Homeowners who were directed by an adjudicator to pay almost £90,000 to builders who carried out an ambitious refurbishment of their property have failed to convince the High Court that they are entitled to a £40,000 set-off against that sum in respect of delays to the project.

The contract price for the project was originally £600,000. However, following various snags and hold-ups, the builders’ final account came to over £1.3 million. Disputes arose as to the value of the work done, the date of practical completion and the cost of remedying various alleged defects.

The homeowners paid just over £1.1 million, the sum at which they valued the work minus various deductions. However, the builders claimed that they were owed a balance of more than £190,000 and referred the dispute to an adjudicator, who directed the homeowners to pay an additional £88,606 within 14 days.

The homeowners withheld £40,000 of that sum on the basis that they were entitled to liquidated damages under the contract in respect of the delays that had blighted the project. The builders issued High Court enforcement proceedings, insisting that no such deductions were permissible.

Ruling in favour of the builders, the Court noted that the matter had been referred to the adjudicator on the basis that he would determine the sums due from the homeowners to the builders ‘without set-off’. It was clear that the adjudicator had ordered immediate payment of the sum due and had not permitted the homeowners to set off what was clearly and obviously a disputed claim for liquidated damages.

Noting that its decision did not leave the homeowners without a remedy, the Court observed that they could themselves proceed to an adjudication or final dispute resolution in respect of their disputed liquidated damages claim. However, it would be for them to judge whether such a course was sensible.


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