Key Facts
- •C.N.O Plant Hire Ltd (Claimant) and Caldwell Construction Ltd (Defendant) had a subcontract that did not comply with the Housing Grants, Construction and Regeneration Act 1996 adjudication requirements.
- •Three adjudications occurred: Mr. Latham's decision (5 March 2024) awarded £253,425.56 + interest to the Claimant; Mr. Lord's decision (14 April 2024) awarded £89,480.94 + VAT to the Claimant (partial payment made); a third adjudication (started 15 March 2023) is also mentioned.
- •The Defendant did not pay Mr. Latham's award and sought a set-off based on Mr. Lord's decision.
- •The dispute centered on whether the second adjudication was on the same or substantially the same subject matter as the first, and whether the court should allow a set-off despite the Defendant not seeking enforcement of Mr. Lord's decision.
Legal Principles
Enforcement of adjudication decisions: robust approach unless jurisdictional issues or breach of natural justice; immediate compliance with decisions unless otherwise directed; true valuation allowed only after compliance with payment obligations.
Bexheat Ltd v Essex Services Group Ltd [2022] EWHC 936 (TCC)
A party failing to pay a notified sum cannot commence a true value adjudication; preventing a paying party from commencing a true value adjudication on matters subject to a decision in the same payment cycle.
S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448, Broseley London Limited v Prime Asset Management Limited [2020] EWHC 944 (TCC), Sudlows Limited v Global Switch Estates 1 Limited [2023] EWCA Civ 813, Lidl Great Britain v Closed Circuit Cooling Limited [2023] EWHC 3051 (TCC)
Set-off against adjudication awards is generally not permitted; exceptions include specified contractual rights, logical implication from the adjudicator's decision, and court discretion where two valid decisions involve payments owed by each party.
FK Construction Limited v ISG Retail Limited [2023] EWHC 1042 (TCC)
Steps for court consideration of set-off: validity of both decisions; enforceability of both decisions; enforcement of both decisions if valid and enforceable; appropriateness of set-off given the basis of the first decision.
HS Works Ltd v Enterprise Managed Services Ltd [2009] EWHC 729 (TCC)
Outcomes
The court refused to allow a set-off of Mr. Lord's award against Mr. Latham's award.
The Defendant did not bring enforcement proceedings for Mr. Lord's decision; the court considered it unfair and inappropriate to exercise its discretion to order a set-off in the absence of such proceedings; jurisdictional challenges concerning Mr. Lord's decision were anticipated; the court found the Defendant's argument of different payment cycles too simplistic; and allowing the set-off without first enforcing Mr. Latham's award would undermine the policy of swift adjudication enforcement.