Bovis was a management contractor for Triangle Developments for the fit-out of three Victorian schools into three residential apartments. The contract was in the form of the JCT Standard Form of Management Contract 1998 Edition. The contract contained, at clause 7.6.4.1, a clause which stated that any further payment or release of retention shall not apply as a result of the determination of those in his employment.

A dispute arose in respect of the valuation of two interim certificates, in which the architect had reduced certain sums so that each of the two certificates certified a negative value to Bovis. The architect also served a notice on Bovis to the effect that they were failing to proceed regularly and diligently with the works. Triangle then issued a withholding notice in respect of liquidated and ascertained damages following a certificate of non-completion. Bovis claimed that Triangle had repudiated the contract by engaging new contractors, and that Bovis had accepted that repudiation.

During this period three adjudications were being progressed. The first related to the negative interim certificates, the second in respect of Triangle’s claim that Bovis was in breach for a requirement to provide documents and the third relating to the question as to whether the contract had been repudiated.

A variety of questions arose, but one central question related to the status of an adjudicator’s decision. The first adjudicator’s decision was in conflict with the third in respect of the payments of sums due. The first decision related to the interim valuation, whilst the third related to payments of sum due as a result of the counting process upon determination of the contract.

HHJ Thornton QC held:

1. That as a general rule, the decision of an adjudicator that money must be paid gave rise to a separate contractual obligation of the paying party to comply with the decision;
2. That an effective withholding notice, given before the adjudication notice was given, or in some instances before the decision was issued, would normally be required in order to withhold against an adjudicator’s decision;
3. It was possible for the contractual terms between the parties to supersede or provide a right to deduct from a payment directed to be made by an adjudicator;
4. If such a superseding contractual right had existed then an earlier decision of an adjudicator would not be enforced or would be stayed;
5. In this case Triangle was entitled to rely on clause 7.6.4.1 (or the adjudicator’s third decision) in order to withhold sums against the first adjudicator’s decision;
6. A contention that the determination of Bovis’ employment was invalid or a nullity was not sufficient to entitle Bovis to defeat Triangle’s reliance on clause 7.6.4.1 unless there was an adjudicator’s decision, or sufficient evidence.