Workspace entered into a contract with YJL to carry out construction works at a site in London. The Contract contained both adjudication provisions and an arbitration clause. YJL commenced an adjudication and was awarded an extension of time for part of the delay. Therefore YJL was liable to Workspace for liquidated damages. YJL commenced an arbitration in relation to its entitlement to an extension of time, loss and expense, and variations. The arbitrator decided in favour of Workspace. Workspace then sought an order in respect of its costs.

Prior to the costs hearing, Workspace commenced another adjudication as a result of a negative valuation of YJL’s works (“Interim Certificate 27”) which took into account the amount paid by YJL as a result of the previous adjudication and required YJL to pay Workspace £230,779. The adjudicator valued the certificate at £56,143.35. The adjudicator did not direct that this money be paid by Workspace as he did not believe that he had the requisite jurisdiction to do so.

The arbitrator then made a provisional costs award in favour of Workspace pending a later detailed assessment and ordered an interim payment be made. YJL made a part-payment but did not pay the balance as it argued that it was not due by operation of a set-off against the adjudicator’s decision. The arbitrator then issued a peremptory order in respect of the outstanding monies.

At the enforcement hearing judgment was in favour of YJL:

1. The adjudicator’s detailed valuation of YJL’s works demonstrated an over-repayment by YJL in respect of loss and expense, and therefore he had expressly stated that £56,143.35 was due to YJL. Alternatively, if this was not the case then it was to be reasonably inferred that he had decided that the sum was due by logical consequence of his valuation.
2. The adjudicator’s belief that the Notice of Adjudication only permitted an assessment of what YJL owed to Workspace and not what Workspace may owe to YJL was wrong. The Court, being obliged to consider an adjudicator’s decision afresh, indicated that the adjudicator was acting within jurisdiction because the Notice of Adjudication said the dispute was “the proper valuation of Certificate 27”.
   The adjudicator could not properly carry out a detailed valuation had he stopped when he found that nothing was owed by YJL to Workspace. The adjudicator was expressly addressing the balance of the account between the parties and therefore had the jurisdiction to find that Workspace owed monies to YJL.
   There was no reason why the Court could not find that the adjudicator had jurisdiction, even when he believed he did not. It was unrealistic to suggest that the adjudicator was merely to decide whether or not money was owed to Workspace as it would have been an incomplete and improper valuation process.
3. The arbitrator’s award did not defeat the adjudicator’s decision. Generally a defendant cannot raise a counterclaim as a means of defeating a claim to enforce an arbitral award, but this case was different. Rather than a counterclaim, the sum awarded by the adjudicator was a binding decision; a decision as binding as that of the arbitrator. Both awards were capable of being subject to the Court’s judgment and neither was of a status higher than the other. Also the costs award could not be elevated to a greater status than that of the adjudicator’s decision as it was provisional and subject to detailed later assessment.
   It would be artificial to ring-fence the costs award seeking its enforcement simply because the award is not subject to potential challenge. Particularly given that Workspace chose not to include the Interim Certificate 27 point in the arbitration but to adjudicate on it. It cannot ignore the adjudicator’s award just because it is discontented with it.
   As the mutual debts owed by the parties to one another arose from the same transaction (the same building contract, and out of the same underlying disputes: regarding delay) an equitable estoppel had arisen and thus the debts cancelled each other out.
4. The award was not enforced and therefore the issue of a stay of execution did not arise. Had the award been enforced then execution would have been stayed pending the outcome of the arbitration; it would have been inequitable to force either party to pay anything at this stage.
   A further reason to order a stay would have been because the parties had recently appeared before the arbitrator addressing issues of extension of time and liquidated damages, and the decision was as yet unpublished but imminent. This decision was likely to alter the overall accounting positions of the two parties.