Cases - KNS Industrial Services (Birmingham) Ltd v Sindall Ltd
Record details
- Name
- KNS Industrial Services (Birmingham) Ltd v Sindall Ltd
- Date
- [2000]; [2000]
- Citation
- EWHC 75 (TCC); 75 Con LR 71
- Legislation
- Keywords
- Contract - construction contract - withholding payment - sums due - definition of "to withhold" - Housing Grants, Construction and Regeneration Act 1996, section 111 - adjudication - construction - construction contract - decision - adjudication decision - enforcement of adjudication decision - notice of intention to withhold payment - timing of notice of intention to withhold payment
- Summary
-
KNS were mechanical and electrical subcontractors to Sindall. KNS considered that they had been underpaid, and therefore served notice of intention to suspend performance of their works and subsequently withdrew from site. Sindall responded by terminating the employment of KNS. KNS referred the matter to adjudication, claiming a proper valuation of their work and asserting that no timely and valid notice of intention to withhold payment had been served.
The adjudicator found that KNS's works had been undervalued by Sindall but that the final date for payment in respect of that valuation had not passed at the time that KNS served their notice of adjudication. The adjudicator found that the final date for payment was 10 March 2000, the notice having been served on 9 March - after the last date for the issue of a withholding notice. The adjudicator then allowed deduction of the sums claimed by Sindall.
Sindall paid the balance that the adjudicator found to be due - £4,844.94. KNS were dissatisfied with this outcome and sought to enforce that part of the adjudicator's decision that found their works to be undervalued whilst arguing that the adjudicator had exceeded his jurisdiction by taking into account the sums that Sindall sought to withhold. Both parties made separate applications for summary judgment.
The judge concluded that whilst there may be instances where an adjudicator's jurisdiction is in question and the decision can be severed so that the authorised can be saved and the unauthorised set aside, this was not such a case. The judge said that a party cannot pick amongst the reasons so as to characterise parts as unjustified and therefore made without jurisdiction.
The judge therefore gave summary judgment for Sindall against KNS and refused summary judgment for KNS against Sindall.
A much more narrow view was expressed in this case by the Court than in Northern Developments (Cumbria) Ltd v J & J Nichol (2000) [2000] BLR 158. It was held that the term 'withhold' was used in s. 111 to cover both the situation where in arriving at a valuation the contractor had not taken account of a countervailing factor as well as the situation where there was to be reduction in or deduction from an amount that had been declared or thought to be due. In the former case the word 'withhold' may not always be correct, because one cannot withhold what is not due.