Harwood v Lantrode [2000] TCC

This summary was provided by CMS Cameron McKenna LLP.

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An adjudicator's decision will be enforced even if the losing party has commenced proceedings for final determination of the dispute. Section 111 notices to withhold payment apply to equitable set-offs. A stay of execution was granted as a petition for liquidation had been presented.

HHJ Seymour QC, Technology and Construction Court

24 November 2000

The nature of the dispute that was referred to adjudication is unreported, however on 13 October 2000 the Adjudicator issued his decision in favour of Harwood to the tune of £208,309.17. Lantrode refused pay and so Harwood brought this application to enforce the Adjudicator's decision.

Lantrode resisted payment on the grounds that:

  • to enforce payment would be an abuse of court process as Lantrode had commenced proceedings for the final resolution of the dispute;
  • the Withholding Notice provisions of section 111 HGCRA 1996 do not exclude equitable set-off and in the proceedings for final determination Lantrode had asserted cross-claims which exceeded the amount of the Award; and
  • that Harwood was or might be insolvent.

The Judge found the first two defences unsustainable: the purpose of the Act is to provide an interim decision on who should hold funds, pending the final resolution of the dispute. The fact that those proceedings are pending does not mean that an application to enforce the interim decision is an abuse of process. Further, if section 111 did exclude equitable set-off then this would render the scheme of little practical value and therefore he found this argument extremely weak. On these two grounds, the Judge found in favour of Harwood for the full amount of the Adjudicator's decision.

In relation to the question of Harwood's insolvency, the Judge recognised that, if the Winding Up Petition was upheld, then the liquidation would be deemed to commence at the date of the presentation of the Petition and therefore any funds paid would fall under the ambit of that liquidation. Although he felt that there was insufficient evidence before him to predict the likely outcome of the Winding Up Petition, Judge Seymour awarded a stay of enforcement of his Judgment pending the hearing of the Petition.

An adjudicator's decision will be enforced even if the losing party has commenced proceedings for final determination of the dispute. Section 111 notices to withhold payment apply to equitable set-offs. A stay of execution was granted as a petition for liquidation had been presented.

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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