The sub-sub-contractor remained bound by the final account agreement despite the sub-contractor having wrongly withheld the sum of the sum of 7,362 from the payment of 142,901 towards the agreed final account sum of 707,500 in breach of that agreement

Technology and Construction Court
His Honour Judge Philip Raynor QC
20 November 2009


The sub-contractor and the sub-sub-contractor agreed in principle to settle the sub-sub-contractor’s final account value in the sum of £707,500. The sub-contractor sent its “certificate of final agreement” with this total for signature. The sub-contractor stated that the current sum due for payment towards the agreed sum of £707,500 was £142,910. The sub-sub-contractor signed and returned the “certificate of final agreement” duly signed by it. The sub-contractor only paid £135,538 because of damage to a gas main. The sub-sub-contractor stated that this meant that the settlement agreement had become null and void, sent a revised final account by which it claimed £1,030,000 and started an adjudication in which it claimed this sum. The adjudication proceeded but was stayed pending the determination of the sub-contractor’s application for a declaration that the sub-sub-contractor was bound by the final account agreement.


Judge Raynor held that the sub-sub-contractor remained bound by the final account agreement. Declarations should be made that to that effect and that the adjudicator therefore did not have jurisdiction to decide the sub-sub-contractor’s claim for what it contended was its full final account entitlement. The final account agreement took effect on the basis that the parties intended their arrangements to have legal effect when the sub-contractor submitted the “certificate of final agreement” for the sub-sub-contractor’s signature and the sub-sub-contractor signed and returned it. A term was to be implied into the final account agreement that the agreed payment of £142,910 towards the settlement sum of £707,500 should be made within a reasonable time, namely within ten days of the agreement having been made, notwithstanding that the sub-contractor had not provided the confirmation sought by the sub-sub-contractor that payment would be made within ten days at most. The final account agreement was not conditional on £142,901 being paid and even if it was, the sub-contractor’s wrongful withholding from that sum of £7,362 was not a wrongful repudiation of that agreement. Payment in full of £142,901 towards the settlement sum was not a condition of the final account agreement and the sub-contractor’s initial payment of only £135,538 was in any event not a breach of that condition entitling it to terminate that agreement.