Letchworth Roofing Company v Sterling Building Company

It was not the case that the adjudicator acted in breach of the rules of natural justice by not properly deciding the dispute before him
Technology and Construction Court
Coulson J
5 May 2009
The dispute was the sub-contractor's claim under an interim payment application. The contractor refused to pay because it claimed to be entitled to raise a cross-claim for delay. Part of the dispute identified in the notice of adjudication was whether a valid withholding notice concerning that cross-claim was in place. The sub-contractor in its referral notice made it plain that although there was no withholding notice, it was not averse to the adjudicator deciding the merits of the cross-claim, although solely to assist the future consideration of the final account. The adjudicator awarded a specified sum to the sub-contractor in respect of the payment application. Whilst the adjudicator found that the contractor's cross-claim had a specified value, he did not deduct that value from the sum awarded. The contractor contended that the adjudicator acted in breach of the rules of natural justice on the basis that he did not properly decide the dispute before him. Whilst the adjudicator held that the contractor did not serve an effective withholding notice, he also found that its delay cross-claim had a specified value and ought to have taken that value into account by deducting it from the sum he awarded to the sub-contractor.
Coulson J rejected the contractor's contention. The wording of the notice of adjudication and the referral notice clearly stated that the only issue in the adjudication was the validity of the withholding notice and that the merits and/or valuation of the cross-claim was a separate exercise for the future which could not be the subject of a deduction from any sums found due to the sub-contractor. Whilst it was rather odd that the sub-contractor was seeking guidance from the adjudicator on a matter expressly said to be relevant to the future consideration of the final account, the wording of the referral notice confirmed that for the purposes of the adjudication the only issue was the validity or otherwise of the withholding notice and the absence of a valid withholding notice meant that the cross-claim in the adjudication had to fail in its entirety. There was nothing in either the adjudication or the referral notice which suggested that the cross-claim, regardless of the withholding notice position, was being referred to the adjudicator for decision as part of his consideration of the interim payment application.