TCC confirms and clarifies Grove

M Davenport Builders Limited v (1) Mr Colin Greer (2) Mrs Julia Greer [2019] EWHC 318 (TCC): the TCC has recently confirmed and clarified the Court of Appeal's recent decision in S&T(UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448.

Facts

The Greers engaged Davenport to undertake construction operations on a building in Stockport. Davenport submitted a payment application against which the Greers failed to issue a Payment Notice or Pay Less Notice. The Greers again failed to issue a Payment Notice or Pay Less Notice against Davenport's payee's Notice in Default.

Davenport adjudicated on this technical point and won; the Greers did not pay the sums awarded to Davenport. Following the decision in the technical adjudication, the Greers commenced a true value adjudication which determined that no sum was payable to Davenport, although the adjudicator did comment that he thought he may not have jurisdiction as would prima facie appear to be the case following Grove.

The question therefore arose whether the Greers were obliged to pay the sums awarded under the technical award or whether they were entitled to rely on the true value decision by way of defence, set-off or counterclaim to enforcement of the technical adjudication.

Rationale

In short, the Greers were not entitled to rely on the true value adjudication to resist enforcement of the technical adjudication. Section 111(1) of the 1996 Act creates an obligation of "immediate" payment to ensure cash flow; it applies equally to interim and final payments and results in a requirement to immediately pay an adjudication award. This is in line with the recent Court of Appeal decision in Grove.

However, the Greers sought to distinguish Grove by relying on Harding v Paice [2016] 1 WLR 4068. In Harding:

• The Contractor obtained an award in a technical adjudication following the Employer's failure to serve a Payment Notice or Pay Less Notice.
• The Employer did not pay this award and commenced a true value adjudication after the Contractor commenced enforcement proceedings. However, the Employer did indicate an intention to pay technical adjudication award.
• The Contractor sought an injunction to prevent the true value adjudication from proceeding.
• The Employer then paid the technical adjudication award after the injunction application hearing, but before judgment (the payment was made the day before the enforcement proceedings were due to be heard).
• The true value adjudication decision (which was delivered after payment of the technical adjudication had been made) was set aside by the court for apparent bias.
• The area of contention was therefore whether a true value adjudication could be commenced before payment of the technical adjudication award was made, if, as here, payment was made before the true value decision was made.

Comment

The absence of a Pay Less Notice does not prevent an Employer from subsequently challenging the valuation underlying a certificate, but he cannot commence the true value adjudication until he has paid the award in the technical adjudication.

This decision therefore does not depart from Grove but perhaps ties up a few loose ends; a party will not be able to commence a true value adjudication before making payment of any sums awarded in a technical adjudication.

The required procedure is that an award from a technical adjudication decision must be paid before a true value adjudication is commenced. If a true value adjudication is commenced before payment of the technical adjudication decision, it is likely that the true value decision will not be enforceable.

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