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Adjudication – Set-off no excuse to resist enforcement

The recent case of Beck Interiors Ltd v Classic Decorative Finishing Ltd featured another unsuccessful attempt by a party to resist enforcement of an adjudicator’s decision.

The adjudicator held that Beck was entitled to £36,000. However, Classic refused to pay on the grounds that Beck owed it £60,000 on a different project in Dublin and that it should be entitled to set-off these sums from the adjudicator’s decision. Beck issued enforcement proceedings against Classic and Classic defended the proceedings on the basis of the set-off.

The Court held:

  • It is rare for the Court to permit an unsuccessful party in adjudication to set-off, from the sum awarded by the adjudicator, some other separate claim. It would defeat the purpose of the Housing Grants, Construction and Regeneration Act.
  • There are two possible exceptions to this general principle: 1) where the contract allows for such a set-off; and 2) where the adjudicator did not order immediate payment. As there was no express right to set-off within the contract Classic, and the adjudicator ordered immediate payment, these exceptions did not apply.
  • Classic’s claim for equitable set off failed as the set-off related to an entirely different contract, as well as being in a different jurisdiction.

Classic’s claim for set-off therefore failed and it had no arguable defence to the enforcement of the adjudicator’s decision. This case reinforces the view that adjudicator’s decisions should be enforced unless there are unusual circumstances. In addition, it highlights the fact that cross contract set-off clauses can be included in contracts. If Classic had had such a clause, it could have legitimately set-off against the adjudicator’s award.

If you require more information regarding this or any other construction topic,
please do not hesitate to contact the Construction Team at Clarke Willmott.