Solland International Ltd v Daraydan Holdings Ltd
Technology and Construction Court
His Honour Judge Richard Seymour QC
15 February 2002
There were two separate contracts, ie the building contract and the furnishings contract. A dispute was referred to adjudication by the contractor which resulted in the adjudicator deciding that the employer should pay the contractor the amount certified as the value of work under the building contract. The employer refused to pay the amount awarded on the grounds that at enforcement stage there should be taken into account its counterclaim for liquidated damages under the furnishings contract and its claim for abatement under the building contract for incomplete and defective work and the fact that there were apparently other disputes between the parties.
Judge Seymour held that the decision should be enforced by way of summary judgment without any deduction by reason of the employer having failed to serve an effective notice of intention to withhold payment under section 111 of the Construction Act 1996.
Section 111(1) of the Construction Act 1996 provides that a party may not withhold payment after the final date for payment of a sum due under the contract unless it has given an effective notice of intention to withhold payment. The force of the words "may not" meant “is not permitted to” with the result that where a sum was due under the contract, that sum had to be paid unless an effective notice of intention to withhold payment had been served. The simple point in the instant case was that as a result of the adjudicator's decision the employer became obliged under the terms of the building contract and the Scheme for Construction Contracts (incorporated into the contract) to pay the amount awarded by the adjudicator. The fact that there appeared to the other disputes between the parties (including under the separate furnishings contract) was no reason not to enforce the decision.
An adjudicator’s decision will be treated by the courts as being equivalent to a “sum due under the contract” with the result that the decision will be enforced without deduction unless an effective notice of intention to withhold payment has been served under section 111 of the Construction Act.