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CNO Plant Hire Ltd (“CNO”) entered into a subcontract with Caldwell Construction Ltd (“Caldwell”) on 20 September 2022 under which CNO agreed to undertake various works on project in Maghull, Liverpool (the “Subcontract”).
This case is CNO’s application for summary enforcement of an adjudication decision (Adjudication 1 decision referred to below). In response, Caldwell invited the court to exercise its discretion to set off on the basis of a second adjudication decision (Adjudication 2 referred to below).
The first adjudication (made on a ‘smash and grab’ basis) related to CNO’s interim application for payment issued in December 2023 (“Adjudication 1”). Caldwell had failed to issue a payment notice or pay less notice in respect of this application and the Adjudicator ultimately decided that £253,425.56 was due to CNO plus interest. In addition, the Defendant had to pay the adjudicator’s fees of £8,190.00 plus VAT.
Caldwell failed to pay the sums decided in Adjudication 1 and instead on 15 March 2024 it commenced a ‘true value’ adjudication regarding the valuation of the final account (“Adjudication 2”). Adjudication 2 was dealt with by Mr Lord. In Adjudication 2 Cadlwell referred to an interim application dated September 2023 and asked for a valuation to be made in respect of the same items considered in Adjudication 1. CNO challenged the Mr Lord’s jurisdiction to deal with the matter and provided the Adjudication 1 decision, asserting that the interim payment application in September 2023 and the interim payment application in December 2023 were for the same works.
Mr Lord decided he did have jurisdiction to deal with the matter and on 14 April 2024 he issued his decision that Caldwell pay CNO £89,480.94 plus VAT within 7 days. On 18 April 2024, Caldwell paid CNO £63,695.38 (the difference in amounts being because Caldwell asserted that it was entitled to withhold its statutory CIS contributions from the payment).
The issues for the Judge in this case to determine were: (i) as Cadwell had not issued enforcement proceedings in respect of Adjudication 2, should the court consider exercising its power to order a set off? And (ii) should the court permit a set off on the facts of this case?
As to the first issue, CNO argued that, pursuant to FK Construction limited, Caldwell falls at the first hurdle in respect of any set off because the only enforcement application before the court relates to Adjudication 1 (for whatever reason, Caldwell chose not to issue enforcement proceedings in respect of Adjudication 2). The Judge agreed and found it is not appropriate for the court to consider exercising its power to order a set off in the circumstances. Caldwell does not argue either of the two usual defences to enforcement (a lack of jurisdiction or a breach of natural justice). Instead, it invited the court to exercise its discretion and order a set off. Set off is not generally permitted in respect of an adjudicator’s award – such awards are to be enforced summarily and expeditiously.
In respect of the second issue the Judge notes if an adjudication decision requires a party to pay a notified sum, if the party fails to pay that sum, it may not start a true value adjudication in respect of a dispute in the same payment cycle. Caldwell argues here that the true valuation adjudication decided by Mr Lord in Adjudication 2 was not in respect of the same payment cycle because Adjudication 1 concerned an interim payment application dated December 2023 and Adjudication 2 dealt with an interim payment application dated September 2023.
In the Judge’s view this was too simplistic, it is immediately clear that the subject matter and sums claimed are the same in Adjudications 1 and 2. The Judge also did not accept that Caldwell was entitled to deduct money from the monies awarded to take account of statutory CIS payments. If the adjudicators had intended those deductions to be made from the decision, then that would have been set out in those decisions.
The Judge found that an order taking account of the decision in Adjudication 2 without requiring payment of the notified sum in Adjudication 1 would “seriously undermine the policy of swift enforcement of adjudicators’ decisions” and subsequently did not order set off in this case.
This case is a reminder that the courts will generally enforce adjudication decisions (save for instances of jurisdictional issues or breaches of natural justice) and also of the hurdles that are required to be met for set off to be awarded.