Letchworth Roofing v Sterling Building Company [2009] EWHC 1119

This summary was provided by CMS Cameron McKenna LLP.

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


In this case the court held that (a) where an adjudicator had not been appointed in accordance with the provisions of the adjudication clause in the contract, he lacked jurisdiction and his award was unenforceable; (b) where the Scheme for Construction Contracts applied, there could be two adjudications on the same issue at the same time provided that no decision had been reached in either adjudication.

Technology and Construction Court, Mr Justice Coulson


Sterling Building Company (“Sterling”) employed Letchworth Roofing Company (“Letchworth”) to carry out roofing works pursuant to a subcontract incorporating the JCT Standard Form of Subcontract DOM/1.  Following completion of the works, Sterling withheld payment to Letchworth in the sum of £117,286 (ex VAT).  Letchworth referred the dispute to adjudication, claiming that no valid withholding notice had been issued. 

The adjudicator decided that there was no valid withholding notice, as the letter that Sterling relied on did not state the amount being withheld, nor the grounds for it being withheld, and was not issued in the required time frame.
The value of the cross-claim was not an issue addressed in Letchworth’s notice of adjudication.  However, in its referral notice (i.e. the more detailed claim document served a few days later), Letchworth asked the adjudicator to value Sterling’s alleged cross-claim for delay “even if he determines no withholding notice is in place”.  The adjudicator valued the cross-claim in the sum of £24,866.77.  As Sterling had not issued a valid withholding notice in relation to its delay cross-claim nor was the issue of the valuation of the cross-claim included in the notice of adjudication, the adjudicator decided that his finding in relation to the value of the cross-claim was only declaratory in nature and was not an enforceable award that could be taken account when deciding the sums due to Letchworth.  Sterling subsequently argued before the Court that the cross-claim should have been taken into consideration by the adjudicator when making his award.  Sterling maintained it had a valid cross-claim, notwithstanding the fact that it had not issued a withholding notice.

The adjudicator issued his decision 35 days after he received the referral notice.  Pursuant to the Housing Grants, Construction and Regeneration Act 1996 an adjudicator is required to reach his decision within 28 days of receiving the referral notice, extendable to 42 days with the agreement of the referring party or for longer periods with the agreement of both parties.  In the proceedings before the Court Sterling argued that the adjudicator’s decision was reached outside of the statutory deadline, in that Letchworth had not expressly agreed to extend the time for the adjudicator’s decision to 42 days.  Letchworth argued that it had in fact agreed to an extension.


In considering Letchworth’s application for summary judgment to enforce the adjudicator’s award, Coulson J addressed the following two issues:

  • What qualifies as “agreement” by the referring party with reference to extending the time an adjudicator has to reach a decision? 
  • Is the responding party entitled to rely on a cross-claim regardless of what is in the notice of adjudication and/or whether a proper withholding notice had been issued?


Coulson J found as a matter of fact that Letchworth had granted an extension of time for the adjudicator to reach his decision because:

  • Letchworth’s referral notice made it clear that it would agree to an extension of time;
  • on three occasions the adjudicator informed Letchworth he would require a one week extension and at no point did Letchworth object; and
  • if the decision had not been in Letchworth’s favour, Letchworth would have been estopped from nullifying the decision on the same grounds.

With reference to the cross-claim, Sterling relied on the decisions of Akenhead J in Cantillon v Urvasco [2008] EWHC 282 (TCC) and HHJ Davies in Quartzelec Limited v Honeywell Control Systems [2008] EWHC 3315 (TCC) as authority for the submission that a cross-claim should be taken into account by an adjudicator notwithstanding the fact that there no valid withholding notice had been issued and the cross-claim had not been addressed in the notice of adjudication.  Coulson J rejected this argument.  He held that although a respondent can seek to raise any cross-claim he pleases, if, as here, the adjudicator concludes that such a cross-claim required a valid withholding notice and there was no such notice, then the adjudicator is acting entirely properly by taking out of account the value of the cross-claim, and the court cannot interfere with that decision.  If it were otherwise, there would be no need for withholding notices at all.  Coulson J distinguished Cantillon and Quartzelec on the facts.  In Cantillon the Court was not concerned with cross-claims or withholding notices.  In Quartzelec the adjudicator had refused to deal with a part of the defence at all, including whether or not a withholding notice was required.  If he had considered the defence and decided, even if wrongly, that a withholding notice was required but not given, his decision would have been enforced.  Accordingly, Letchworth were granted summary judgment and the adjudicator’s award was enforced.

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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