Joseph Finney plc -v- Gordon Vickers and Gary Vickers t/a Mill Hotel (A Firm)
A compromise agreement was entered into whereby the employer agreed to pay the sum invoiced by the contractor by a specified date despite the fact that the employer had previously purported to serve a notice of withholding for a similar sum to that invoiced
7 March, 2001
A dispute arose as to a payment application by the contractor and subsequent valuation as set out in the architect's certificate. The employer gave notice that it was withholding the amount certified by reason of the contractor's delay, defects and incomplete works. The contractor disputed the validity of this purported notice of intention to withhold payment. The contractor's claims consultant wrote to the employer stating that the employer's previous statement that it would pay the contractor's invoice for the certified sum was unequivocal. The contractor began court proceedings and applied for summary judgment in respect of the invoiced sum on the basis that: (1) There was clear and unambiguous evidence of a compromise agreement whereby the employer agreed to pay the sum invoiced by the contractor by a specified date and (2) In reliance on the employer's promise, the contractor forbore from pursuing its remedy to recover the monies by way of adjudication. Judge Wilcox held that a compromise agreement was entered into whereby the employer agreed to pay the sum invoiced by the contractor by a specified date despite the fact that the employer had previously purported to serve a notice of withholding for a similar sum to that invoiced with the result that summary judgment should be ordered in the contractors favour for the amount invoiced. This was on the basis that the evidence supported the contractor's contention that there was such a compromise agreement. The letters from the employer sent immediately subsequent to the above-mentioned telephone conversation contained a clear promise to pay in accordance with the invoice (and therefore the contract on the basis that that sum had been certified for payment by the architect) in return for which the contractor promised not to proceed with an adjudication to enforce its rights to payment under the contract. In arriving at this decision the judge stated that an exchange of mutual promises was good consideration and the promise not to adjudicate was a promise of value insofar as an adjudication would have involved expenditure in terms of time, money and personnel. Advice Note This judgment demonstrates that a promise not to adjudicate can constitute good consideration for a compromise agreement.