ROK Building v Celtic Composting Systems [2009] EWHC 2664

This summary was provided by CMS Cameron McKenna LLP.

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

summary

Valid adjudicators’ decisions are to be enforced without set-off or cross claim.  The Court must interpret adjudicators’ decisions not only from the words used by the adjudicator but also in the context of the dispute which was referred to adjudication.  On the facts of this case, the adjudicator had failed to state when payment of the sums he had found due to the claimant should be made.  On a proper interpretation of the decision, however, the adjudicator was clearly calling for an actual payment by the defendant to the claimant, not simply requiring that the amount included in his decision should be the subject of later adjustment in certificates.

Technology and Construction Court, Mr Justice Akenhead

Background

Celtic Composting Systems Ltd (“Celtic”) was a main contractor employed by Devon County Council to carry out civil engineering works.   Celtic employed Rok Building Ltd (“Rok”) to provide a composting facility pursuant to a sub-contract incorporating the NEC3 form of engineering and construction contract Option B June 2005 with amendments June 2006, as amended by the parties (the “contract”).  There was a flood on site which Rok claimed was a Compensation Event under the contract, giving rise to an entitlement to time and money.  Celtic disputed this and Rok referred the matter to adjudication.  The adjudicator found that the flood was a Compensation Event and made an award in Rok’s favour.  The decision did not state when payment was to be made.  Celtic accepted the validity of the adjudicator’s decision, but made no payment to Rok.  Celtic took the point that the decision did not specify payment to be made within a set time or at all.

Issues

In considering Rok’s application for summary judgment to enforce the adjudicator’s award, Akenhead J addressed the following question:

  • Was the adjudicator’s decision directive in the sense of directing Celtic to pay forthwith or in a reasonable time or was it declaratory in the sense that the sum allowed to Rok was simply to be accounted for in future certification and payment procedures?

Decision

The Court found:

  • Valid adjudicators’ decisions are to be enforced without set-off or cross claim.  Set-offs or cross claims should be raised in the adjudication; it is not appropriate that the losing party raises them during enforcement proceedings when they could have been raised before.  If payment of an adjudication decision on the sum due under an interim certificate had to be subject to the view of a Contract Administrator/ Quantity Surveyor in a subsequent certificate then the purpose of adjudication would be defeated, as each successive certificate would defeat the decision by an adjudicator on the previous certificate (see William Verry Ltd v London Borough of Camden [2006] EWHC 761 (TCC).
  • The Court must interpret adjudicators’ decisions not only from the words used by the adjudicator but also in the context of the dispute which was referred to adjudication.  The dispute may involve or require a declaration as to what the true value is or a directive decision that money be paid.  This issue in any given case will depend on the facts of the case and the wording of the adjudicator’s decision.
  • On the facts of this case the adjudicator was clearly calling for payment by Celtic.  He was not simply requiring that the value of Rok’s claims for compensation should be the subject of later adjustment in certificates.
  • If it is clear from the wording of the decision and in context that payment is required to be made, it is not essential that an adjudicator’s decision should specify that payment should be made within a specific time.
  • Rok was therefore entitled to enforce the adjudicator’s award by way of summary judgment.  

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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