Balfour Beatty Construction Northern Ltd v Modus Corovest (Blackpool) Ltd

A contractual agreement to mediate may justify a stay, but the court should first determine whether summary judgment is available. Where a claim has no defence with a realistic prospect of success, there is no proper dispute requiring mediation.

An adjudicator’s decision will ordinarily be enforced unless the adjudicator decided a different question or acted in an obviously unfair manner. Reasons need only be coherent and sufficient to show that the referred issues were addressed. A failure to deal expressly with every argument is not ordinarily fatal.

Under the payment regime, an employer cannot avoid the consequences of failing to serve a withholding notice. Liquidated damages remain triable where extensions of time are genuinely disputed and have a realistic prospect of success.

Balfour Beatty sought summary judgment for enforcement of an adjudicator’s decision concerning additional payment for shop-front and glazing works, and for payment of an interim valuation certified by the employer’s agents. Modus sought a stay for mediation, resisted both claims, and counterclaimed for liquidated damages exceeding £2 million.

The contract incorporated the JCT Standard Form of Building Contract with Contracted Design (1998 edition), as amended. The issues included the enforceability and adequacy of the adjudicator’s reasons, alleged failures to address arguments and allow a rejoinder, the effect of payment and withholding notices, set-off, and whether the liquidated damages claim was suitable for summary judgment.

1. The application for a stay was refused. The mediation provisions were no more than an unenforceable agreement to agree. Even if binding, a stay would not be appropriate where the relevant claim had no defence with a realistic prospect of success. Mediation could be considered only for disputes requiring trial directions.

2. The adjudicator’s decision was enforced. The court’s starting point was the strong policy of enforcing adjudicators’ decisions, as stated in Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2006] BLR 15. The decision was substantively reasoned despite the adjudicator’s description of it as unreasoned. Its notes clearly explained the contractual analysis and conclusion.

3. An adjudicator need not address every argument in detail. It is sufficient that the decision shows that the issues necessary to resolve the dispute were considered. The alleged omission concerning the final-account mechanism was rejected. A natural justice challenge also required a significant breach or potential prejudice, which was absent.

4. The complaint about the absence of a rejoinder failed. The adjudicator’s timetable made no provision for one, Modus had not requested permission to serve one, and no significant new point or possible prejudice was identified.

5. Summary judgment was also given for the amount certified in interim valuation 29. The employer’s agents had given the payment notice required by clause 30.3.3. Clause 30.3.5 therefore did not apply. In any event, the certified amount was the amount properly due in the application, and the absence of a withholding notice prevented reliance on the liquidated damages counterclaim against it.

6. Modus could not set off its liquidated damages claim against either the adjudicator’s award or the interim payment. The court adopted the approach in William Verry Ltd v The Mayor and Burgesses of the London Borough of Camden [2006] EWHC 761 (TCC).

7. The Scheme for Construction Contracts did not apply to an employer’s claim for liquidated damages. The claim was nevertheless unsuitable for summary judgment because extensions of time and completion dates were the subject of bona fide disputes on which Balfour Beatty had a realistic prospect of success. Summary judgment on the counterclaim was refused.

Summary judgment was entered for Balfour Beatty in the total sum of £1,178,480, including interest. The liquidated damages dispute remained for mediation, adjudication or trial.

First-instance decision. No prior appellate decision is stated in the judgment.