Beck Interiors Ltd V Classic Decorative Finishing Ltd

It was no defense to the contractor's claim to enforce the adjudicator's award of a specified sum to it that a sum was due to the sub-contractor under the final account for it's works on a separate contract
Beck Interiors Ltd V Classic Decorative Finishing Ltd
Technology and Construction Court
Coulson J
12 July 2012
Coulson J rejected the sub-contractor contended that the adjudicator’s award of a specified sum to the contractor should not be enforced because it should be permitted to set off against that sum by way of defence the (greater) sum due to it under the final account for its works on a separate sub-contract on another project.
The general principle was that it was rare for the unsuccessful party in an adjudication to be permitted to set off a separate claim against the sum awarded by the adjudicator on the basis that so to permit would defeat the purpose of the Construction Act. The possible exceptions to this general principle were where (i) A set off provision in the contract was capable of being construed as giving the unsuccessful party the right to make such a set off and (ii) The contract machinery relating to withholding notices also permitted a set off and cross claim and that the adjudicator did not order immediate payment but instead gave a declaration as to the proper operation of the contract or ordered that the sum due should be paid but only as part of and pursuant to the existing contract machinery. Exception (i) did not apply because there was no express set off provision in the sub-contract, the withholding notice provision was in unexceptionable form and no withholding notice was in any event given by the sub-contractor. Exception (ii) did not apply in the instant case because the adjudicator ordered the immediate payment of this sum without further ado and his decision was in no sense a declaration as to how the contract should be interpreted.
This meant that the sub-contractor had to rely on its equitable right to set off. Caselaw stressed that an equitable set off could only be permitted where the cross claim was so closely connected with the claim that it would be manifestly unjust to allow the claim without taking into account the cross-claim. However, equity could not possibly require the court to take into account the claim on the separate Irish contract when addressing the contractor’s claim for summary judgment in connection with the London contract. In addition the claim and cross claim could not be said to arise out of the same or similar subject-matter.