Adjudication
Re: A Company (1299 of 2001) (15 May 2001)

© Daniel Atkinson 2001 24 September 2001

In Re: A Company (1299 of 2001) (15 May 2001) GAL issued a Statutory Demand on CCL for payment of an unpaid amount of £9,702.47 on two valuations. CCL obtained an injunction without notice restraining GAL from presenting the petition pending a final injuction.

CCL were main contractors in the construction of four houses and engaged GAL as sub-contractors for the roofing works. Some days after the final date for payment of the second valuation CCL had reported to GAL that rear kitchen roofs were ponding severely. Some 6 weeks later CCL notified GAL that in addition to leaks, felt gutters had been fitted instead of lead. This therefore was an issue of defective work. CCL had no opportunity to raise the question of defective work at the time of the valuations since it was unaware of them.

It was argued that Section 111 Notice only applied to monies which were in fact due and that this required the Court to consider whether the sum demanded was irrecoverable, in whole or in part, because of the defective performance of the Contract.

It was held that if the work was defective the employer had a right to recover damages for breach of contract in subsequent litigation or arbitration. This did not however alter the position that by virtue of Section 111 the employer was obliged to pay forthwith without deduction in the absence of a withholding notice. It was held that any other construction of Sections 110 and 111 would rob them of all practical significance.

CCL were therefore held liable to pay £9,702.47 without deduction regardless of any defence which might otherwise have existed by reason of the alleged defects of the works. CCL had not taken steps to litigate its cross-claim for defective work. It was probable that CCL could have been able to obtain an adjudication order on the matter which would have been enforceable. Accordingly there was a significant possibility that a future court would find that CCL had a reasonable opportunity to litigate the cross-claim. Accordingly it could not be concluded that there was no reasonable prospect of success, so GAL was allowed to present its petition and CCL refused the injunction sought.