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Court makes an order for payment despite absence of such an order in Adjudicator’s award

In a rather helpful judgment for many, the Court has held in the case of WRW Construction Ltd v Datblygau Davies Developments Ltd [2020] EWHC 1965 (TCC), that the sum determined as due by the Adjudicator must be paid notwithstanding the Adjudicator’s decision did not order payment to be made.

In this case, Datblygau Davies Developments Ltd (DDD) appointed WRW Construction Limited (WRW) via an undated contract incorporating the JCT 2011 Design and Build Contract to design and build nine dwellings on a site in Twickenham, London for a contract sum of £2.2 million. The contract was ultimately terminated and in an adjudication initiated by DDD, DDD sought a valuation of the post-termination final account pursuant to clause 8.7 of the contract. DDD claimed payment of circa £3.3m from WRW and invited the Adjudicator to determine the sums payable by WRW to DDD and to order payment of the same.

In the Response, WRW set out its position that the valuation of the final account actually showed the sum of £695,035.63 was due to WRW from DDD rather than any sums being payable to DDD. WRW acknowledged that the Adjudicator had no jurisdiction to order a payment to WRW from DDD (given the Notice of Adjudication only permitted a valuation of the sums due to DDD). However, WRW further argued that because the Adjudicator had been asked to value the post-termination final account, that led to a position where DDD was indebted to WRW and that the Adjudicator should conclude that the sum due and payable by WRW to DDD was -£695,035.63.

Following a valuation of the final account, the Adjudicator determined that there was an amount due from WRW which was -£568,597.32.

Enforcement

WRW sought summary enforcement of the Adjudicator’s decision, namely, the payment of £568,597.32 from DDD. DDD submitted that the Court could not make an order for payment in absence of the Adjudicator’s decision actually making an order for payment. To do otherwise, would involve the Court in making a final determination on the merits of the post-termination valuation account. Instead, DDD argued that there would need to be a further adjudication between the parties which would proceed on the basis of a valid and binding valuation of the post-termination final account reached in the previous adjudication.

Whilst the Court accepted that the Adjudicator did not have jurisdiction to award a monetary sum to WRW as the responding party to the adjudication, the Court considered the key question was really whether on the basis of a valid, binding valuation of the post-termination account the Court's enforcement of that valid award could include an order for payment of the sum due as a consequence of the binding valuation. The Court determined that there was no bar to enforcing a temporarily binding valuation in an adjudication award by making an order for payment of the monies due as a result of that valuation. The Court stated that “it would be contrary to principle and established authority for the Court to effectively force a party who has the benefit of an award in its favour as far as a balance being due to it, thereafter to have to commence a further adjudication (to which there is no defence) for the purpose of obtaining an order for payment from the Adjudicator before returning to the Court if necessary, for further enforcement proceedings”. As such, summary judgment for the sum sought was granted in favour of WRW.

DDD also applied for a stay of the enforcement so that sums were only paid into Court rather than to WRW as DDD intended to commence court proceedings to finally determine the issues in this case. However, DDD had not commenced any proceedings to re-open the valuation determined by the Adjudicator by the time of this hearing. The Court stated that it could not see any good reason why such proceedings should not have commenced some time ago and in the circumstances, this was not a sufficient reason to stay enforcement and DDD were required to pay the sums ordered to WRW.

What does this mean for you?

Although this case was made on specific points, there does appear to have been a more general principle established that the absence of an order for payment is not a bar to the enforcement of the sums ultimately flowing from an Adjudicator’s decision. This potentially opens up the options for Responding Parties if they can prepare their Response to set out their alternative valuation of the sum owed in full such that a counter (negative) valuation can be assessed by the Adjudicator. Adjudicators do not always go so far as to assess the full counter valuation and may well stop at £0 however, it is worth considering pushing Adjudicators further in this regard and refer them to the WRW case when making submissions in the Response.

This case also serves as a warning for Referring Parties. The narrowly worded Notice of Adjudication may not be sufficient to stop a Responding Party obtaining an award they can enforce in their favour and in such circumstances, the Referring Party should act quickly to commence court proceedings to finally determine the issue to have any hope of staying enforcement.

For more information on the article above please contact Lianne Edwards and David Tomlin.

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