107772.001 SH Construction Case Booklet

107772.001 SH Construction Case Booklet

Cases The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 4 of 2018 Kenneth T. Salmon and Katy Ormston

Construction & Engineering

Contents 1. Introduction 2. Enforcement—set-off against adjudicator’s decision MI Electrical Solutions Ltd v Elements (Europe) Ltd page 3 3. Jurisdiction—excess—power to order refund of overpayment  page 3 Breyer Group plc v Adam Michael Scaffolding Services Ltd 4. Jurisdiction—failure to exhaust  page 3 DSVG Façade Ltd v Conneely Facades Ltd 5. Jurisdiction—insolvency—company in liquidation cannot commence adjudication claiming further sums are due  page 4 Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation) 6. Jurisdiction—waiver  page 5 Beach Homes Ltd v Stephen Hazel and Helen Hazell 7. Natural justice  page 6 DSVG Façade Ltd v Conneely Facades Ltd Vinci Construction UK Ltd v Beumer Group UK Ltd 9. Payment terms—whether providing an adequate payment mechanism  page 6 CIMC MBS Ltd (formerly Verbus Systems Ltd) v Bennett (Construction) Ltd 10. Set-off of claims not in pay less notice—contract terms—compliance with Act  page 7 MI Electrical Solutions Ltd v Elements (Europe) Ltd 11. Summary  page 8 8. Natural justice—disclosure and reasons  page 6

Legislation The Act means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Pt 8. The ‘new’ provisions apply to contracts entered into on or after 1 October 2011. The main regulations are contained in the Scheme for Construction Contracts (England & Wales) Regulations 1998 (the Principal Regulations) 1 . They have been amended by the Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 2 (the new Regulations). The new Regulations apply only to contracts for construction operations in England entered into on or after 1 October 2011. For earlier contracts the Principal Regulations apply. There are separate regulations for contracts for work in Scotland applicable to contracts made on or after 1 November 2011 3 . The new regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts the Scheme for Construction Contracts (Scotland) Regulations 1998 4 applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011 5 . A reference to “the Scheme” is to the Principal Regulations for England and Wales, or the Scheme for Scotland, as the context so requires.

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1. Introduction The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 4 of 2018. Kenneth T. Salmon Consultant Solicitor and Katy Ormston Trainee Solicitor at Slater Heelis LLP. The law is stated at 31 July 2018 and covers four cases giving rise to jurisdictional challenges. These cases also concern the ability of the adjudicator to order repayment of an overpayment; the inability of an adjudicator to decide claims requiring the taking of an account following mutual dealings under the Insolvency Rules; a failure to exhaust jurisdiction and a rather uncommon case of waiver. Further, and as we have come to expect, there are cases on payment, set off and natural justice. 2. Enforcement—set-off against adjudicator’s decision See MI Electrical Solutions Ltd v Elements (Europe) Ltd (below) 3. Jurisdiction—excess—power to order refund of overpayment Breyer Group PLC v Adam Michael Scaffolding Services Ltd 6 The Claimant contractor (“Breyer”) employed the Defendant subcontractor (“Adam”) to provide scaffolding services. The subcontract period became extended and the subcontract sum of £685,000 increased. In fact Breyer paid Adam just over £4.5 million. Adam said it was entitled to more and claimed a final account gross sum of some £5.6 million, which, after giving credit for the sum paid, left a balance due to them of approximately £1 million. Breyer on the other hand, contended that the true value of the final account was much lower and it had therefore overpaid Adam. The dispute was referred to adjudication in which it was decided the value of the final account works was £2.5 million. It followed there had been an overpayment of £2.013 million which the adjudicator ordered Adam to repay to Breyer. Adam failed to make any payments to Breyer. Breyer sought enforcement of the adjudicator’s decision. Adam opposed and contended that: 1. The adjudication notice was not wide enough to confer jurisdiction on the adjudicator to make an award in favour of Breyer nor to order any payment from Adam to Breyer; 2. That the decision was one that no adjudicator could reasonably have made; Adam criticised the evidence and the way it was dealt with by the adjudicator; 3. Breyer had been paid for the works by its employer; 4. Enforcement would render Adam insolvent.

In granting the application the Court held: 1. The notice of adjudication was wide enough to allow the adjudicator to determine the value of the final account and to order the refund of any overpayment 7 . 2. The reasonableness or otherwise of the decision was irrelevant upon enforcement unless, perhaps, it could be said to be ‘outrageously irrational’ and that was not the case here 8 . The criticisms of the evidence were no defence to enforcement. 3. There was no evidence before the adjudicator as to the payment position under the main contract. Even if there had been and he had failed to take it into account, such an error would not have been a defence. 4. The evidence before the Court did not demonstrate that Adam was insolvent. There were no special circumstances to justify a stay and nothing to prevent Adam from bringing proceedings to correct the alleged errors. 4. Jurisdiction—failure to exhaust DSVG Façade Ltd v Conneely Facades Ltd 9 The Claimant subcontractor (“DSVG”) supplied labour to carry out cladding works for the Defendant contractor (“Conneely”). DSVG presented an invoice for £21,747 part of which Conneely paid some months later. DSVG referred the dispute over the unpaid part of the invoice to adjudication claiming payment on the basis that there was no valid payer’s notice or pay less notice but in the alternative on the merits that DSVG’s payment application had been rejected because of Conneely’s wrongful assessment and valuation of the works. The adjudicator found for DSVG on the basis that there was no valid payer’s notice or pay less notice and declined to deal with the alternative case regarding the merits of the valuation of the works. When DSVG sought enforcement of the decision, Conneely argued that the adjudicator’s refusal to deal with the issue of valuation meant that, in breach of the rules of natural justice, the adjudicator had failed to deal with the entire dispute referred to him and had thus failed to exhaust his jurisdiction. The Court found that on a proper construction of the referral documents there was no agreement to refer two disputes to the adjudicator. He could only decide one dispute, namely as to DSVG’s entitlement to the notified sum in the absence of a payer’s notice or pay less notice 10 . The adjudicator had decided that dispute, and having done so, there was no residual jurisdiction to consider and decide a separate dispute about the true valuation of the works. It followed the adjudicator could not be in breach of the rules of natural justice for having decided not to consider the valuation of the works. Conneely was not entitled to raise the valuation issue as a defence to enforcement. It was a different dispute to be dealt with in separate proceedings 11 .

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Comment The conclusion though seemingly sound raises a problem and potential pitfall for referring parties. If the claim is for the notified sum due on application absent a payment or pay less notice, an alternative claim for a valuation and payment would be a separate dispute and could not be referred in the same adjudication notice. 5. Jurisdiction—insolvency— company in liquidation cannot commence adjudication claiming further sums are due Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation) 12 This was a claim by Michael J Lonsdale (Electrical) Ltd (“Lonsdale”) for declarations and a permanent injunction to prevent Bresco Electrical Services Ltd (In Liquidation) (“Bresco”) from bringing a claim to adjudication, on the basis that Bresco’s liquidation operated in law to extinguish the claim(s) Bresco relied upon in that adjudication. Bresco agreed to perform electrical installation works for Lonsdale under a construction contract governed by the Act. Bresco left the site in December 2014 in controversial circumstances, with each party alleging wrongful termination by the other. Bresco commenced adjudication proceedings arguably seeking to refer at least four disputes for determination. They were: • Whether Lonsdale committed a repudiatory breach of contract; • Whether Bresco completed works to a particular value prior to the repudiatory breach; • Whether Bresco was entitled to be paid for work it had completed, and what amount it had in fact been paid; • And also whether Bresco was entitled to damages for loss of profits (and potentially, how much those damages were). However, both parties maintained before the Court that the notice referred a single dispute to adjudication and given the nature of the issues that arose for resolution, the Court was prepared to proceed on that basis. At least three of the decisions sought from the adjudicator concerned what sums of money were due to Bresco. Therefore the dispute (if there was only one), sought a decision from the adjudicator that particular sums were due to Bresco from Lonsdale, by way of payment under the contract and/or damages for loss of profit. Despite a challenge by Bresco, the Court had no doubt it had the necessary jurisdiction to grant an injunction in an ongoing adjudication 13 .

The question for the Court was whether a company in liquidation could refer a dispute to adjudication when that dispute included (whether in whole or in part) determination of a claim for further sums said to be due to the referring party from the responding party? The answer required a detailed review of the relevant authorities, the statutory adjudication regime, the Insolvency (England and Wales) Rules 2016 (SI 2016/1024) and the Insolvency Rules 1986 (SI 1986/1925) following which the Court concluded as follows: 1. There were some minor differences in the wording between Rule 4.90 of the 1986 Insolvency Rules and Rule 14.25 of the 2016 Insolvency Rules. Both rules required the taking of an account of what was due from each party to the other in respect of their mutual dealings and then setting off of sums due from one party against the sums due from the other. 2. The minor differences in the wording did not make any difference to the issue before the Court. Even if they did, the use of the expression in the 2016 Rules “an account must be taken” made clear that the provisions were mandatory. That “account” included, and consisted of, analysis of the parties’ “mutual dealings” with set off of the different sums due in each direction to arrive at a single balance. 3. The sums claimed to be due from Lonsdale to Bresco, and sums claimed from Bresco to be due to Lonsdale, clearly fell within the definition of “mutual dealings” and were caught by the Rules. There were plainly mutual credits and/or mutual debts between the company in liquidation (Bresco) and the creditor (Lonsdale) and an account had be taken of those dealings in each direction to arrive at a single balance due either to, or from, the company in liquidation. Such categorisation of those sums included the sums the subject matter of the dispute referred to adjudication in this case. 4. As at the date of the liquidation, and as a direct result of what occurred upon the appointment of the liquidator and the operation of the Insolvency Rules, the disputes between Lonsdale and Bresco that consisted of claims and cross-claims between them were to be replaced with a single debt. Thereafter the resolution of the dispute required the taking of an account to determine the balance payable and in which direction. 5. All Bresco could have was a claim to the balance following the taking of the account required by the Rules. An adjudicator could not conduct such an account under the Insolvency Rules. 6. It was clear from previous authority that once a contractor became insolvent, there was an automatic set off arrangement 14 . “Accordingly, the importance given by the legislature to cash flow for contractors and subcontractors in sections 109 to 111 of the Act effectively gave way to the importance of rights of creditors once there is an insolvency” 15 .

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7. The authorities made clear that the doctrine of bankruptcy set off (at that date under the 1986 Rules, not the 2016 Rules) was not undermined, changed or watered down by the passing of the Act. That meant that Lonsdale, under either version of the Insolvency Rules, was entitled to the benefit of that doctrine. In consequence there was but a single claim in existence so far as enforcement by either party was concerned. How much that was, and in which direction, must be – indeed, could only be – ascertained after taking the account of the mutual dealings required by the Insolvency Rules. 8. The adjudicator did not have jurisdiction to determine the dispute referred to him. Injunction granted. Comment This is an important decision. In a careful and convincing judgment His Lordship makes clear that once the so called “bankruptcy rules” apply, the only sum due over which there can be a dispute, is the sum due either way after the taking of an account of the mutual dealings between the parties. Whilst the effect is to reduce the circumstances in which an insolvent company can adjudicate, this is consistent with the protection which the insolvency laws confer on creditors. The more interesting issue is whether an adjudicator might ever have the power to take the account required under the Insolvency Rules, assuming that the claims and cross claims arise under the same single construction contract and genuinely comprise a single dispute. The reasons for the finding on the facts of this case, though compelling, will not necessarily apply to every other sets of circumstances. 6. Jurisdiction—waiver Beach Homes Ltd v Stephen Hazell and Helen Hazell 16 Mr & Mrs Hazell appointed Beach Homes Ltd (“Beach”) to carry out construction works on their house. A dispute arose as to whether the works were complete and as to the value of the final account. The contract contained various dispute resolution provisions: one for all disputes to be referred to adjudication under the Scheme; and one for disputes concerning the value of variations to be resolved by expert determination which was to be final, conclusive and binding upon the parties. The dispute was referred to adjudication and expert determination by Beach. A Mr Judkins was appointed as adjudicator and expert by RICS. Mr Judkins proceeded to act and make a decision both as adjudicator and (in respect of the value of variations in dispute) as expert. He found Beach was entitled to a further payment of £128,826 plus interest and £22,616 for his adjudication fees. In relation to the expert determination element of his fees he ordered the parties to be equally responsible for payment. Beach now sought enforcement of the decision and Mr & Mrs Hazell opposed the application on several grounds.

The first and principal ground was that the dispute referred by the notice of adjudication made no mention of expert determination nor had Beach invited RICS to make such an appointment. Accordingly the adjudicator was wrong to conclude as he did that he could embark upon expert determination which Beach had not placed within his remit. Therefore his entire activity was conducted without jurisdiction. The Court accepted that Mr & Mrs Hazell had said in a document in the adjudication “no authority was given for Beach Homes Limited to start an adjudication process and this is not implicit to the contract without our approval.” However after that Mr & Mrs Hazell had played a full part in the process of both adjudication and expert determination in the knowledge that Mr Judkins believed he had jurisdiction to conduct both aspects. They therefore waived any jurisdictional argument they might have had. Other grounds concerned the construction of the variations clause and whether the decision was correct. The answer to these arguments was that “Adjudicator’s decisions will be enforced by the Courts, regardless of errors of fact or law.” 17 There was one other ground, raised before the adjudicator and rejected by him: that the adjudication clause did not comply with the Unfair Terms in Consumer Contracts Regulations (UTCCR). The application of UTCCR had been considered in three previous cases. In two of these three cases the provisions were found not to be unfair. The adjudicator was right to conclude that the clause in this case was not unfair, but even if the Court had been of different view it would not have mattered as the decision was to be enforced regardless of errors of law. Comment It must be said that the dispute resolution provisions were unusual, and possibly the purported appointment of the same person as both adjudicator under the Scheme and expert determiner under the contract in terms of cases on enforcement is unique. The finding of ‘waiver’ was a convenient answer to the main question: whether the adjudicator had been asked and appointed (and therefore had jurisdiction) to perform both roles? The fact that the matter was raised in the adjudication, albeit without a formal objection and reservation of rights and the brevity of reasons for the finding, may suggest to practitioners that this decision be treated with some caution. The outcome might well have been different with the more usual and fulsome objection and reservation.

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7. Natural Justice See DSVG Façade Ltd v Conneely Facades Ltd (page 3) 8. Natural Justice—disclosure and reasons Vinci Construction UK Ltd v Beumer Group UK Ltd 18 In what was the seventh in a series of adjudications between the parties, the Claimant (“Vinci”) sought summary judgment in respect of an adjudicator’s decision against the Defendant (“Beumer”) for £9,671,500 and interest. Under the NEC3 subcontract with bespoke amendments, Beumer as subcontractor was to provide a baggage handling system at Gatwick airport. Following an earlier court determination about the operability and enforceability of liquidated damages for delay, Vinci issued a payment certificate setting out its entitlement to £9,671,500 as liquidated damages. Beumer denied any entitlement. A dispute crystallised which Vinci referred to adjudication before Mr Brian Eggleston (who had previously been appointed in adjudications 4 and 6). Beumer raised three objections to enforcement: 1. The adjudicator made findings which were inconsistent with his findings in a previous adjudication and so deciding something already decided and doing this in a manner inconsistent with the previous decision. Beumer attacked the finding that its applications for extension of time lacked sufficient substantiation and delay analysis; 2. The adjudicator did not give any reasons or any adequate reasons for his decision on key issues; 3. The adjudicator did not disclose, or order Vinci to disclose material from a previous adjudication (between Vinci and another subcontractor) which Beumer had good reason to believe would have demonstrated that the case Vinci was advancing in the present adjudication was inconsistent with the case it had advanced in that other adjudication. The Court dismissed all three complaints in essence because the evidence filed by Beumer did not support them. In doing so the Court made the following comments: 1. Whether the adjudicator was right or wrong as to the finding on the extensions of time was of no concern to the Court on enforcement. The need to have the right answer was subordinate to having the answer quickly. It was part of the dispute which he decided. Beumer must either litigate or arbitrate the matter. No issue of natural justice arose. Furthermore he was deciding an extension of time claim based on compensation events which he had not previously been asked to decide. Thus there was no inconsistency. It was also said the adjudicator had decided a point of law on the issue of time-barring, not referred to him. The answer to that was that Vinci did rely on the

subcontract time-barring provisions in its referral. It was thus an issue in the adjudication. 2. The authorities showed that to succeed, the complainant would have to show the reasons were “absent or unintelligible, and that as a result he had suffered substantial prejudice.” 19 At the heart of the complaint was the adjudicator’s treatment of the programming information. The Court found no difficulty in discerning the reasoning: the claims were made too late and were time-barred, and in any event failed for lack of supporting evidence and delay analysis. 3. The Courts concluded that the adjudicator was not asked to order disclosure and despite his giving Beumer every opportunity, no proper material was put before him that would have required him to do so, or to resign. The challenges to enforcement all failed. Summary judgment granted on the award. 9. Payment terms—whether providing an adequate payment mechanism CIMC MBS Ltd (formerly Verbus Systems Ltd) v Bennett (Construction) Ltd 20 CIMC MBS Ltd (“CIMC”) the subcontractor sought declarations that the payment terms in its subcontract with Bennett Construction Ltd (“Bennett”) as the contractor did not provide an adequate mechanism for determining what payments were due and when, pursuant to s.110(1)(a) of the Act. CIMCwas to design, supply and install pre-fabricatedmodular bedroom units for a hotel which Bennett was building for employer (K) in London. The hotel when constructed was to be run by operator (P). The units were to be fabricated in China and transported by sea to Southampton. The subcontract which incorporated the JCT Design and Build Sub-Contract 2011 form of contract provided for the sub-contract price to be in accordance with milestones thus: • Stage 1 payment – 20% on execution of the contract • Stage 2 payment – 30% on sign-off of a prototype room by P, K and Bennett in China • Stage 3 payment – 30% on sign-off of all snagging items by P, K and Bennett, in China • Stage 4 payment – 10% on sign-off of units in the port of Southampton • Stage 5 payment – 10% on completion of installation and any snagging Work under the subcontract was suspended for non- payment by K and CIMC referred a dispute over payment to adjudication. It sought various declarations including one that the milestone payment provisions in the subcontract were unenforceable because they did not comply with the requirement of s.110(1)(a) of the Act.

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The adjudicator decided that the milestone payment provisions did comply with the Act. CIMC now brought a Part 8 claim for declaration that milestone stages 2, 3 and 4 did not comply with the Act as there were no criteria for determining whether sign-off had occurred and therefore it was impossible to ascertain the due dates or final date for payment. CIMC also relied on the fact that P and K were involved in the payment process though they were not parties to the subcontract. Waksman J decided: 1. S.110(1)(a) was intended to do away with uncertainty 21 . The payment provisions were to be construed in the context of the subcontract as a whole and the Court could not re-write the subcontract in order to avoid the effects of non-compliance with the payment section. It was not clear what the sign-off process involved. The term “sign-off” appeared in both payment and non-payment terms and was not capable of being given a single meaning. In particular in the context of milestone stages 2 and 3 it was impossible to say what the due date for sign-off was. 2. The fact that the sign-off involved third parties was not of itself objectionable. By analogy with a surveyor’s certificate there had to be criteria and a particular time for sign-off, to enable any failure to sign-off to be challenged 22 . Milestone stages 2 and 3 did not comply with s.110(1)(a) because the criteria and date for sign- off were not clear. 3. Milestone stage 4, did comply with s.110(1)(a) as it could be construed as referring simply to delivery of the units at Southampton. 10. Set-off of claims not in pay less notice—contract terms—compliance with Act MI Electrical Solutions Ltd v Elements (Europe) Ltd 23 The Claimant subcontractor (“MI”) and Defendant contractor (“Elements”) entered into a subcontract for the supply and installation of mechanical and electrical works for apartments being constructed by Elements. MI’s payment application was met with a pay less notice in which Elements relied on alleged delay by MI as a grounds for non-payment. The dispute was referred to adjudication. The adjudicator decided that the ground relied on by Elements was not a justification for non-payment. Elements then sought to argue that it was entitled by reason of two clauses of its subcontract to set-off a cross claim for the cost of rectification of defects which it alleged were caused by MI. The adjudicator decided that since the claim for rectification costs was not the subject of the pay less notice, then, whatever might be the merits of the claim, it did not provide a defence to the claim for payment. He ordered Elements to pay £179,931.57. Elements paid £11,479.24 having deducted a sum of £168,452.33 for rectification

costs contending that the subcontract also entitled it to set-off such costs against the sum awarded. The issue for the Court was whether the subcontract entitled Elements to a set-off either against the application for payment despite the absence of a pay less notice on that ground, or as a set-off against the sum of the adjudicator’s award. This required the Court to consider the purpose of the payment provisions of the Act and the effect of terms that might defeat the provisions. As part of the issue, the Court also had to decide whether the defence of set-off was effectively left open by the adjudicator’s decision so as to be potentially available at the enforcement stage. The Court decided that: 1. The defence of set-off had effectively been determined by the adjudicator’s finding that MI was entitled to payment. To reach that conclusion it was necessary for the adjudicator to determine, as he had, that as a matter of law, Elements was not entitled to its cross claim for the cost of rectification of defects which had not been included in the pay less notice. He had therefore determined the issue and the parties were contractually bound by that decision. 2. Neither of the clauses in the subcontract permitted a set-off against the adjudicator’s decision. First, neither of the exceptions to the general rule preventing set-off applied i.e. the cross claim for defects did not follow as a logical consequence of the adjudicator’s decision and it was not a natural corollary of the decision 24 . Second, the set-off provisions were to be read subject to and consistent with the effect of the Act. Otherwise they would not comply with the Act and would be struck down 25 . The Court would attempt to construe the clauses as being consistent with the Act. That could be done by construing them as not applying to monies due under an adjudicator’s decision or alternatively to treat the set-off clauses as being subservient to the obligation to comply with the adjudicator’s decision and therefore only effective if the set-off was connected with or flowed from that decision. If that was wrong, the clauses were inconsistent with the policy of the Act and would be unenforceable. 3. The Court distinguished the case of Parsons Plastics 26 on the grounds of the explicit wording of the contractual clause in that case making the decision subject to a set- off and counterclaim. The Court also noted that Parsons Plastics was distinguished by the appellate court in Ferson 27 , because the former had not considered the effect of the contractual provisions on s.108 of the Act and the right to adjudicate at any time – a material distinction which applied in this case also. It also did not go unremarked that Parsons Plastics had been distinguished in all subsequent cases to which the Act applied, and was rightly to be seen as a rare exception.

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11. Summary Enforcement—set-off against adjudicator’s decision See MI Electrical Solutions Ltd v Elements (Europe) Ltd (right) Jurisdiction—excess—power to order refund of overpayment Breyer Group plc v Adam Michael Scaffolding Services Ltd The notice of adjudication was wide enough to allow the adjudicator to determine the value of the final account and to order the refund of any overpayment. The reasonableness of the decision was irrelevant upon enforcement unless, perhaps, it could be said to be ‘outrageously irrational’. Jurisdiction—failure to exhaust DSVG Façade Ltd v Conneely Facades Ltd On a proper construction of the referral there was no agreement to refer two disputes to the adjudicator. He could only decide one dispute, namely as to the claimant’s entitlement to the notified sum in the absence of a payer’s notice or pay less notice. Having done so, there was no residual jurisdiction to consider and decide a separate dispute about the true valuation of the works. It followed there was no breach of the rules of natural justice. Jurisdiction—insolvency Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation) A company in liquidation cannot refer a dispute to adjudication when that dispute includes (whether in whole or in part) determination of any claim for further sums said to be due to the referring party from the responding party. Jurisdiction—waiver Beach Homes Ltd v Stephen Hazel and Helen Hazell Where the responding party played a full part in a joint process of both adjudication and expert determination, in the knowledge that the adjudicator/expert believed he had jurisdiction to conduct both aspects, they waived any jurisdictional argument they might have had. Natural justice See DSVG Façade Ltd v Conneely Facades Ltd (above) Natural justice—disclosure and reasons Vinci Construction UK Ltd v Beumer Group UK Ltd There was no inconsistency between the present and previous awards. The issue decided was new one. Whether the decision was right or wrong was not for the Court to consider on enforcement. No natural justice issue arose. The reasons given were discernible and adequate. On the evidence the adjudicator had not been asked to order disclosure and there was no proper material before him that would have required him to do so.

Payment terms—whether providing an adequate payment mechanism CIMC MBS Ltd (formerly Verbus Systems Ltd) v Bennett (Construction) Ltd S.110(1)(a) was intended to do away with uncertainty. The payment provisions of contract were to be construed in the context of the contract as a whole and the Court could not re-write the contract in order to avoid the effects of non-compliance with the section. The provisions as to the certainty of the milestone payments were insufficient to determine the date when payment became due or to calculate that date. Set-off of claims not in pay less notice—contract terms—compliance with Act MI Electrical Solutions Ltd v Elements (Europe) Ltd The adjudicator had effectively determined the question of set-off of claims not included in the pay less notice, by his finding that the Claimant was entitled to payment and the parties were contractually bound by that decision. The subcontract set-off clauses did not permit set-off against the adjudicator’s decision. The exceptions to the general rule did not apply. In any case the set-off provisions were to be read subject to and consistent with the effect of the Act or they would be struck down. The Court distinguished the case of Parsons Plastics which was rightly to be seen as a rare exception.

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References: 1. Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 1998/649). 2. Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333). 3. Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371). 4. Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34). 5. Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations. 6. Unreported QBD (TCC) Joanna Smith QC 12 June 2018. 7. Workspace Management Ltd v YJL London Ltd [2009] EWHC 2017 (TCC), applied. 8. Urand Commercial Ltd v Century Investments Ltd [2011] EWHC 1561 (TCC), applied. 9. Unreported QBD (TCC) Joanna Smith QC 13 June 2018. 10. KNS Industrial Services (Birmingham) Ltd v Sindall Ltd (2001) 3 T.C.L.R 10 and Penten Group Ltd v Spartafield Ltd [2016] EWHC 317 (TCC) considered and Grove Developments Ltd v S&T (UK) Ltd [2018] EWHC 123 (TCC) applied. 11. Hutton Construction Ltd v Wilson Properties (London) Ltd [2017] EWHC 517 (TCC). 12. Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Ltd [2018] EWHC 2043 (TCC) Fraser J. 31 July, 2018. 13. The Dorchester Hotel Ltd v Vivid Interiors Ltd [2009] EWHC 70 (TCC) Coulson J. 14. See rule 4.90 of the Insolvency Rule 1986 as discussed in Stein v Blake [1996] AC 243 and, in the context of a case such as this, in Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 522 paras 29-34). 15. Per Lord Neuburger in Melville Dundas Ltd (in receivership) v George Wimpey UK Ltd [2007] UKHL 18. 16. [2018] EWHC 1846 (TCC); [2018] EWHC 1847 (TCC) Jonathan Acton Davis QC judgment 20 July, 2018. 17. Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018] EWHC 227. 18. [2018] EWHC 1874 (TCC) Jonathan Acton Davis QC judgment 24 July, 2018. 19. Per Jackson J (as he then was) in Carillion Construction Ltd v Devonshire Royal Dockyard [2005] EWHC 778 (TCC) at [81]. 20. Unreported (TCC) HHJ Waksman QC, judgment 18 July 2018. 21. Fenice Investments Inc v Jerram Falkus Construction Ltd [2009] EWHC 3272 (TCC). 22. Alstom Signalling Ltd (t/a Alstom Transport Information Solutions) v Jarvis Facilities Ltd [2004] EWHC 1285 (TCC). 23. [2018] EWHC 1472 (TCC) Alexander Nissen QC., judgment 1 May 2018. 24. Naylor Construction Services Ltd v Acoustafoam Ltd [2010] B.L.R. 183 applied. 25. Levolux AT Ltd v Ferson Contactors Ltd [2003] EWCA Civ 11. 26. Parsons Plastics (Research and Development) Limited v Purac Ltd [2002] EWCA Civ 459. 27. Levolux AT Ltd v Ferson Contactors Ltd [2003] EWCA Civ 11.

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Get in touch with our team for more info: Matthew Grellier Head of Construction & Engineering [email protected]

Katy Ormston Trainee Solicitor [email protected]

Kenneth Salmon Consultant Solicitor [email protected]

[email protected] 0161 672 1255 slaterheelis.co.uk

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