Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [Part 3]

[2017] EWHC 1763 (TCC)

There had been a number of adjudications, some involving payment applications.  Mr Justice Fraser commented that:

“As a term for this type of dispute or adjudication, in my judgment the phrase ‘smash and grab’ is best avoided. The phrase has clearly pejorative overtones ... If employers or third party certifiers fail to comply with those legal requirements, then the party seeking payment (usually the contractor) becomes entitled to the sum (as an interim payment) for which application has been made. To describe an attempt, or the adjudication itself, by a party to enforce these legal rights as a ‘smash and grab’ entirely misses the point. An adjudicator in such a dispute has a more straightforward task than in other adjudications on other more complicated facts – he or she will usually only need to consider the timings and contents of certain notices.”

If, as here, a contract comes to an end through repudiation, whilst further performance of the contract by both parties comes to an end, the existing rights and obligations the parties have, as at the time the contract comes to an end, remain. This meant that here, if ICI had a right as of 17 February 2015 to recover overpayments under the contract, that right remained in being even though it was ICI who repudiated the contract. MMT suggested that the most that interim assessments could be said to be was a definitive or final valuation of the works for all purposes at that point in the project.  This was potentially significant as the total sum paid to MMT as at the date of this trial included sums paid pursuant to two adjudication decisions. MMT suggested that the sums claimed in the interim application in question had therefore been subject to “a judgment on the merits”.

The Judge did not consider this to be strictly correct. The decision in question was based upon the lack of pay less notices. They were then subject to enforcement proceedings which were, very late in the day, conceded and the amount due was paid. This was not a judgment and did not change the character of the adjudicator’s decision to one that was finally binding, rather than binding on an interim basis. The Judge noted that clause 50.5 made it clear that: “The Project Manager corrects any wrongly assessed amount due in a later payment certificate.” Further, a review of recent cases showed that the value of the works remained something that could be challenged. In other words, the value of the works executed was not definitely determined by the figure in the interim assessment (or an adjudicator’s decision on that interim assessment). The Judge further considered that this was not something that could “sensibly be argued otherwise, given the nature of adjudication”. This meant that notwithstanding the adjudicator’s earlier decisions, the Judge concluded that:

“the amount to which the contractor is entitled as final payment for the works is not definitively decided as the figure in the most recent interim assessment”.

Back to the previous page

Click to download PDF