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The absence of a valid order for payment is no bar to the enforcement of an adjudication decision

Judgment was handed down today (23 July 2020) in WRW Construction v Datblygau Davies Developments [2020] EWHC 1965 (TCC).

This case concerned a final account dispute arising under the post-termination final account provisions of the JCT 2011 Design and Build Contract.

Following the termination of the contract, and the completion of the works by others, the Employer submitted its final account, contending that a sum of nearly £3.5 million was due to it from the Contractor.

A dispute arose as to the proper value of the final account, which the Employer referred to adjudication.  The Employer framed its Referral to give the Adjudicator jurisdiction to value the final account, but to order payment only from the Contractor to the Employer (and not the other way round).  In its Response, the Contractor contended that in fact the Employer owed it a further £700,000, and invited the Adjudicator to value the final account accordingly.

Following a three month adjudication, with expert quantity surveying and property valuation evidence on both sides, the Adjudicator valued the final account and found that the Employer owed the Contractor nearly £600,000.  He also ordered the Employer to pay that sum to the Contractor.

The Employer objected that ordering payment was outside the Adjudicator’s jurisdiction, and requested the Adjudicator to amend his decision pursuant to the slip rule to remove the order for payment.  The Contractor submitted that such an amendment would be outside the scope of the slip rule, and that it made no substantive difference in any event, because the sum was payable as a debt under the contract as a result of the Adjudicator’s valuation (which the Employer accepted was binding). The Adjudicator revised his decision to order the Contractor to pay a negative sum to the Employer.

The Employer refused to pay, so the Contractor brought proceedings to enforce the decision and/or recover the £600,000 that was due as a debt as a result of the decision.

The Employer resisted enforcement on the basis that the Adjudicator had no jurisdiction to order payment, and that granting summary judgment in respect of the valuation (in the absence of a valid order for payment) would amount to a final determination of the merits.  The arguments at the enforcement hearing focussed on whether the Contractor had to commence a further adjudication (to which it was accepted there was no defence) before the Court could give effect to the temporarily binding final account valuation.  The Court considered the Supreme Court decisions in Aspect v Higgins [2015] UKSC 38 and Bresco v Lonsdale [2020] UKSC 25 and agreed with the Contractor that a further adjudication was unnecessary: the valuation gave rise to a binding contractual obligation to pay the sums due as a result, and enforcing that obligation by summary judgment would not preclude the Employer from bringing its own proceedings in court for a final valuation of the account (and recovering any overpayment if established).

Accordingly, summary judgment was granted.

The Employer also sought a stay of execution, on the usual grounds, but also relying on the effect of COVID 19 on the Contractor’s business.  The Court declined to order a stay on the basis of a lack of evidence of any real risk that the judgment sum would not be repaid.

Crispin Winser acted for WRW Construction in the adjudication and on the enforcement, instructed by DJM Law.

Please click here for the judgment.

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