| Date | 12 June 2002 |
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| Judgment | Total M & E Services Limited -v- ABB Building Technologies Limited, TCC 26 February 2002 |
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| The Issue | Various contentions concerning the enforcement of an adjudicator's decision. |
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| Implication |
Where the underlying contract does not provide for the reimbursement of parties' costs in adjudication, there can be no valid claim for costs as damages. The court may order payment into court of part of an adjudicator's decision, where there has been no adjudication of the underlying merits. |
printThe recent case of Total M & E Services -v- ABB Building Technologies examined a number of issues surrounding the enforcement of an adjudicator's decision, including whether the cost of the adjudication could be recoverable as a claim for damages and whether a stay of execution of judgment should be granted. ABB were engaged to undertake electrical works at Somerset House in London and entered into a labour only sub-contract for electrical installation works with Total. The price agreed was £250,000, the scope of the works being identified upon drawings. The sub-contract prescribed no mechanism for variation of the works, but nevertheless substantial works beyond the original scope were performed by Total. By the time the matter came to adjudication, the amount claimed by Total was for a sum in excess of £450,000. An early challenge to the jurisdiction of the adjudicator was made by ABB, when it was argued that each and every item of additional work was not instructed under the sub-contract, since that contract did not contain a clause enabling the instruction of variations. ABB contended that, at best, each individual instruction gave rise to a separate collateral contract for that particular element of work. Accordingly, argued ABB, it was not open to Total to refer disputes under these different contracts to adjudication under the Construction Act. The appointed adjudicator listened to these contentions but informed the parties that he would nevertheless proceed with the adjudication. The matter was raised once again on enforcement proceedings in front of His Honour Judge David Wilcox. Judge Wilcox concluded that the adjudicator had been correct to continue with the adjudication on the basis of a contract plus variations, rather than separate oral contracts. The additional work performed by Total was the same type of work as the original sub-contract. The contract as varied was evidenced partly in writing and partly oral, and the adjudicator therefore had jurisdiction to make determinations as to the value of the additional works. Another matter placed before Judge Wilcox was whether Total was entitled to recover the costs of the adjudication as a damages claim. Total accepted that the Statutory Scheme did not make any provision for the adjudicator to award costs, unless the parties agreed otherwise. The adjudicator therefore had no jurisdiction to order that one party's adjudication costs should be paid by the other. However, Total argued that if a contractor fails to pay under a construction sub-contract, it is foreseeable that the sub-contractor will seek adjudication and properly incur costs. These should be recoverable as damages. Judge Wilcox rejected this claim. The statutory scheme envisages that both parties may go to adjudication and incur costs which they cannot under the Act recover from the other side. It followed in Judge Wilcox's view, that such costs could not therefore arise as damages for breach. A further issue in contention between the parties was whether ABB was entitled to maintain a set-off in respect of defective work. It is not clear why this was not argued as an abatement. Nevertheless, the adjudicator had decided that ABB had failed to serve a withholding notice under Section 111 of the Construction Act and had therefore rejected the claim for set-off. Judge Wilcox concluded that ABB were seeking to reopen this issue, which in his judgment the adjudicator had properly dealt with. In consequence, Total was entitled to summary judgment in the full amount of the adjudicator's decision. Judge Wilcox was then asked to determine whether there should be a stay, or deferment, of that decision. ABB argued that Total M & E Services, being a labour only sub-contractor, were clearly not a fixed asset-rich company. It expressed concern that should Total receive the amount of the summary judgment claimed, they would cut and run disposing of the monies and liquidating the company. Judge Wilcox concluded that it was not just and fair for the court to attempt to reallocate the commercial risks accepted by the parties. ABB had elected to enter into a contract with a non-asset rich sub-contractor. Accordingly it should not be able to withhold a payment to the sub-contractor on the pretext that there would be an absence of security for those monies in the future, should the decision upon entitlement be reversed. Surprisingly however, Judge Wilcox did order that the monies relating to the set-off, which had been disallowed by the adjudicator, should be paid into court pending its final resolution. This was considered to be appropriate, because there had been no adjudication on the merits of the disputed set-off made by ABB, merely a determination by the adjudicator that there had been no valid withholding notice issued by ABB.
CJ-0223
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