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He decided the issue over the capping beam was not part of the dispute i.e. not part of the valuation of payment application 34 and outside his jurisdiction. In Court, Employer applied under Part 8 CPR for declarations including one that the Adjudicator’s decision was unenforceable for failure to address the capping beam claim. Contractor sought declarations that Payment Notices 34 and 34a were invalid and that the Decision was valid and enforceable. Employer conceded Payment Notice 34a was out of time and invalid but relied Payment Notice 34 as valid but said the Decision was not binding because of the failure to address its capping beam cross- claim. They contended that whilst Decision was not binding in respect of the extent of its set off, it was binding as to value of Payment Notice 34. In the result the Contractor was no longer able to rely on Payment Application 34 as a payment notice and was only entitled to the amount identified by the adjudicator (which it had paid).
Developments v Laxmanbhai Construction (UK) Ltd [2021] EWHC 2441 (TCC) 7 September 2021 (HHJ Eyre QC) - Set off – failure to consider defence – validity of payment notice – severance LLP This was a complex case. Claimant Employer engaged defendant Contractor to build 79 residential units in London on a JCT DB 2011 with amendments for a contract sum of £27.39m. Employer served a “holding” notice relied on as a valid Payment Notice for £0.97p (i.e. a nominal £1 less 3% retention) within the requisite period (Payment Notice 34). It later served a detailed Payment Notice (34a) outside the requisite period. This process had been employed in previous payment applications 31-33. Contractor’s interim payment 34 had been for £1,888,660.70 whereas Payment Notice 34a was for £657,218.50 which was paid. Instead of commencing a ‘smash and grab’ adjudication based on its payment application Contractor commenced a true value adjudication over application 34. It wanted to settle the way in which payment applications were dealt with and avoid a further adjudication by the Employer for a true value. In the adjudication Employer relied on its Payment Notice 34. It also raised a counterclaim for a defective capping beam claiming loss of future rental of £149, 692.
Contractor argued that Payment Notice 34 was invalid, and Decision, enforceable in its entirety.
Alternatively, if not enforceable in full, it was not enforceable at all with the consequence that the notified sum was the amount set out in Payment Application 34 (see s.111 (1) of the Act); and Employer was obliged to pay that sum even if the Decision was enforceable (Employer's redress after payment was to seek to recover any overpayment).
Adjudicator valued application No 34 at £103,826.98.
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