Bovis Lend Lease Ltd v Triangle Development Ltd [2002] EWHC 3123 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

For a withholding to be made against an Adjudicator's decision, an effective withholding notice must have been given, which was adjudicated upon, and the Adjudicator's decision, or another Adjudicator's decision, suggests the party can withhold.

His Honour Judge Thornton QC, Technology and Construction Court

2 November 2002

The Claimant ('Bovis') agreed to refurbish and fit out three Victorian schoolhouses into 43 luxury flats for the Defendant ('Triangle'). The contract incorporated the JCT Standard Form of Management Contract, 1998 edition. The following order of events occurred:

A dispute arose concerning two interim certificates which Bovis referred to adjudication;
Bovis said it was terminating the contract because Triangle had engaged new contractors and thereby, Bovis said, repudiated the contract. Triangle said that in fact it was terminating the contract because Bovis had failed to proceed regularly and diligently with the works;
Triangle referred to a second adjudication Bovis' purported termination of the contract;
The first adjudication decided Bovis was due a sum of money. The same Adjudicator, in the second adjudication, decided Bovis had not validly terminated the contract;

Bovis applied for summary judgment to enforce the decision in the first adjudication. Triangle opposed the application saying that, under clause 7.6.4.1 of the contract, Triangle's termination of the contract entitled Triangle to withhold paying the sum awarded in the first adjudication.

HHJ Thornton QC confirmed that the HGCR Act 1996 and the Scheme applied to the contract. The Judge summarised the law applicable to withholding paying sums awarded by Adjudicators:

The decision of an Adjudicator that money must be paid gives rise to a separate contractual obligation. Usually the paying party cannot withhold against that sum.
To withhold paying an Adjudicator's decision, an effective notice to withhold payment must usually have been given prior to the adjudication notice being given, or possibly the decision being given, and been ruled upon and made part of the subject-matter of that decision.
However, if other contractual terms clearly have the effect of superseding a sum awarded by an Adjudicator, those terms will prevail. Given the Court of Appeal's judgment in Levolux (see page 131), this part of the judgment, at least, is no longer good law.
Equally, where a paying party is entitled to withhold paying the sum directed to be paid as a result of the same, or another, adjudication decision, the first decision will not be enforced or, alternatively, judgment will be stayed.

The Judge held that Triangle was entitled to rely on clause 7.6.4.1 of the contract and the decision in the second adjudication (because it effectively said Triangle was entitled to terminate the contract) to withhold paying the sum awarded in the first adjudication. Bovis could not defeat Triangle's reliance on clause 7.6.4.1 by saying, as it did, that Triangle's termination of the contract was invalid. To succeed Bovis would need an Adjudicator's decision to that effect, or other 'sufficient evidence'.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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