Mr and Mrs Stevens engaged Thameside Construction Company Limited (‘Thameside’) under a contract made in July 2010 to carry out extensive extension construction and conversion works (‘the Works’) at their home in Buckinghamshire. The Contract incorporated the JCT Intermediate Form of Building Contract with Contractor’s Design, (Revision 2 2009) and the Scheme for Construction Contracts.

The original contract sum increased as a result of substantial variations and the Date for Completion was extended from 14 March 2011 to 8 August 2011. The Works were, however, only completed in March 2012 with Mr and Mrs Stevens having taken part possession some time beforehand.

In June 2012, Thameside submitted its interim application 16, which was treated as the Final Account, valuing the Works at approximately £1.31 million. Mrs Stevens valued the Works at £1.19 million.

In March 2012, Thameside commenced an adjudication seeking payment of the sum of £190,102.89 from Mr and Mrs Stevens “without set off”. Mr and Mrs included in its response a counter claim for defects and liquidated damages in the sum of £88,891.40 and £60,000 respectively.

In his decision the Adjudicator stated that the only way he saw to deal with the dispute was on the basis it related to an application for a further interim payment, notwithstanding that the parties treated the application as a Final Account. The Adjudicator determined that “..a balance due to Thameside of £88,606.02 for which I will make an order for immediate payment on grounds this decision is the equivalent of an interim certificate.” The Adjudicator awarded “£0.00” in relation to liquidated damages.

Mr and Mrs Stevens paid Thameside £66,327.46 and issued a Withholding Notice pursuant to the contract for the balance of £40,000 being liquidated damages levied at £2,000 per week.

On 10 June 2013 Thameside issued proceedings for the balance of the Adjudicator’s Decision in the sum of £40,000 on the basis that Mr and Mrs Stevens had no right to set off from the Adjudicator’s Decision. Mr and Mrs Stevens argued that the Adjudicator’s decision could and was to be treated in effect as equivalent to an interim certificate and, construing the Decision according to its terms and context, they were entitled to set off or withhold against the sum payable as they had done.

The Judge reviewed a number of authorities and considered that the general position was that adjudicators’ decisions that direct one party to pay money are to be honoured and that no set off or withholding should be permitted. The Judge referred to exceptions to this position in the scenario where an adjudicator is simply declaring the amount is due for certification, rather than directing payment of the balance, and also in the rare situation where there is a contractual right to set off which does not offend the statutory requirement for immediate enforcement, or where it can be determined from the decision that the adjudicator is permitting a further set off to be made against the decision.

In the present case, the Judge found that the Adjudicator was directing that Mr and Mrs Stevens to pay a sum within 14 days and did not anticipate that Mr and Mrs Stevens would set off in respect of the clearly disputed claim for liquidated damages. Therefore, this was not a case that fell into either of the main exceptions to the general rule and a judgment for Thameside was entered for £40,000 plus VAT and interest.