CNO Plant v Caldwell

C.N.O. Plant Hire Ltd v Caldwell Construction Ltd

Citation: [2024] EWHC 2188 (TCC)

Background Facts

CNO was subcontracted by Caldwell on 20 September 2022 to perform earthworks and related construction services at a project in Maghull.
CNO submitted an interim payment application in December 2023 for £253,425.56 (net of prior payments). Caldwell failed to issue a payment notice or pay less notice.
In a first adjudication, it was decided that Caldwell had to pay this sum plus interest and adjudicator’s fees.
Caldwell did not pay. Instead, Caldwell commenced a second adjudication seeking a true valuation of the works, arguing that they had overpaid and sought repayment.
In the second adjudication, Caldwell was ordered to pay £89,480.94.
CNO sought to enforce the first adjudication decision via summary judgment. Caldwell argued that the court should allow a set-off based on the second adjudication decision.

Enforcement of first adjudication:
The court granted summary judgment in favour of CNO to enforce the first adjudication decision.

Set-off argument rejected:
- The court held that set-off is not generally permitted against adjudication awards except in narrow circumstances.
- Caldwell did not issue separate enforcement proceedings for the second adjudication decision. Therefore, the court refused to consider it as a set-off.
- The works covered in both adjudications were the same, and the supposed distinction between the September 2023 and December 2023 applications was found artificial.
- The Defendant had failed to pay the notified sum before starting a true value adjudication, contrary to established principles (as in S&T v Grove).

Outcome:
CNO was entitled to payment of the full sum awarded in the first adjudication decision. No set-off was permitted.

"Pay first, argue later" principle reaffirmed:
A party must pay the notified sum from a "smash and grab" adjudication before it can commence a true value adjudication.

Strict approach to set-off:
No set-off against adjudication awards is generally allowed unless both decisions are valid, enforceable, and the paying party has commenced enforcement proceedings for its own decision.

Same payment cycle principle:
A true value adjudication cannot be used to avoid paying a notified sum where it relates to the same payment cycle. Arguments of separate payment cycles will be scrutinised carefully.

Importance of procedural compliance:
If a party wishes to rely on a subsequent adjudication decision as a defence or set-off, it must enforce that decision formally.

Supports cash flow objective of the 1996 Act:
The decision reinforces the policy of providing swift and certain interim payments to contractors and subcontractors.