Thameside Construction Company Ltd v Stevens
The homeowners should not be permitted to set off against the sum awarded by the adjudicator to the contractor the liquidated damages to which they contended they were entitled
17 September, 2013
THAMESIDE CONSTRUCTION COMPANY LTD v STEVENS
Technology and Construction Court
17th July 2013
Akenhead J held that the homeowners should not be permitted to set off against the sum awarded by the adjudicator to the contractor the liquidated damages to which they contended they were entitled on the ground that the adjudicator in effect was treating the award as if it were an interim certificate or possibly a valuation and therefore had to be taken to have envisaged that there could be a later set off or withholding against his decision, at least in relation to liquidated damages.
Whilst the adjudicator stated on "practical" grounds that he was going to approach the valuation issue "on the basis that this is an application for a further interim certificate", he then went on to say that (i) He would bear in mind that the parties "mutually intend (or indeed wish) this to act as a final account" and (ii) There is no final certificate because there has been neither a practical completion certificate nor a certificate of making good defects. Neither of these statements could be read meaning that the decision should be treated as if it was an interim certificate or valuation under the contract because (i) This was not his decision and (ii) He was not treating it as an essential part of his decision.
In reaching this decision Akenhead J derived the following propositions from caselaw as to setting off against sums awarded by adjudicators: (i) The first exercise should be to interpret or construe what the adjudicator decided; (ii) In doing so it was necessary to distinguish between the decisive and directive parts of the decision on the one hand and the reasoning on the other; (iii) The general position is that decisions which direct that one or other party is to pay money are to be honoured and no set-off or withholding against payment of that amount should be permitted; and (iv) The limited exceptions to this position are where (a) There is a specified contractual right to set-off which does not offend against the statutory requirement for immediate enforcement of the decision (b) The adjudicator is simply declaring that an overall amount is due or is due for certification, rather than directing that a balance should actually be paid and (c) It can be determined from the decision that the adjudicator is permitting a further set off to be made against the sum otherwise decided as payable.