The parties entered into a contract for ground remediation works based on the JCT Standard form of building contract, with contractor’s design, 1981 edition. VHE submitted an interim application. RBSTB did not serve a withholding notice and VHE did not submit an invoice as required by the contract. VHE commenced adjudication seeking full payment of the amount of this interim application. The Adjudicator found that RBSTB was entitled to abate or challenge the amount applied for unless the withholding notice had been given.

VHE then issued an invoice. RBSTB did not issue a withholding notice in relation to the invoice. RBSTB then commenced a second adjudication. As a result of the second adjudication, an amount was due to VHE. In response, RBSTB stated that they intended to deduct almost all of the sum awarded to cover liquidated damages for delay. However, a withholding notice had not been issued.

The Judge raised the interesting question about the status of an Adjudicator’s decision. In effect, he was considering whether each of the Adjudicator’s decisions were debts that were due and owing in their entirety. If so, then by ordering the first one to be paid and then the second one to be repaid was a net balance which would then be ordered for payment by the court. In other words, one had been set off against the other. The other approach was to enforce the most recent one as superseding the earlier decision. This raised a fundamental legal question about the status of an Adjudicator’s decision and how settled decisions were to be considered where there was a request for enforcement in respect of more than one decision. The Judge was of the view that the second Adjudicator did not have jurisdiction to set aside, revise or vary the first Adjudicator’s decision. However, the second Adjudicator had not attempted to do so.

However, in the absence of an effective withholding notice, RBSTB were not entitled to deduct money in claim of a set-off. The words “may not withhold payment” in s111(1) were ample in width to have the effect of excluding set-offs and there was no reason why they should not mean what they say. In addition, s111(4) required the withholding notice to precede the referral to adjudication.