Ferson Contractors Limited -v- Levolux A.T. Limited
Case reference:
[2002] EWCA Civ 11
Wednesday, 22 January 2003
Key terms: Enforcement - Section 108 - withholding notice - suspension - determination - exceptions to enforcement - overriding contractual terms
This was an appeal from the summary judgment decision of HHJ Wilcox on 26 June 2002 (see case note below) enforcing an Adjudicator’s decision. The question in this appeal is whether the Adjudicator’s decision should be enforced in the derogation of contractual rights which could be in conflict with the decision.
The facts of the case and the summary judgment decision are set out below. The Defendant raised several issues by way of appeal. First, they argued that the contract had been validly terminated, and so the Adjudicator’s decision was inconsistent with the determination. Lord Justice Mantell held that that argument was rejected, as the first instance Judge had held that there had plainly been no valid determination. It was the Adjudicator’s decision that payment should be made, on the basis that the Withholding Notice was invalid, that meant that the sub-contractor had a right to suspend such that the Contractor did not have a right to determine the contract for wrongful suspension.
Second, the Defendant argued that there were some exceptions to the principle that an Adjudicator’s decision is binding and enforceable pending final resolution by arbitration or litigation. In respect of this appeal, one of those exceptions was that the terms of the contract to stated that no further payment would be made as a result the obligation to make a payment in accordance with the Adjudicator’s decision. This exception was based upon HHJ Thornton Q.C’s judgment in Bovis Lend Lease -v- Triangle Developments (2 November 2002). Lord Justice Mantell considered that case and the cases upon which Bovis relied. He came to the conclusion that the logic in the cases relied upon by HHJ Thornton was insufficient to support the conclusion reached in Bovis. However, Lord Justice Mantell construed the terms of the contract so as to give effect to the Adjudicator’s decision, and so held that the determination clauses must be read as not applying to amounts due by reason of the Adjudicator’s decision. He therefore dismissed the Appeal. Lord Justice Longmore, and Lord Justice Ward agreed.
The facts of the case and the summary judgment decision are set out below. The Defendant raised several issues by way of appeal. First, they argued that the contract had been validly terminated, and so the Adjudicator’s decision was inconsistent with the determination. Lord Justice Mantell held that that argument was rejected, as the first instance Judge had held that there had plainly been no valid determination. It was the Adjudicator’s decision that payment should be made, on the basis that the Withholding Notice was invalid, that meant that the sub-contractor had a right to suspend such that the Contractor did not have a right to determine the contract for wrongful suspension.
Second, the Defendant argued that there were some exceptions to the principle that an Adjudicator’s decision is binding and enforceable pending final resolution by arbitration or litigation. In respect of this appeal, one of those exceptions was that the terms of the contract to stated that no further payment would be made as a result the obligation to make a payment in accordance with the Adjudicator’s decision. This exception was based upon HHJ Thornton Q.C’s judgment in Bovis Lend Lease -v- Triangle Developments (2 November 2002). Lord Justice Mantell considered that case and the cases upon which Bovis relied. He came to the conclusion that the logic in the cases relied upon by HHJ Thornton was insufficient to support the conclusion reached in Bovis. However, Lord Justice Mantell construed the terms of the contract so as to give effect to the Adjudicator’s decision, and so held that the determination clauses must be read as not applying to amounts due by reason of the Adjudicator’s decision. He therefore dismissed the Appeal. Lord Justice Longmore, and Lord Justice Ward agreed.