Sub-contractor wins dispute over payment of £388k

A sub-contractor has won its battle to force a developer to pay more than £388,000 for work carried on a major project.

The case involved E7 Building Services and R G Carter Cambridge Ltd.

E7 had been contracted to carry out mechanical and electrical works on one of Carter’s projects.

The two sides later disputed the levels of payment due, so the matter went before an adjudicator.

The adjudicator found the value of the works to be £2,338,653, which was £388,888 more than Carter had paid. However, the adjudicator did not have jurisdiction to order payment to be made.
 
E7 demanded payment of the outstanding balance, which the Carter countered by alleging delay damages and contra-charges of £769,201.90.

The case went to a second adjudication in which the adjudicator decided that E7 was entitled to payment of the outstanding balance, as he found that he had the power to amend the payment notice under a clause in the contract. 

He also relied on another clause to rule out the Carter’s cross-claim that it could set-off the balance against the money it alleged it was owed.

Carter claimed the adjudicator had breached natural justice by deciding on the basis of the two clauses when they had not been referred to by either party, and so had acted in excess of his jurisdiction.

The case then went before the High Court, which ruled in favour E7. It held that the issues had been fairly assessed by the adjudicator. The parties had been aware of all the relevant material. No breach of natural justice arose from the adjudicator referencing the two clauses.

The application to enforce payment of the outstanding £388,888.81 was granted.

Please contact Sing Li if you would like more information about the issues raised in this article or any aspect of contract law.