Reports From The Courts - August 2020

• Published date: 24 August 2020
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Real Estate and Construction, Contracts and Commercial Law, Arbitration & Dispute Resolution, Construction & Planning
• Law Firm: Beale & Co
• Author: Andrew Croft and Ben Spannuth

Our regular round up of the cases of most interest to construction comes from Andrew Croft and Ben Spannuth of Beale & Company Solicitors LLP, focusing on one that underlines the courts' reluctance to support challenges to the jurisdiction of adjudicators; and another that reinforces the position that 'the prevention principle is not an overriding rule of public or legal policy' and that it is possible to contract out of its application.

Platform Interior Solutions Limited v ISG Construction Limited

[2020] EWHC 945 (TCC); Ter Haar QC

ISG Construction Limited (ISG), a construction services company engaged Platform Interior Solutions Limited (Platform), commercial fit-out specialists, to undertake works forming part of ISG's redevelopment of a hotel in Edinburgh (the Sub-Contract).

Clause 27(1)(h) of the Sub-Contract stated: 'ISG may [...] terminate [Platform's] employment [...] if [Platform] [...] is in material or persistent breach of this Sub-Contract'. Clause 27(4) of the Sub-Contract provided that Platform 'shall within 14 days of being so notified, submit an application for payment for works executed' to be treated as a final account.

A dispute arose between the parties in relation to the gross valuation balance due to Platform, including its Valuation 12 Application for '556,186.27 and, as a result of ISG's alleged repudiation of the Sub-Contract and Platform's subsequent rescinding of the Sub-Contract, the retention amount of '65,082.16. ISG failed to respond to Platform's Valuation 12 Application with a Payment Notice or a Pay Less Notice. Platform served a Notice of Adjudication.

On 11 December 2019, the adjudicator held that Platform was due payment of '417,541.33 plus VAT from ISG (the Decision) Platform demanded payment from ISG. ISG refused to make payment as it had 'received advice that [the Decision] is invalid and unenforceable' and that, '[i]n relation to valuation [...] the Adjudicator has made fundamental errors affecting the validity and enforceability of her Decision'. On 23 December 2019, ISG notified the adjudicator that it was arranging payment of her fees but that this 'does not constitute agreement that your decision is correct [...] valid or enforceable' and reserving its rights in full.

On 31 January 2020, Platform sought to enforce the Decision

ISG challenged the Decision on grounds that the adjudicator inter alia, breached natural justice in reaching her award on a method of valuation advanced by neither party and failed...