Urang Commercial Ltd v Century Investments Ltd & Anor

An adjudicator’s error of law or fact on an issue referred to him does not ordinarily provide a defence to enforcement of his decision. A certified interim valuation constitutes a sum due under the contract, unless some facial error or irregularity is shown. The employer must issue a valid withholding notice within the contractual and statutory time limit. That requirement applies to sums certified as due in interim valuations, not to separate claims or damages relied on as a defence. An adjudicator who decides that a counterclaim cannot be deployed without a withholding notice has addressed the issue, even if the conclusion is legally wrong. The resulting error is not a failure to exercise jurisdiction or a breach of natural justice.

Urang Commercial Ltd sought summary judgment to enforce two adjudication decisions made by Mr Mark Pontin on 30 July 2010. The decisions awarded Urang sums against Century Investments Ltd and Eclipse Hotels (Luton) Ltd under JCT building contracts, together with the adjudicator’s fees.

Both defendants argued that the adjudicator had failed to consider their counterclaims and had failed to take account of withholding notices, allegedly in breach of natural justice. Century also relied on an email said to constitute a withholding notice. The central issues were whether the counterclaims could be raised without valid withholding notices, whether the adjudicator had failed to determine the referred disputes, and whether the certified sums were sums due under the contracts.

1. Summary judgment granted. Urang was entitled to enforce the adjudicator’s award against Century for £47,663.37 and against Eclipse for £22,720.35. The adjudicator’s fees were also awarded, but enforcement was conditional on Urang first paying the fees and demanding reimbursement.
2. An adjudicator’s error of law or fact in deciding an issue referred to him is no defence to enforcement: [2000] BLR 522 and [1999] BLR 93. The question was therefore whether the adjudicator had addressed the counterclaims, not whether he had reached the correct legal conclusion.
3. The adjudicator had decided that the counterclaims could not be deployed as defences without valid withholding notices. That was a decision on the referred issue. It was not a ruling that the counterclaims fell outside his jurisdiction, nor a failure to exercise jurisdiction. The fact that the conclusion was wrong did not justify refusing enforcement.
4. The certified amount in Century’s Interim Valuation No 10 was a sum due under the contract. Urang needed to prove the existence of the properly issued certificate, not establish the correctness of the valuation or disprove possible cross-claims. The court left open the effect of an error apparent on the face of a certificate or another irregularity in its issue.
5. The withholding-notice requirement applied to sums stated as due in interim valuations. It did not apply to other contractual claims or damages. The adjudicator was therefore wrong to treat the absence of a withholding notice as preventing Century from relying on its counterclaim against claims other than the certified sum.
6. Century could not rely on an email never raised during the adjudication. In any event, it was served out of time. Eclipse’s asserted withholding notice was unsupported by the adjudication response or documentary evidence and could not be relied upon.
7. The sums for adjudicator’s fees were enforceable only after Urang had paid the fees and made a demand for reimbursement. Payment was then due within 14 days of the demand.

First-instance decision. The judgment records no prior appellate decision.