JPA Design & Build v Sentosa (UK) and Sentosa (UK) and JPA Design & Build [2009] EWHC 2312

This summary was provided by CMS Cameron McKenna LLP.

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The 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.
Technology and Construction Court,  Mr Justice Coulson


Sentosa (UK) Ltd (“Sentosa”) engaged JPA Design and Build Limited (“JPA”) to carry out the design and construction of a new medical centre. The contract was in the JCT Design and Build Form, 2005 edition, 2007 revision.  The contract provided that Sentosa would make an Advance Payment of £300,000 to JPA “to be reimbursed to the Employer at the time of the agreement of the Final Account.”  Sentosa failed to make this Advance Payment.  Three separate disputes were subsequently referred to adjudication, of which two are significant: the claim for the Advance Payment of £300,000 (“the first adjudication”); and a dispute as to extensions of time and liquidated and ascertained damages (“LADs”) (“the second adjudication”).  The first adjudicator found that JPA were entitled to immediate repayment of the Advance Payment of £300,000.  The second adjudicator found that Sentosa were entitled to claim £180,000 in LADs but could not deduct them because they had not given a valid withholding notice.


The Court addressed the following issues:

  • Sentosa accepted that JPA were entitled to £300,000 together with interest but contended that Sentosa were entitled to set off against that sum the £180,000 identified as their entitlement to LADs in the other adjudication.  JPA disputed the set off and sought to enforce the first adjudicator’s decision in their favour in the sum of £300,000.
  • Sentosa argued that enforcement of the judgment should in any event be stayed for the following reasons;
    • JPA  would be unable to repay the £300,000 when the final account came to be finalised;
    • If JPA were entitled to be paid the £300,000 awarded by the first adjudicator, Sentosa’s entitlement to £180,000 in LADs should be given considerable weight when the Court decided whether to grant a stay of execution;
    • £300,000 was unequivocally due back to Sentosa at the Final Account stage.


Applying the guiding principles set out by Jackson J (as he then was) in Balfour Beatty Construction v Serco Ltd [2004] EWHC 3336, Coulson J found that it followed logically from the  adjudicator’s decision that Sentosa were entitled to recover a specific sum by way of LADs.  Indeed, the adjudicator had decided that there was such an entitlement in clear and unequivocal terms. Therefore Sentosa were entitled to set off the LADs in the second adjudication against the sums due in the first adjudication.  This decision should be compared to the decision in Mr. SG Hart t/a Hart & Son  v (1) Mr. Dennis Smith (2) Mrs. Jacqui Smith [2009] EWHC 2223.  In that case the second adudicator’s decision was merely that the contract administrator should issue certificates of non-completion.  The Court held that it did not follow logically from this that the employer was entitled to the specific sum it was now claiming by way of liquidated damages and refused to allow a set off of that claim against an earlier adjudicator’s award in favour of the contractor.

Although Coulson J’s decision meant that summary judgment was awarded to JPA in the sum of c. £120,000 (i.e. £300,000 minus £180,000), Coulson J also exercised his discretion to stay enforcement of the judgment pending resolution of the dispute in substantive proceedings.  It was common ground that JPA would be unable to repay the £300,000.  Adopting the approach he had set out in Wimbledon Construction 2000 Ltd v Vago [2005] EWHC 1086, Coulson J held that at the date of the contract JPA was not in its current parlous financial position and that that financial position had not been brought about by the failure of Sentosa to pay the £300,000 advance. 

  • Having stayed judgement on these grounds, it was not necessary to decide the issue of stay on the alternative grounds advanced by Sentosa.  Notwithstanding this the Court indicated that, had JPA been entitled to judgment for the full £300,000, Sentosa’s entitlement to claim £180,000 LADs pursuant to the second adjudicator’s award would have been a factor which would have justified a stay of execution up to that amount.  The Court would also have granted a stay on the basis of Sentosa’s contractual right to repayment of the £300,000 at the Final Account stage (which at the time of the hearing was imminent).

This summary was provided by CMS Cameron McKenna LLP.

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