ROK Building Ltd v Celtic Composting Systems Ltd

A valid adjudicator’s decision in a construction dispute must be enforced according to its proper meaning and the context of the dispute referred. A decision may require immediate payment even though it does not specify a payment deadline, particularly where it uses directive language and the contract requires adjudicator’s decisions to be implemented. Contractual certification procedures do not convert a payment direction into a merely declaratory valuation. Enforcement is ordinarily without set-off or cross-claims that were, or could have been, raised in the adjudication.

The claimant subcontractor referred a flooding-related compensation event under an NEC3 subcontract to adjudication. The adjudicator found that the flooding entitled the claimant to an extension of time and awarded £204,465.14 plus VAT, interest and adjudication costs. The defendant main contractor did not pay, arguing that the decision merely declared the value to be reflected in later payment certificates.

The claimant applied to enforce the decision. The central issue was whether, construed in the context of the referred dispute and the adjudicator’s wording, the decision directed payment or only required a future contractual valuation adjustment.

1. Enforcement and construction of the decision. The adjudicator’s decision was directive and required payment. The court construed it by reference both to the words used and to the context of the dispute, which concerned sums said to have been due under interim payment application No 13.
2. The wording that the claimant “shall be paid” was directive. The adjudicator had deducted retention from the gross sum and awarded interest from the date when payment should have been made. Those features confirmed that the award was for payment, not merely a declaration of value.
3. The absence of a specified payment period did not prevent enforcement. Where the contract made the decision binding and required it to be implemented, a clear direction to pay was sufficient. Wording indicating that later certificates were to reflect the decision would have been needed to produce a merely declaratory result.
4. The contractual certification machinery did not prevent the adjudicator directing payment. Nor could the defendant rely on the alleged inability to recover from the employer or on set-off for liquidated damages. The subcontract was not a pay-when-paid contract, and the defendant could have raised the relevant cross-claims in the adjudication.
5. Judgment was entered for the claimant for £173,191.73, representing the adjudicated principal sum less the amount already paid under Certificate No 16, with VAT. Interest awarded by the adjudicator continued to 22 October 2009, followed by interest at £10.19 per day until payment. Payment was ordered without set-off within 14 days of the hearing.