was a specified sum. The possible effect of the decision in the second adjudication was that all or part of the sum decided to be due under the decision in the first adjudication should, if paid by the contractor, be repaid by the sub-contractor. Each party contended that the decision adverse to it was invalid on the grounds of jurisdiction or natural justice.
Akenhead J rejected both parties' contentions and decided that the two decisions in the two adjudications should both be enforced by an appropriate net payment to reflect the parties' entitlements under those decisions. It was necessary to consider what effect could be given to the second decision where the adjudicator only made a declaration as to the net value of the final account and did not make a directive decision that the sub-contractor had to pay any balance back to the contractor. Whilst it might have been open to the sub-contractor to raise additional claims by way of set off, diminution or otherwise which had not been addressed in the dispute referred to the adjudicator, it had not done so. If the parties were to give effect to the decision, as they were required to do contractually, as soon as the sum payable pursuant to the decision was paid, a balance would then be due back to the contractor. The court's discretion should on balance be drawn by making orders to reflect the net effect of this judgement on the pragmatic basis that it would have been pointless, at least administratively for the contractor to hand over the net sum (allowing for the belated payment) due pursuant to the decision in the first adjudication decision and for the sub-contractor then to hand back all or the bulk of what had just been paid to it to the contractor.