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The recent case of J&B Hopkins Limited v Trant Engineering Limited  EWHC 1305 (TCC) is another case relating to enforcement of an adjudicator’s decision based on a failure by the paying party to serve payment or pay less notices.
Trant instructed J&B Hopkins to carry out maintenance and electrical works at a recycling plant in the sum of approximately £1.7 million.
In July 2019, J&B Hopkins issued a payment application (No. 26) in the sum of approximately £800,000 plus VAT. Trant did not issue a valid payment notice or pay less notice. In January 2020, J&B Hopkins commenced adjudication proceedings for payment of the sum stated as due in application number 26. The adjudicator found in favour of J&B Hopkins and, in the absence of payment, J&B Hopkins subsequently commenced proceedings to enforce the decision reached by the adjudicator.
As a result of the COVID-19 pandemic, the hearing took place remotely via Skype.
Trant sought to resist enforcement of the adjudicator’s decision on the grounds that the payment cycle had moved on since the time of the application in question. In particular, Trant submitted that J&B Hopkins was no longer entitled to be paid the sum in payment application number 26 because it had been superseded by subsequent interim payment cycles. Trant also argued that by enforcing the adjudicator’s decision, this would undermine the “correction” principle whereby interim payments can be corrected in the next payment cycle.
Whilst the Judge accepted that a sum in an interim application, which becomes due as a result of a failure to serve notices, can be corrected on later applications, he held that this correction principle does not have the effect that the amount due was not due at all.
The Judge further held that disputes on earlier applications do not disappear or cease to exist because a subsequent application is made on an interim basis. If this were the case, given that payment cycles are often monthly, and that adjudications are normally decided in 28 days (plus the time needed by the referring party to arrange the nomination and appointment of adjudicator) it would be verging on impossible for parties to conduct an adjudication and enforce the decision before the next application fell due.
For the reasons set out above, the Judge rejected Trant’s submissions and gave judgement in favour of J&B Hopkins.
In summary, this case confirms that a party cannot withhold payment on an adjudication decision from an earlier payment cycle because it has been superseded by a subsequent interim payment cycle. The Judge in particular reiterated the importance of serving notices correctly and on time and the potentially significant consequences that will arise if a party fails to comply with the notice procedure, stating:
“Serving the relevant and required notices is not an impossible or Herculean task. Failure to do so has certain consequences. These are widely known and this judgement provides another example. … If an Adjudication Decision has been issued with jurisdiction and without material breaches of natural justice, it will be enforced by way of summary judgement.”.
For more information on the article above please contact Sarah Wasniowski.