Cases - Bovis Lend Lease Ltd v Triangle Development Ltd

Record details

Name
Bovis Lend Lease Ltd v Triangle Development Ltd
Date
[2003]
Citation
BLR 131
Legislation
Keywords
Construction contracts - Adjudication - Construction of adjudication clause - Interim certificates - Witholding notices - Effect of adjudicator's decision - Set-off - Cross-claims - Entitlement to deduction - Repudiation - Summary judgment - Enforcement - JCT Standard Contract - Housing Grants, Construction and Regeneration Act 1996, sections 108 and 111 - Scheme for Construction Contracts (England and Wales) Regulations 1998, paragraph 23 - CPR Part 8 Procedure - stay of execution
Summary

Bovis entered into a management contract with Triangle to refurbish and fit out 3 existing Victorian schoolhouses into 43 luxury residential apartments. Disputes arose as to the valuation of two interim certificates, which Bovis referred to adjudication. Triangle counter-adjudicated with 2 further notices of adjudication. Bovis then argued that Triangle were in repudiatory breach and sought to accept that repudiatory breach as terminating their employment under the contract. Triangle also served notice terminating Bovis's employment under the contract.

The first adjudication concerning the 2 interim certificates was issued on 12 September 2002 and concluded that Triangle should pay Bovis £158,000 with interest. The decision in the second adjudication was given on 13 September 2002, in which the adjudicator decided that Bovis was in breach of its contractual obligations by not providing certain of the documents required by Triangle. The decision in the third adjudication was given on 26 September 2002 and was to the effect that Triangle were not in repudiatory breach and the contract had therefore not been brought to an end by Bovis's attempted acceptance of Triangle's alleged repudiatory breach.

All of these matters came before the court by way of an application by Bovis for a declaration that Triangle were liable to pay the sums decided by the adjudicator in the first adjudication. Triangle resisted this application on the basis of the adjudicator's subsequent decisions.

The judge concluded that the first and third adjudication decisions were in conflict, which had arisen because the parties had chosen to refer their existing dispute piecemeal to adjudication. As a result, there were 2 conflicting decisions, one giving Bovis a right to payment and the other giving Triangle the right to cross-claim and to liquidated damages flowing from Bovis's repudiation of the contract. It was not possible, in these proceedings, to determine whether Triangle's cross-claim was sufficient to defeat or merely reduce Bovis's claim, but Triangle also claimed an entitlement to rely on a provision of the contract that provided that, following determination of the contractor's employment, the provisions of the contract requiring further payments to be made were not to apply.

The judge concluded that where there were contractual terms that clearly have the effect of suspending or providing that an entitlement to avoid or deduct from a payment directed to be paid by the adjudicator's decision, those terms will prevail. Equally, where a paying party is given an entitlement to deduct from, or cross-claim against, the sum directed to be paid as a result of the same, or another adjudication decision, the first decision will not be enforced or, alternatively, judgment will be stayed.

The court held that an adjudicator's decision that money should be paid gives rise to a separate contractual obligation. The losing party can only make withholdings, set-offs, deductions or cross-claims against the sum awarded if:

  1. a withholding notice was issued before the adjudication and was ruled upon and formed part of the decision;
  2. the contract contains terms that have the effect of superseding, or providing for entitlement to avoid or deduct from, an adjudicator's award; or
  3. there is an entitlement to deduct from, or cross-claim against, an adjudicator's award as a result of the same or another adjudication decision.

Therefore, the judge concluded that Triangle were entitled to rely on the provision of the contract that suspended payment of further sums, even those directed to be paid pursuant to the adjudicator's first decision.

[Note that this case was decided before the Court of Appeal decision in Ferson v Levolux (2003).]