The building contract was for the refurbishment of a Victorian housing scheme in Holborn. The contract was in the form of a JCT Intermediate Form of Contract 1998 Edition incorporating Amendment 1 and TC/94/IFC. At practical completion, Verry had been granted an extension of time of 27 weeks and five days. There had been two adjudications. The first concerned an application for payment in June 2003 and the second, this time brought by Camden, concerned specific items of valuation. These enforcement proceedings concerned the third adjudicator’s decision. That decision confirmed the extension of time, calculated the amount due at practical completion, the amount of retention, the amount of liquidated damages and then, identified a net payment, to Verry, together with interest.

Verry commenced a fourth adjudication in respect of the final certificate and Camden a fifth adjudication in respect of defects. The fourth adjudication had been stayed by consent, and at the time of the judgment, decision number 5 had not yet been issued.

Camden resisted the Summary Judgment Application on three grounds: the final certificate showed an amount due of £46,020.11 which was extinguished by Camden’s liquidated damages claim; the decision in the fifth adjudication in respect of defects was imminent; and Camden was concerned about Verry’s financial ability to pay any amounts that may become due in Adjudication No. 4, should a repayment be ordered.

The issue for the Court to consider was whether an adjudicator’s decision could be defeated by the contract between the parties or a counterclaim for defects that had not been considered by the adjudicator.

Mr Justice Ramsey considered that the intention of Parliament was that adjudicator’s decisions should be enforced, pending final determination, because of the use of the word “binding” in Section 108(3) of the Act. He held that the word “binding” was intended to provide “a similar degree of compliance” to that of an arbitrator’s award, while recognising that adjudication is not arbitration as a decision is not “final” but is “interim”.

The question of whether the employer could deduct liquidated damages from an adjudicator’s decision, had been considered previously (David MacLean Housing Limited v Swansea Housing Association Limited [2003] BLR 125 and Balfour Beatty Construction v Serco Limited (2004) EWHC 336). Mr Justice Ramsey considered the earlier case law and referred to an adopted approach in David MacLean Contractors Limited v The Albany Building Limited where he said “that there was a danger that an adjudicator’s decision could be effectively rendered nugatory by simply raising a cross-claim which might or might not succeed at the end of the day.” (Paragraph 29 of the judgment).

In respect of the final certificate, Mr Justice Ramsey considered that the subsequent issuing of the final certificate should not prevent the contractor from being paid properly at practical completion. The contract envisaged that an interim payment would take place at practical completion and that the contractor would be paid the amount properly due. The mechanics of the final certificate and final payment operated after the payment of the amount properly due at practical completion. He held that an adjudicator’s decision should not give way to a disputed final certificate valuation. by compliance as compliance was on an “interim provisional basis”;

In respect of defects, Mr Ramsey noted that Camden did not raise the issue of defects in Adjudication No. 3. As they had not been raised, Camden could not be in a better position by attempting to set-off a “disputed, unliquidated counter-claim against the adjudicator’s decision”. Camden therefore could not resist payment of Adjudication No. 3 on the basis of the unliquidated disputed counter-claim for defects, nor on the basis of a final certificate which did not have a conclusive effect.

Finally, Verry demonstrated that they were a company of substance and so a stay was inappropriate.