Fileturn Ltd v The Belgrave London Ltd

Citation: All ER (D) 124 (Apr)

Nature of case:
This dispute, between parties to a construction contract, arose in relation to the percentage deduction the employer (“the defendant company”) was entitled to make to an interim payment owed to the contractor (“the claimant”), who was conducting alteration and refurbishment works to the defendant’s hotel.

In February 2012 the parties had entered into a JCT Form Intermediate Building Contract 2011, which incorporated the adjudication provisions and also gave the defendant the right to deduct a retention of 5% from the gross sums payable to the claimant, reducing to 2.5% on practical completion. When the claimant later made an application for interim payment, the defendant refused to pay and the matter was referred to adjudication.
The adjudicator, finding that practical completion had occurred in and around the time of the contractor’s request for payment, decided that the defendant was entitled only to the lower 2.5% retention.
The claimant then brought proceedings for summary judgment, seeking to enforce the adjudicator’s award. The defendant:
(a) disputed whether the adjudicator had made a ‘temporary binding’ decision as to the date of practical completion; and
(b) sought to stay enforcement of that decision pending the decisions in two subsequent adjudications.
The court held, in relation to the first matter, that the adjudicator’s decision as to practical completion was temporary binding on the parties. The adjudicator had clearly had jurisdiction to determine the matter of the percentage retention in circumstances where the defendant had wished to argue in its submissions that this ought not to be the full 2.5%, and this had itself brought directly into play the issue of whether practical completion had occurred and, if so, when.
In relation to the second matter, the court refused the defendant’s application for a stay, considering it impossible to speculate on the possible outcome of any later adjudication. The sum which had been ordered by the adjudicator was already overdue and there was no basis on which to conclude that the defendant would be unable to pay. In the circumstances, the defendant had no real prospect of successfully defending the claim and summary judgment was entered in favour of the claimant.

Counsel

Justin Mort QC

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