CSC engaged Windglass to supply and install windows, doors and screens at a site in London. The subcontract between CSC and Windglass did not contain an adequate mechanism, in accordance with the Act, for determining what payments were due or when they became due. Accordingly the relevant provisions of Part II of the Scheme were implied into the Contract.

A dispute arose between Windglass and CSC concerning unpaid interim valuations and whether or not Windglass had agreed to make their applications for interim payments in a particular form. Windglass had performed its works on site, and supplied the requisite materials in accordance with the subcontract. CSC had only responded to Windglass on two occasions, in what CSC submitted were withholding notices. The two withholding notices stated that Windglass’ applications would not be processed by CSC because they were not in the appropriate format nor signed by CSC’s site manager.

Windglass referred the dispute to adjudication. The adjudicator awarded Windglass £151,818.77 and found CSC liable for his fees. CSC did not pay and Windglass sought to enforce the decision. CSC defended the proceedings on the basis that the adjudicator exceeded his jurisdiction in deciding that the withholding notices were invalid because they did not include valid grounds for withholding. CSC argued that the Act did not require the grounds for withholding to be valid for the notice to be effective.

The Judge held that CSC’s defence failed for four reasons:

1. In deciding that the withholding notices were invalid, and that any cross claims raised as defences to the withholding notices must fail as a consequence, the adjudicator had answered the issues put to him. This was within the adjudicator’s jurisdiction and the Judge queried whether this was a jurisdictional point in any event;
2. CSC’s argument that the Act did not require the grounds for withholding to be valid was not accepted. The Judge also did not agree that, as long as there was something which purports to be a withholding notice, then that is sufficient to justify withholding, regardless of the contents of the notice itself. There was no meaningful distinction between a ‘valid’ or an ‘effective’ notice in s111;
3. The adjudicator provided reasons as to why he considered CSC’s withholding notices were not effective, as neither the amount proposed to be withheld nor the grounds for doing so were set out; and
4. Even if the adjudicator should have looked at and taken into account the alleged counterclaim, it was so vague and that it could not operate as a valid set-off or counterclaim to the withholding notices in any event. Therefore even if there was a jurisdictional difficulty, or an alleged breach of natural justice, the default was merely technical and did not affect the outcome of the adjudication or the application.

CSC also submitted that their purported withholding notices should act as a ‘gateway’ with which it could gain entitlement to raise defences in the adjudication not previously raised. The Judge rejected this submission on the basis that the Act does not permit someone to put in an ineffective withholding notice to get around the administrative requirements of the Act, and to then introduce entirely different justifications at a later date.

The Judge accordingly enforced the adjudicator’s decision.