Set-Off And Adjudicator's Awards

Two recent cases in the Technology and Construction Court (TCC) have considered the enforcement of an adjudicator's decision, where the 'losing' party claims set-off. The cases are Beck Interiors Ltd v. Classic Decorative Finishing Ltd [2012] EWHC 1956 (TCC) and Squibb Group Ltd v. Vertase FLI Ltd [2012] EWHC 1958 (TCC). Neither decision is particularly novel however they both provide a timely reminder of the Court's approach to an issue that arises regularly between parties post adjudication.

Beck

Beck Interiors Ltd ("Beck") was awarded £43,081.74 at adjudication. Classic Decorative Finishing Ltd ("CDF") resisted enforcement of the award, on the grounds that it was owed 59,156.23€ by Beck in respect of a separate contract. Mr Justice Coulson refused to uphold that line of defence and the award was enforced.

In his decision, Mr Justice Coulson stressed that, typically, there are two exceptions to the general rule that set-off cannot be relied upon by the 'losing' party to prevent or reduce enforcement of an adjudicator's award.

The first is where the express terms of the contract permit it; the second is where the nature of the adjudicator's decision permits it. For example, in relation to the latter, there have been instances where set-off has been permitted where the adjudicator's decision simply determines the value of a sum due in line with the contract machinery or where the decision instead address the operation of the contract machinery.

In Beck the contract contained no set-off provisions at all, and so there was no real requirement to look at this issue in any depth (there was nevertheless an unsuccessful attempt by CDF to rely on equitable set-off). In terms of the decision itself the adjudicator ordered immediate payment of the sums due to Beck, and so it was clear that he did not envisage any further analysis or deductions being made to that sum by CDF.

Squibb

In Squibb Group Ltd ("Squibb"), the award was £167,531.05...