Sleaford Building Services Limited v Isoplus Piping Systems Limited

Where parallel Part 7 enforcement proceedings and Part 8 declaratory proceedings concern an adjudication decision, the court should ordinarily determine enforcement first and then assess whether the Part 8 issues can properly be resolved. Part 8 is unsuitable where contractual construction raises multiple issues, substantial factual disputes, valuation questions or waiver. A condition precedent must be identified with sufficient clarity, including the event triggering the obligation and the consequences of breach. A party seeking to prevent enforcement must establish the causal connection between the breach and the sum awarded by the adjudicator. A valid adjudication decision remains binding unless a final determination in properly constituted proceedings affects its efficacy.

The parties were involved in consolidated Part 8 and Part 7 proceedings arising from an adjudication concerning payment under an NEC3 subcontract. The adjudicator decided that Isoplus was owed £323,502.32 and determined that clause 21.4 contained preconditions to payment for work carried out by sub-subcontractors, but could not confirm whether those preconditions had been satisfied.

Sleaford sought declarations that Isoplus had failed to comply with clause 21.4 and that the adjudicator’s decision should therefore not be enforced. Isoplus sought enforcement and argued that the Part 8 claim was unsuitable because it involved construction, factual disputes, waiver and valuation. The court also considered whether clause 21.4 was unenforceable under section 110 of the Housing Grants, Construction and Regeneration Act 1996.

1. Enforcement. The adjudicator’s decision was valid and binding. The adjudicator distinguished between decisions and advice, but clearly decided that payment was due. Judgment was therefore entered for Isoplus for £323,502.32 plus interest, subject to any valid final determination in the Part 8 proceedings.
2. Part 8 procedure. The approach in A&V Building Solutions Ltd v J&B Hopkins Ltd [2023] EWCA Civ 54 applied. Where Part 8 proceedings have been issued and are heard with enforcement proceedings, the court should consider whether the Part 8 issues are suitable for summary determination and, if so, whether they can be finally resolved at the hearing.
3. Clause 21.4 raised issues unsuitable for Part 8. It was first necessary to determine whether the clause could operate alongside milestone payments, since the contract did not identify the value of sub-subcontracted work within each lump-sum milestone. The clause also contained several potentially separate conditions precedent, which had not been adequately identified or particularised. The possible application of the clause to a labour-only arrangement raised a further issue of construction.
4. The alleged breaches involved factual questions concerning compatibility, insurance and design responsibility. Isoplus also had an arguable case that earlier payments amounted to unilateral waiver. These matters required further evidence. Valuation evidence would also be needed to establish what part of the adjudicated sum related to work affected by any proved breach.
5. The principle stated in Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2008] EWHC 2379 (TCC) supported the requirement that the circumstances triggering a condition precedent be identified unambiguously.
6. The section 110 issue was not determined. Further research and consideration of the consequences under section 110(3) were required, and the issue would be better decided in proceedings concerning a future payment claim. Meanwhile, the parties remained bound by the adjudicator’s determination that clause 21.4 was a precondition to payment of sums related to sub-subcontractor work.
7. The Part 8 claim was dismissed, without determining its substantive merits. Sleaford was not prevented from raising the essential clause 21.4 arguments in fresh, properly particularised proceedings.

Not an appeal. The judgment concerned consolidated Part 7 enforcement proceedings and Part 8 declaratory proceedings arising from an adjudication.