Construction Centre Group Ltd v Highland Council CA127/02

Here Lord Macfadyen had to consider a dispute arising in relation to the Small Isles and Inverie Ferry scheme. The defenders resisted payment of an adjudicator's decision in the sum of ?250k. By clause 66 of the contract, the parties had to give "effect forthwith to every decision of ... the Adjudicator on a dispute given under this clause" unless that decision was revised by agreement or the dispute had been referred to arbitration and an arbitral award had been made. The Highland Council argued that the effect of awarding summary judgment would be to give a final judgment in place of an interim decision. Lord Macfadyen disagreed, saying that not to allow enforcement would obstruct the purpose of section 108 of the HGCRA. One of the points of adjudication was to obtain payment on a provisional basis. CCGL were not asking the Court to endorse the soundness of the adjudicator's decision but were asking the Court to recognise that the parties had committed themselves contractually to implement that decision. The Highland Council also argued that as they had a claim against CCGL for the payment of liquidated damages (quantified at a sum in excess of ?250k), they were entitled to refuse to pay the sum awarded. A valid notice had been served in pursuant to section 111 of the HGCRA. CCGL argued that as the liquidated damages claim could have been advanced before the adjudicator, the Highland Council could not rely on it now to resist enforcement. Further, CCGL submitted that section 111 referred to notices in relation to payment certificates and not to notices in respect of adjudicator's decisions. Lord Macfadyen held that as the Highland Council had chosen not to advance their retention argument before the adjudicator, they could not rely upon it now. That said, the right of retention was not lost and that right remained against any future sum, which might fall due to CCGL under the contract. However, there had been nothing to prevent the Highland Council from putting forward their claim for liquidated damages in the adjudication. It was now too late. Section 111 was not intended to permit the giving of a withholding notice in respect of an adjudicator's award. Lord Macfadyen concluded that "it destructive of the effectiveness of the institution of adjudication if a responding party could decline to put forward an available defence in the course of the adjudication, then give a section 111 notice seeking to withhold on that ground the sum awarded by the Adjudicator".

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