Enforcement of decision: Westwood -v- Blyth

The effect of determination on the enforcement of an adjudicator's decision.

Summing up

The case:

Westwood Structural Services Ltd -v- Blyth Wood Park Management Company Ltd [2008] EWHC 3138 (TCC), 9 December 2008

The issue:

The effect of determination on the enforceability of an adjudicator's decision under the JCT Minor Works, 1998 Edition.

The implication:The decisions of an adjudicator are binding in the absence of any jurisdictional arguments. The determination provisions within JCT Minor Works 1998 cannot be used to defeat a contractor's entitlement to be paid a sum that fell due before the determination, even though an adjudicator may have reached his decision as to that sum after the date of the determination.

Back in 2003, the Court of Appeal made an important decision in the case of Levolux AT Limited -v- Ferson Contractors Limited. The situation in this case was that the claimant's GC/Works subcontract had been determined by the defendant who then relied upon the determination provisions to avoid paying a sum decided as due to the claimant pursuant to an adjudication commenced after the determination.

In the Court of Appeal decision, Lord Justice Mantell said: "The contract must be construed so as to give effect to the intention of Parliament rather than to defeat it. If that cannot be achieved, then the offending clause must be struck down." In other words the contractual provisions could not be used to avoid compliance with the adjudicator's decision.

The recent case of Westwood Structural Services Limited -v- Blyth Wood Park Management Company Limited [2008] concerned an application to enforce an adjudicator's decision in the sum of £49,583.31 in circumstances where Blyth Wood Park were seeking to rely upon the determination of Westwood, employed under the JCT Minor Works 1998 Edition, to avoid complying with the adjudi-cator's decision.

The key facts in this case were that Westwood contended that the works were practically complete on 15 January 2008, relying on a letter from the Contract Administrator, but two days later there was a letter from the Contract Administrator expressing concerns about workmanship. Westwood was told by the Contract Administrator not to carry out any further work. On 16 April 2008 Westwood commenced an adjudication seeking declarations that practical completion of the works was achieved on 15 January 2008 and that the letter of 17 January 2008 was a repudiatory breach.

Westwood also claimed for sums due for the balance of the work at 15 January 2008. Then on 25 April 2008, the Contract Administrator determined the contract and it was argued in the adjudication that Blyth Wood Park now did not have to make any further payment because of the determination provisions of the contract.

Clause 7.2.3 of the contract states that "Upon determination of the employment of the Contractor the Employer shall not be bound to make any further payment to the Contractor that may be due under this Agreement until after completion of the works and the making good of any defects therein"

Practical completion

In the adjudicator's first decision of 6 June 2008, he found that practical completion had occurred on 15 January 2008, that the letter of 17 January was not a repudiatory breach and he directed that the sum of around £40,000 plus VAT and fees should be paid to Westwood by Blyth Wood Park.

The adjudicator refused to deal with the question of the determination in his first decision because it arose after the adjudication had commenced. The adjudicator then decided in his second decision that Blyth Wood Park had validly determined the contract on 25 April 2008, but that clause 7.2.3 did not bite when the payment arose out of an adjudicator's decision and also that further payment in clause 7.2.3 applied to future payment not to payment that became due before the determination.

Despite these decisions, Blyth Wood Park refused to pay and Westwood applied to the court to enforce the adjudicator's first decision. One would have thought that Blyth Wood was on a sticky wicket, but they nevertheless elected to defend the application on the basis that they argued that the sum directed to be paid by the adjudicator was not due until after the determination and it was not therefore due now.

In summary, Judge Peter Coulson enforced the adjudicator's decision for the following reasons:

1. The adjudicator had in his first decision made it clear that the sum to be paid should have been paid by 12 February 2008. He said that while this may be wrong either in fact or law, following the case of Bouygues -v- Dahl-Jenson, the absence of any jurisdictional point in respect of decision 1 meant that the decision is binding and the sum is due and payable.

2. There was no cross-application seeking to appeal the adjudicator's second decision, which had decided that the sum in the first adjudication was not caught by clause 7.2.3 and was due in any event. Again this decision was binding.

By way of comment the judge added that following the case of Levolux and others, an adjudicator's decision may have a different status to a certificate or an obligation to pay a specified sum under the contract.

Finally, he observed that the adjudicator was probably right in concluding that the sum was due on 12 February 2008 and it was contrary to the terms of the contract and the Act that the employer could defeat a claim by reference to an event that occurred two-and-a-half months after the money should have been paid.