RMC Building and Civil Engineering Ltd v UK Construction Ltd (TCC - 15.2.2016)
The basis for the adjudicator’s decision was the contractor’s failure to issue a pay less notice in respect of the sum applied for by the sub-contractor in an interim payment application. The contractor submitted that (i) The sum applied for and awarded by the adjudicator was significantly greater than the sum recorded by the sub-contractor’s quantity surveyor and would therefore, if paid over immediately, constitute a windfall (ii) The sub-contractor’s repudiation of the sub-contract, by walking off site before submitting the interim payment application in question, meant that any overpayment could not be remedied in subsequent interim certificates (iii) Making the windfall payment would inevitably adversely affect its cash flow and could potentially cause significant damage and (iv) The injustice to it would greatly outweigh any detriment suffered by the sub-contractor, which could in any event be compensated by a subsequent award of interest.
Edwards-Stuart J rejected the contractor’s submissions and declined to order a stay of execution of any part of the judgment sum in respect of the adjudicator’s award of that sum to the sub-contractor in consequence of the contractor’s failure to serve a pay less notice in respect of the sub-contractor’s interim payment application.
This was not one of those rare cases in which there should be a stay of enforcement of any part of the judgment sum. It would have been unjust to the sub-contractor to impose a stay of execution of any part of the judgment sum. It was not the case that to execute the judgment would have amounted to a manifest injustice to the contractor. The contractor had already issued Part 8 proceedings with the intention of establishing the sub-contractor’s true entitlement in respect of the payment application. The contractor failed to adduce any evidence that (i) It would suffer severe financial hardship if required to pay the full amount of the judgment sum or (ii) There was a real risk that it might be unable to recover any overpayment (if it was subsequently shown that there was one) from the sub-contractor when the dispute was finally resolved. The contractor’s submission that any detriment suffered by the sub-contractor could in any event be compensated by a subsequent award of interest should be also be rejected.