The contractor carried out works to a residential home. The contract was, therefore, not a "construction contract" as defined in the Housing Grants, Construction and Regeneration Act 1996. However, the contract was the JCT Minor Works, 1998 edition including MW11. The amendment incorporated adjudication provisions and so the parties were contractually obliged to adjudicate if one of the parties commenced adjudication in accordance with the contract. On 10 September 1999 the architect certified the sum of 拢13,558 due to the contractor. On 14 September 1999 the employer served a withholding notice under the contract seeking to withhold amounts for defective work, non-performance and liquidated damages. The contractor disputed the amount withheld, and referred the dispute to adjudication. The adjudicator reduced the sum due to the contractor, but nonetheless decided that the employer should pay an amount together with costs to the contractor. The employer did not pay.
The employer argued that it was entitled to withhold sums due by way of liquidated damages against the adjudicator's decision.

Reference

The employer argued that clause 2.3 of the amended contract provided the employer with the right to set-off liquidated damages from any sum due under the contract. The employer maintained that this included sums due under an adjudicator's decision, which in turn was based upon the contractual provisions. Reliance was placed upon Bovis Lend Lease Limited vs Triangle Developments Limited" (2nd November 2002). On the other hand, the contractor argued that the contract should be interpreted to give effect to the adjudication provisions, and accordingly no set-off against an adjudicator's award should be allowed following the Court of Appeal case of Levolux AT Limited v Ferson Contractors Limited [2003] EWCA Civ 11 CA. HHJ Hull QC held that clause 2.3 of the contract did not provide a party with the right to set-off liquidated damages against an adjudicator's decision. He followed the Court of Appeal in Levolux considering that the approach in Bovis had been disapproved by the Court of Appeal.

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Postscript

It is clear that the courts will now follow the Court of Appeal's ruling in Levolux and enforce an adjudicator's decision in preference to the contractual provisions providing for set-off. This reinforces the view that a respondent to an adjudication, that considers that it has a cross-claim must commence a cross-adjudication if it is to have any chance any defeating the enforcement of an earlier adjudicator's decision. Many thanks to Brent McDonald of 2 Temple Gardens for supplying details of this case.