High Court Upholds Adjudication Enforcement

The case centred on the enforcement of an adjudication decision, a crucial aspect of dispute resolution in the construction industry. This judgment not only affirms the principles governing adjudication but also underscores the importance of swift enforcement in maintaining the integrity of the adjudication process.

Background of the Case

The dispute originated from a subcontract agreement between C.N.O. Plant Hire Ltd (“CNO“) and Caldwell Construction Ltd (“Caldwell“) for works on a project at Poverty Lane, Maghull. The subcontract did not comply with the adjudication requirements outlined in the Housing Grants, Construction and Regeneration Act 1996, leading to the application of the Scheme for Construction Contracts (England and Wales) Regulations 1998.

The parties engaged in three adjudications, with the first two being particularly relevant to the enforcement action brought by our client, CNO. In the first adjudication, the dispute revolved around CNO’s interim payment application, which Caldwell failed to address with a payment notice or pay less notice. The adjudicator, Mr. Latham, ruled in favour of CNO, awarding the sum of £253,425.56 plus interest and adjudicator’s fees. However, Caldwell did not comply with this decision, prompting CNO to seek enforcement through the courts.

Key Issues Considered by the Court

The court had to determine whether the adjudication decision by Mr. Latham should be enforced or whether the defendant’s request for a set-off, based on a subsequent adjudication decision, could be considered.

• Enforcement of Adjudication:

The court reaffirmed the well-established principle that adjudication decisions must be enforced swiftly and without set-off unless there are exceptional circumstances. This principle is vital to the construction industry, where quick resolution of disputes is necessary to keep projects moving forward.

• Rejection of Set-Off

The court rejected Caldwell’s argument for a set-off. The court highlighted that Caldwell’s failure to issue enforcement proceedings for the second adjudication decision was a fundamental flaw in how their defence to CNO’s enforcement proceedings were advanced.

Additionally, It was evident that the claims in both adjudications related to the same work, and the sums claimed were part of the same payment cycle. Allowing a set-off in the circumstances without enforcing the first adjudication decision would undermine the policy of prompt resolution of disputes – that adjudication decisions must be enforced without delay.

• Implications for Construction Law and Adjudication

The court’s ruling serves as a reminder that parties must adhere to the principles of adjudication, including the prompt payment of sums awarded by an adjudicator. Failure to do so not only risks enforcement action but rendering subsequent adjudications relating to the same payment cycle a nullity. This is not a new concept, but it is one that seems to be frequently overlooked.

Get in touch

If you are involved in a construction dispute or require advice on adjudication enforcement, our experienced team at Ward Hadaway is here to help. Contact us today for tailored legal advice to protect your business interests.