Henry Brothers (Magherafelt) Ltd v Brunswick (8 Lanyon Place) Ltd (NI, QBD - 16.9.2011)
HENRY BROTHERS (MAGHERAFELT) LTD v BRUNSWICK (8 LANYON PLACE) LTD
Northern Ireland, Queen’s Bench Division
16th September 2011
The contractor claimed the release of all retention monies under the JCT contract. The employer unsuccessfully contended in this first adjudication that the works were not practically complete. The adjudicator in awarding the contractor one half of the retention monies held that the works were deemed to be practically complete when the employer took partial possession. However, the adjudicator declined to award the contractor the second half of the retention money on the basis that (i) Whilst the contractor had failed to serve a schedule of defects within 14 days of the expiry of the defects liability period as it was contractually required to do, it had referred in its response to defects in general terms and (ii) There might be outstanding notified defects. Shortly after the decision was issued, the employer served a schedule of defects and a notice of payment due for those defects in a sum exceeding the total retention monies.
The contractor began a second adjudication by which it claimed the release of the second half of the retention monies. The employer contended that (i) It could not have issued a schedule of defects because it did not consider that practical completion had been achieved (ii) By the time the adjudicator in the first adjudication decided that practical completion had been achieved, the contractual period for the issuing of a schedule had expired and (iii) It was not precluded from withholding sums due for defects even if prior notice had not been given. The adjudicator declined to make any award on the basis that the employer had been entitled to withhold monies for defects even though no notice had been given. The contractor began enforcement proceedings in respect of the award of the first half of the retention monies.
Weatherup J held that the employer’s claim for allegedly outstanding defects did not prevent the contractor from obtaining judgment for the first half of the retention monies.
The employer found itself in the dilemma after the award of the first half of the retention monies of (i) The adjudicator finding in the first adjudication that practical completion had been achieved and (ii) It therefore not having served a schedule of defects within 14 days of the expiry of the defects liability period. Whilst the adjudicator in the second adjudication recognised the employer's dilemma and its entitlement to withhold payment for defects in the absence of any withholding notice (i) The terms of the contract did not provide any basis for withholding the amount of the claim for damages from an adjudicator's award and (ii) The findings and comments by the adjudicator in the first adjudication did not create a right of set off against his award.