Bovis Lend Lease Limited V Triangle Development Limited
Technology and Construction Court
His Honour Judge Anthony Thornton QC
2 November 2002
The management contract incorporated the JCT Management Contract. Disputes arose as to the contents of two interim certificates. During the course of the adjudication the developer purported to determine the management contractor’s employment. Clause 22.214.171.124 provided that where the employer (validly) determined the management contractor’s employment, the provisions of the contract requiring any further payment or release of retention did not apply albeit that the clause was not to be construed so as to prevent the enforcement by the management contractor of any contractual rights in respect of amounts properly due which the developer had unreasonably not paid and which had accrued 28 days or more before the date of determination. The adjudicator awarded a sum to the management contractor. The developer refused to make the payment.
Judge Thornton stated that ordinarily a decision for the payment of a sum of money gave rise to a contractual entitlement to immediate payment without deduction, set-off, withholding, reliance on a cross-claim, abatement or stay of execution by reason of the sum being due under the statutory and contractual backed provisions requiring compliance or the underlying contractual provisions. However, an exception to this “general rule” was where other contractual terms clearly had the effect of superseding or providing for an entitlement to avoid or deduct from sum awarded by the adjudicator. Another exception was where the decision or a separate decision conferred on the paying party an entitlement to deduct from or cross-claim against the sum awarded by the adjudicator
The developer was entitled not to pay the amount awarded on two grounds. The first was that the adjudicator found that the management contractor had repudiated the contract with the result that the developer could set-off its cross-claim for damages for the repudiation. The second was that it had successfully determined the management contractor’s employment under the contract with the result that the contractual provisions requiring further payments did not apply.
Judge Thornton took the view that the contractual obligation to comply with an adjudicator’s decision was overridden by the opening words of clause 126.96.36.199 that no further payment had to be made to the management contractor after its employment was (validly) determined. The Court of Appeal in Levolux v Ferson Contractors (2003) has, however, rejected this approach. Contracts should be construed to give effect to Parliament’s intention that decisions should be enforced.