Set-off against an adjudicator's decision?

Case law holds that when it comes to an adjudicator's decision, you have to pay first and argue for any set-off or withholding afterwards, otherwise you could be hit with your opponent's legal costs.The general rule is that set-off and counterclaim cannot be used to defeat or reduce the enforcement of an adjudicator's decision. In the recent case of Thameside Construction Company Ltd v Stevens and Another, Mr and Mrs Stevens were ordered to pay approximately £88,000 to Thameside Construction. They issued a withholding notice for £40,000 covering liquidated damages that they considered were deductible and then paid the remaining amount of the award to Thameside Construction. Thameside issued proceedings to enforce the adjudicator's award for the full amount and the judge ordered that Mr and Mrs Stevens must pay the full amount as well as £11,000 to cover Thameside's costs. The Court concluded that set-off could only be permitted against an adjudicator’s decision where, for example, the adjudicator’s decision was purely declaratory or where the adjudicator’s decision specifically permitted set-off. The point to note is that in the majority of cases, the losing party will need to pay first and argue for any set-off or deductions later. This can be done via court proceedings, arbitration or counter adjudication. To do anything other than pay, exposes you to the cost of defending enforcement proceedings, bad publicity and also liability to reimburse the other sides' legal costs.

Thameside Construction Company Ltd v Stevens & Anor [2013] EWHC 2071

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