Mr S Hart t/a DW Hart & Son v Mr Dennis Smith & Mrs Jacqui Smith [2009] EWHC 2223

This summary was provided by CMS Cameron McKenna LLP.

For more information visit


In the circumstances of this case the Court did not allow the defendant employer to deduct LDs from a sum that it had been ordered to pay over to the claimant contractor.  The defendant had failed to show that its entitlement to LDs followed logically from the decision of the adjudicator.

Technology and Construction Court, HHJ Toulmin CMG


The defendant employers (“ the Smiths”) employed the claimant contractor  (“Mr Hart”) to convert a number of barns into dwelling houses pursuant to a JCT Standard Form of Building Contract with Quantities 2005 edition (“the contract”).  The parties fell into dispute over payment and Mr Hart referred the matter to adjudication.  The Smiths subsequently referred a further dispute to adjudication, claiming liquidated and ascertained damages (“LADS”) for delay and a declaration that they were entitled to the issuance of Certificates of Non-Completion.  Both adjudications were heard by the same adjudicator.  In the first adjudication, the adjudicator awarded Mr Hart £79,700.43.  In the second adjudication, the adjudicator found that the Smiths were entitled to Certificates of Non-Completion, but pursuant to the terms of the contract were not entitled to an award of LADs until after the Certificates were issued.   Following the adjudicator’s decision, the Contract Administrator accordingly issued Certificates of Non-Completion.  The Smiths calculated that as a result of the issuance of these Certificates, they were entitled to £71,314.29 in LADs from Mr Hart and gave notice to Mr Hart claiming this amount.  Notwithstanding the adjudicator’s decision that he could not at the time of his decision make a LADs award in favour of the Smiths, the Smiths sought to set off the sum of £71,314.29 against the sums due to Mr Hart.


The issue before the Court was whether in these circumstances the Smiths were entitled to set off LADS against the sum awarded to Mr. Hart in the first adjudication.

In Balfour Beatty Construction v Serco Ltd [2004] EWHC 3336, Jackson J (as he then was) set out two guiding principles regarding setting-off LADS against sums due under an adjudicator’s decision, namely:

  • Where it follows logically from an adjudicator’s decision that the employer is entitled to recover a specific sum by way of LADs, then the employer may set off that sum against monies payable to the contractor pursuant to the adjudicator’s decision provided that the employer has given proper notice (in so far as required).
  • Where the entitlement to LADS has not been determined expressly or impliedly by the adjudicator’s decision then the question of whether the employer is entitled to set off the LADs will depend on the contract and the circumstances of the case.

The Smiths sought to rely on the first of these principles.  To this end the Smiths contended that the debt in the sum of £71,314.29 owed to them by Mr Hart was a natural consequence of a) the declaration made by the adjudicator and b) the issuance of certificates by the Contract Administrator and c) the issuance of a notice of the Smiths’ claim for LADS.


HHJ Toulmin found that what followed logically from the adjudicator’s decision was merely that the Contract Administrator ought to issue the Certificates of Non-Completion and nothing more.  The decision did not give any clear indication of the financial consequences of the issue of such Certificates.  The Smiths were therefore not entitled to set off LADs against the sums the adjudicator had found due to Mr Hart.

This decision should be compared to the decision in JPA Design and Build Ltd v Sentosa (UK) Ltd [2009] EWHC 2312 (TCC).  That case concerned two adjudications arising from the same contract.  The Court allowed the defendant to set off LDs that it had been awarded in the second adjudication against sums that the claimant had been awarded in the first adjudication.  Unlike the situation in JPA Design, the adjudicator in the case at hand had not expressly stated that the defendant was entitled to claim LDs; this was merely something that the defendant argued could be inferred from the adjudicator’s decision.
This summary was provided by CMS Cameron McKenna LLP.

For more information visit

Click here to read full-screen | Click here to print the case