ADJUDICATION : ADVANCE PAYMENTS : AWARDS : ENFORCEMENT : LIQUIDATED DAMAGES : SET-OFF : STAY OF EXECUTION : STAY OF JUDGMENT ENFORCING ADJUDICATOR'S AWARD OF SUM TO PARTY : PARTY'S PARLOUS FINANCIAL POSITION AND CONTRACTUAL OBLIGATION TO REPAY SUM

It was appropriate to stay the enforcement of an adjudicator's award made in favour of a contractor against the employer for the payment of an advanced fee, in view of the contractor's parlous financial position and because it was contractually obliged to repay the fee imminently to the employer.

The claimant contractor (J) sought to enforce an adjudicator's award made in its favour against the defendant employer (S). S sought to enforce a separate adjudicator's award made in its favour against J, and to stay the enforcement of J's award. S had engaged J to design and construct a medical centre. The contract provided that S would make an advance payment to J, which would be reimbursed to S when the final account had been agreed. The relationship between the parties broke down and the contract came to an end. J did not put forward a final account despite the fact that the contract had come to an end several months earlier. S claimed that that amounted to an unacceptable delay on J's part. An adjudicator concluded that J was entitled to the immediate payment of the advance payment with interest. A second adjudicator concluded that S was entitled to liquidated damages for the period of culpable delay to the contract of which J was not entitled to an extension of time. It was accepted that J would not be in a position to repay the advance payment when the final account came to be agreed. S submitted that (1) it was entitled to set-off its sum for liquidated damages against the sum for advance payment; (2) the enforcement of J's award should be stayed.

HELD: (1) S could set-off its sum for liquidated damages against the advance payment sum due to J, Balfour Beatty Construction v Serco Ltd (2004) EWHC 3336 (TCC), Edwards v Hope (1884-85) LR 14 QBD 922 CA and Reid v Cupper (1915) 2 KB 147 CA applied. Not only did it follow logically that S was entitled to recover a specific sum by way of liquidated and ascertained damages but the second adjudicator had decided that there was such an entitlement in clear and unequivocal terms. It was not open to J to challenge the adjudicator's decision about S's entitlement by reference to material or claims that the adjudicator had already rejected, Macob Civil Engineering Ltd v Morrison Construction Ltd (1999) CLC 739 QBD (TCC) applied. (2) Due to J's parlous financial position it was just and equitable to stay the enforcement of the award for advance payment, Wimbledon Construction Co 2000 Ltd v Vago (2005) EWHC 1086 (TCC), (2005) BLR 374 and Herschel Engineering Ltd v Breen Property Ltd (2000) BLR 272 QBD (TCC)

applied. J's financial position had significantly worsened since the start of the contract, and it was clear from the company accounts that S's failure to pay J the advance payment was not responsible for the financial situation, and therefore there were no exceptions to granting the stay, Vago applied. Even if it was wrong to set-off the liquidated damages against the advance payment, regardless of J's financial position, the liquidated damages justified a stay of execution up to that amount. Finally, the advance payment was due back to S when the final account was considered and resolved, which should have been completed. Responsibility for the delay lay with J, and in those circumstances the advance payment had to be treated as being imminently repayable to S.

Judgment accordingly

[2009] EWHC 2312 (TCC)

JPA DESIGN & BUILD LTD v SENTOSA (UK) LTD : SENTOSA (UK) LTD v JPA DESIGN & BUILD LTD (2009)

“Lawtel”: 15.10.09