Levolux AT Ltd v Ferson Contractors Ltd (Part II)

The decision that the sub-contractor should be paid a specified sum should be enforced by way of summary judgment notwithstanding the contractor's contention that it had validly determined the sub-contract and that all sums of money otherwise due under the sub-contract had thereby ceased to be due
 
LEVOLUX AT LTD v FERSON CONTRACTORS LTD

Court of Appeal
Ward, Mantell and Longmore LJJ
22 January 2003
 

The sub-contract incorporated the GC/Works sub-contract form (as amended) and complied with the requirements of section 108 of the Housing Grants, Construction and Regeneration Act 1996. The sub-contractor made an interim payment application but the contractor refused to pay the full amount of the application and served a notice of intention to withhold payment in respect of the outstanding balance under section 111. By the time the contractor made the payment of the sum it maintained was due, the sub-contractor had stopped work. The contractor served a notice on the sub-contractor that it required work to recommence and threatened to terminate the sub-contract under clause 29.6.2 on the ground that the sub-contractor had wrongly suspended its performance of the sub-contract. The sub-contractor referred the dispute to adjudication. The adjudicator was appointed who decided that (1) The sub-contractor was entitled to a sum which was only a little less than the full amount applied for. (2) If the contractor’s withholding notice complied with section 111, the sub-contractor’s claim failed and vica versa. (3) The contractor’s withholding notice did not comply with section 111 because it did not specify the ground for withholding. The contractor did not pay the sum awarded and the sub-contractor brought court enforcement proceedings.

 

The Court of Appeal held that the decision that the contractor should pay the sub-contractor a specified sum based on its interim payment application should be enforced by way of summary judgment notwithstanding the contractor’s contention that it had validly determined the sub-contract and that all sums of money otherwise due under the sub-contract (including the monies due under payment application) had thereby ceased to be due under clauses 29.8 and 29.9. It did so on the basis that the sub-contract should be construed to give effect to Parliament’s clear intention in enacting the statutory adjudication scheme that clauses 29.8 and 29.9 should not be interpreted as applying to monies due by reason of an adjudicator’s award and that even if they should have been so interpreted, they would have had to be struck down as being contrary to Parliament’s intention.

 

Advice Note

Termination provisions of a contract that monies cease to be due on termination will not be interpreted as applying to monies due under an adjudicator’s decision.
 

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