In Beck v Classic [2012] EWHC 1956 (TCC) and Squibb v Vertase [2012] EWHC 1958 the English High Court has ruled that adjudicators' decisions must normally be paid in full and should not be subject to a later process of questioning or set off, save in exceptional cases.
These two cases raised the availability (or otherwise) of set off in relation to adjudicator's decisions. The court in both cases reached the same conclusion, namely that the amount awarded by the adjudicator should be paid in full. In doing so, the court reviewed the relevant authorities in similar terms in both cases.
Since the UK Construction Act came into force in 1998, the courts have consistently held that adjudicators' decisions are to be enforced, save in exceptional cases. Neither of these cases raised issues of jurisdiction or natural justice so the availability of set off was the only point the court had to consider. The court accepted that there are exceptions to the general approach that decisions must be enforced. For example, it may follow logically from an adjudicator's decision that an employer is entitled to recover a specific sum by way of liquidated damages and, provided proper notice is given, that sum may be set off against sums otherwise payable. There may also be terms of the contract permitting set off.
Cases where the contractual right to set off trumps the enforcement of an adjudicator's decision will be rare and clear wording will be required (Parsons [2002]). In the case of Ferson [2003] the court held that set off provisions which have the effect of defeating the intentions of Parliament should be struck down and that the effect of Parsons should be limited to cases not covered by the Construction Act.
There is a second exception to the general rule where the adjudicator makes a declaration as to the proper operation of the contractual payment machinery. If by the exercise of that machinery a withholding notice can legitimately be served, the set off may give rise to an arguable defence (Shimizu [2003]). Again, such cases will be unusual.
In the event, the court decided in both cases that the above exceptions could not apply and ordered the adjudicator's decision to be paid in full. It remains the case that only in rare cases such as R&C [2012] will enforcement be refused.