Sir Robert McAlpine v Pring & St Hill Ltd
The sub-contractor could not set-off against the sum awarded by the adjudicator to the contractor various sums allegedly due from the contractor to the sub-contractor which the sub-contractor claimed in a separate adjudication (already) begun by it against the contractor
20 October, 2001
The contractor alleged that the sub-contractor had caused damage to the works and referred the resulting dispute to adjudication. The adjudicator decided that the sub-contractor should pay the sum claimed. The contractor applied for summary judgement to enforce the decision. The sub-contractor began a separate adjudication in which it claimed various (unconnected) sums. The sub-contractor that it was entitled to raise a set-off to the amount awarded in the amount of the claims it had brought in the further adjudication. Section 110(2) of the Construction Act 1996 provides that every construction contract is to provide for the giving of a notice by the paying party not later than the date on which the payment became contractually due specifying the amount (if any) of the payment (proposed to be) made and the basis of its calculation. Section 111(1) provides that a party cannot withhold payment after the final date for payment of a sum due under the contract unless it has given an effective notice of intention to withhold payment (on the basis that a notice under section 110(2) might constitute such a notice). Judge Moseley held that the sub-contractor that it was not entitled to make its set-off. The sub-contractor's submission that the sum awarded by the adjudicator was not one due under the contract but was instead a payment due under the adjudication with the result that it was not necessary for the sub-contractor to have served a notice of intention to withhold payment under section 111(1) should be rejected. This was on the basis that section 111(1) had a wide application and that there was no reason why it should not be applied in the circumstances of the instant case. In particular the contractual provision in the instant case that the parties were to comply with any adjudicator's decision (which reflected section 108(3)) had the effect of making any sum awarded by an adjudicator one payable under the contract for the purposes of section 111. Advice Note This decision makes it clear that a sum awarded in a decision is one which is ?due under the contract? for the purposes of a notice of intention to withhold payment under section 111 of the Construction Act.