Fenice engaged JFC to design and construct five residential properties and a commercial unit at a site in Camden, North London. Disputes arose in connection with JFC’s interim application No. 19, specifically whether a valid withholding notice was issued by Fenice. JFC issued its application on 6 August 2009, for the net amount of £206,564.74. On 25 August 2009, the employer’s agent issued a certificate for payment for the net sum of £71,473, and a withholding notice for the sum of £163,480.

 

The contract incorporated a JCT Design and Build Contract, Revision 1 2007, as further amended by the parties (“JCT Conditions”), and a set of employer’s requirements (“ERs”). Both documents contained separate interim payment mechanisms.

 

JFC relied upon the JCT Conditions, which stated that the final date for payment was 21 days from the receipt by Fenice of JFC’s application, in this instance 27 August 2009. Therefore the withholding notice should have been issued on or before 22 August 2009. Fenice relied upon the ERs which provided for a final date for payment of 12 September 2009, and a withholding date of 7 September 2009.

 

JFC referred the dispute to adjudication and was awarded £177,455.94. The adjudicator had agreed with JFC’s construction, and reduced the amount claimed because of issues concerned with delay. Fenice did not pay the sum awarded, and subsequently issued Part 8 proceedings requesting a declaration that Fenice’s interpretation of the payment provisions was correct. JFC subsequently issued enforcement proceedings, and both claims were consolidated by the TCC.

 

The Judge decided that the payment provisions in the JCT Conditions and the ERs fundamentally conflicted with each other and could not be read together to come up with a rational and workable result. The starting points for calculation of the final date for payment were different. The starting date for calculation in the JCT Conditions was the date of JFC’s application; the starting date for calculation in the ERs was the date of issue of the interim certificate by the employer’s agent.

 

The Judge then had to consider which of the interim payment mechanisms had priority, and would therefore apply. Clause 1.3 of the JCT Conditions stated that the JCT Conditions would have priority over the ERs, the contractor’s proposals and the contract sum analysis and could not be overridden or modified by anything contained in them. The Judge decided that clause 1.3 applied to this situation.

 

The Judge therefore decided that JFC’s interpretation of the payment provisions was to be preferred and, accordingly, the Part 8 declarations were not granted and the adjudicator’s decision was enforced.

 

Finally the Judge gave a warning to parties who intend to challenge an adjudicator’s decision, on a point of construction or law, by Part 8 in the courts:

 

He went on to say that if the losing party does not pay, then that party should expect to be punished by way of punitive interest, if it is claimed by the opposing party, and adverse orders for costs, including the possibility of indemnity costs.