I should have realised that as soon as I suggested that the TCC appeared to have gone quiet, we’d get an adjudication enforcement decision. Good old Sir Peter!
I wrote about the importance of withholding notices recently. Their importance has been underlined again, in Letchworth Roofing Company v Sterling Building Company. Parties really must get to grips with the principle that if they fail to serve a valid withholding notice, they must pay the money that is due.
This case has thrown up another interesting point: what happens when the referring party asks the adjudicator to consider and decide an issue which would not have otherwise been necessary?
In Letchworth v Sterling, the referring party (Letchworth) made it clear that it was not averse to the adjudicator deciding the merits of the cross-claim and calculating the sum that might otherwise have been withheld “solely to assist the future consideration of the final account”. It put it as follows:
152. Whilst we will demonstrate below that there is no valid withholding notice in place and as such no monies can be deducted, notwithstanding Sterling have failed to issue a valid withholding notice, the claim against Letchworth fails in its entirety, and is a total fabrication.
153. We have requested that the adjudicator still considers the merits of the Sterling claim, even if he determines no withholding notice is in place, and we ask here for Sterling to consent to this request, which is made to benefit the conclusion of the account after the decision.”
This issue would never have arisen if the drafting, which the court described as clumsy, had been clearer.
One also has to wonder what the referring party hoped to achieve by seeking guidance of this nature from the adjudicator. Surely it was inevitable that if the adjudicator assessed the cross-claim and gave a value to it, the responding party (Sterling) would seek to have that cross-claim deducted from the adjudicator’s decision.
Without sight of the submissions and the decision, it is hard to second guess the adjudicator’s actions, but it is certainly arguable that he could have deducted the cross-claim from the sums he decided were due to the referring party. If he had awarded the referring party £46,000 odd less the cross-claim (£25,000), would the referring party really have challenged his decision?
Finally, it seems that the declaration the adjudicator made on the cross-claim was made within his jurisdiction (the referring party and not the responding party first raised it). It would have been open to the responding party to bring Part 8 proceedings to enforce this declaration, rather than waiting for the referring party to start enforcement proceedings and then arguing the decision was in breach of natural justice and a nullity. It seems to me, the responding party cannot now support such an application because it will be caught by the reprobation/approbation argument.