Pc Harrington Contractors Ltd V Multiplex Constructions (Uk) Ltd

The sub-contractor was not entitled to the declaration it sought, namely that the contractor would not be entitled in the adjudication it had begun against the sub-contractor to recover damages in respect of its claim that the sub-contractor was in breach of contract by producing defective floors

Christopher Clarke J
Technology and Construction Court
30 November 2007
The contractor alleged that the sub-contractor had produced defective floors. It began adjudication proceedings against the sub-contractor in which it claimed the alleged cost of rectifying the defects. The sub-contractor applied to the court for a declaration that whilst the contractor was entitled to have adjudicated the dispute as to whether or not it had produced defective floors, it was not entitled to have a monetary award made by the adjudicator of a sum representing the cost of rectification. The sub-contractor contended that the reason why it was entitled to such a declaration was that the contractor had just issued an interim payment certificate in which the contractor stated that a "net payment" was due to the sub-contractor in respect of the value of the works it had carried out and the various claims advanced by the sub-contractor which was in excess of the sum claimed by the contractor in the adjudication. The sub-contractor therefore further contended that the "net payment" figure therefore in effect constituted an admission on the contractor's part that it could not be entitled to an award by the adjudicator.
Christopher Clarke J rejected these contentions on the sub-contractor's part on the basis that (i) it was also indicated in the certificate that an amount was to be "deducted and/or withheld pursuant to clause 21.10 and/or 21.11" from the "net payment" figure (comprising an "abatement" and the contractor's "contra charges", including the sum claimed in respect of the defective floors) which exceeded the "net payment" figure and that (ii) the true construction of the sub-contract payment provisions (which satisfied the requirements of the payment provisions of the Construction Act) was that they were concerned (merely) with cash flow and that the amount due to the sub-contractor could therefore not be regarded (simply) as being the "net payment" figure and instead had to take into account the sums which the contractor had deducted (and withheld). This meant that the contractor was entitled in principle to be awarded a monetary sum in respect of the dispute regarding the defective floors in the adjudication and that the sub-contractor therefore was not entitled to the declaration it sought.