VHE Construction PLC -v- RBSTB Trust Co Limited
The decision in the second adjudication reducing the amount of the contractor's payment application meant that the full sum payable under the first adjudication only be enforced by the contractor repaying the difference between that amount and the reduced sum
13 January, 2000
The contract incorporated JCT 81. The contractor submitted an interim payment application. The contractor served a notice of adjudication which sought full payment for all works, variations and loss and expense as set out in its payment application. The adjudicator decided that the employer was liable to make payment but was entitled to withhold payment until the contractor provided a VAT invoice. In accordance with the adjudicator's decision, the contractor submitted a VAT invoice to the employer. The employer initiated a second adjudication (with another adjudicator) and stated in its notice of reference that the adjudicator had the power to open up, review and revise the contractor's payment application. The adjudicator decided that he had the power to revise the amount of the payment application and that its amount should be revised downwards and/or on payment by the employer of any sum greater than the revised sum, the contractor was immediately to repay any difference. Judge Hicks held that the effect of the adjudicator's decision in the second adjudication that the sum payable under the decision in the first adjudication did not change but that the contractor could not enforce that decision without immediately becoming liable to repay the difference between that amount and the reduced sum. Unlike the decision in the first adjudication, the decision in the second adjudication was not an independent requirement to pay money insofar as there was nothing in the notice of referral seeking such a remedy or in the decision capable of being construed as such a requirement. The adjudicator in the second adjudication had no jurisdiction to set aside, review or vary the decision in the first adjudication, was never asked to do so and was conspicuously careful to avoid any form of words which might convey any contrary impression with the result that the employer's obligation to pay the sum awarded under the decision in the first adjudication remained. Advice Note The courts will not endorse a decision in the second adjudication which seeks to set aside, review or vary the decision in the first adjudication. However, it will give effect to a second decision which takes further circumstances (not considered in the first adjudication) into account and in effect reduces the amount awarded in the first adjudication.