Dumarc Building Services Ltd v Mr Salvador Rico [2003] KT203081Epsom C.C

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An important purpose of statutory adjudications is to provide contractors with a fast-track method of obtaining funds to which they are apparently entitled, at least on a provisional basis. That purpose would be frustrated if owners could easily set-off moneys from amounts determined by an adjudicator to be owing.

HHJ Hull QC, Epsom County Court

31 January 2003

This summary has not been prepared using the judgment, which is not yet available.

An owner and a contractor entered into a contract using the JCT Minor Works form. The contract was for work at a residential home. Although residential building work is not subject to the operation of the HGCRA, the parties had agreed to amend the standard form so that disputes could be adjudicated as if under the HGCRA.

The architect under the building contract certified that a certain amount of money was due to the contractor. Four days later, the owner issued a withholding notice, in which it sought to withhold money as damages, both liquidated and unliquidated. On the owner's view, with the set-off having been made, no money was owing to the contractor. The owner therefore made no payment to the contractor, despite the architect having issued a certificate stating that money was owed to the contractor.

The contractor, aggrieved at the owner's conduct, referred the matter to adjudication. The Adjudicator awarded a certain amount to the contractor. The owner refused to pay this amount, claiming that it was entitled to set-off against the awarded amount the damages that it had sought to withhold. It said the adjudicator had not dealt with this issue.

The contractor sought to enforce the Adjudicator's determination before the County Court, by way of summary judgment. The owner resisted the claim on the basis that it was entitled, under the building contract, to make its set-off. The Court found that the adjudicator had not dealt with the claim for set-off. However, the Court decided that the owner was not now entitled to set off against the adjudicator's decision. The main reason was that the construction contract did not provide in terms that a set-off could be made against a valid adjudicator's award. The Court referred with approval to the approach of the Court of Appeal in Levolux v Ferson, which had simplified the law.

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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