ALE Heavylift v MSD (Darlington) Ltd

Adjudicators’ decisions under the Housing Grants Construction and Regeneration Act 1996 are ordinarily enforced summarily and on a provisional basis. A party cannot resist enforcement by advancing a jurisdictional objection which was not taken during the adjudication where the parties’ written submissions establish the agreement and the dispute referred. The statutory withholding-payment regime is comprehensive. A cross-claim or set-off raised out of time cannot generally be deployed against the adjudicator’s award. Refusing to consider such a claim is not a breach of natural justice where the parties had notice of the applicable contractual and statutory requirements. A stay based on the claimant’s financial position requires consideration of all the circumstances, including whether that position has materially deteriorated since the contract and whether the applicant has promptly commenced proceedings to determine its cross-claim.

ALE sought summary judgment enforcing an adjudicator’s decision requiring MSD to pay for the hire of a crane and operators used on construction works at Wembley Stadium. The adjudicator awarded £80,000 plus VAT, interest, costs and fees, and declined to consider MSD’s alleged set-off or counterclaim because no effective withholding notice had been served within the prescribed period.

MSD challenged enforcement on jurisdictional, contractual, set-off, natural justice and stay grounds. It argued that the parties had entered into two contracts, or had substantially varied the written contract orally, that the adjudicator had answered the wrong question, and that ALE’s financial position justified a stay.

1. Enforcement. The claim to enforce the adjudicator’s award succeeded. The statutory scheme requires adjudicators’ decisions to be enforced pending final determination, subject only to limited exceptions. The court should interfere only where it is plain that the adjudicator decided a question not referred or acted in an obviously unfair manner, as explained in Carillion Construction v Devonport Royal Dockyard [2006] BLR 15.
2. Jurisdiction and the contract. The Notice of Adjudication and Referral Notice identified a written agreement conforming with section 107 of the Housing Grants Construction and Regeneration Act 1996. MSD’s response addressed the same contract. Under section 107(5), the material contractual terms alleged in written adjudication submissions and not denied were sufficient to constitute an agreement in writing. In any event, MSD had waived a jurisdictional challenge based on the alleged oral variation or second contract.
3. Withholding and set-off. The adjudicator correctly treated MSD’s alleged losses as a counterclaim and excluded them. The obligation to pay had crystallised, while the purported withholding notice was out of time and ineffective under section 111 of the Act and clause 10 of the Scheme. The statutory regime provides a comprehensive code governing withholding against sums contractually due. The exclusion of the counterclaim was within the adjudicator’s jurisdiction.
4. Natural justice. There was no procedural unfairness or apparent bias. MSD had notice of the dispute and had agreed to contractual provisions requiring compliance with the adjudicator’s decision without set-off or counterclaim. Parliament’s prescribed payment machinery could not itself be characterised as unfair.
5. Stay. A stay was refused. ALE’s accounts caused serious concern, but its financial position was materially similar to that when the contract was made. MSD had not commenced adjudication or court proceedings to determine its alleged losses, making the date and circumstances of any repayment uncertain. Considering all the circumstances and the policy of prompt enforcement, a stay was inappropriate.
6. Judgment was entered for ALE for £109,772.26, including agreed interest to judgment, payable by 4 pm on 16 August 2006. Costs were directed to detailed assessment.

This was a first-instance application to enforce an adjudicator’s decision dated 18 May 2006. No earlier court decision in the same proceedings is stated.