This article focuses on J & B Hopkins Ltd v Trant Engineering Ltd [2020] EWHC 1305 (TCC) which concerned an application by J & B Hopkins for summary judgment to enforce a notified sum adjudicator’s decision. The judgment reinforces the established principles of enforcing adjudicators’ decisions and clarifies the current application of the ‘correction principle’ in subsequent payment cycles. As the Judge succinctly put it: “Serving the relevant and required notices is not an impossible or Herculean task. Failure to dos so has certain consequences.”

Background to Dispute

J & B Hopkins was engaged by Trant under a subcontract dated 20 April 2018 to carry out M&E works at a recycling plant. The original subcontract sum was £1.7 million, which increased significantly due to variations, estimated by Trant to be in the region of £3.3 to £3.5 million.

On 30 July 2019, J & B Hopkins submitted Interim Application 26, claiming approximately £812,000. Following non-payment, J & B Hopkins commenced an adjudication on 17 January 2020, seeking a determination on whether the sum in Application 26 became due and payable due to Trant’s alleged failure to serve valid notices. The adjudicator issued a decision on 2 March 2020, finding that Trant had issued no valid notices and that the £812,000 was due and payable immediately.

Trant refused to pay, leading J & B Hopkins to issue proceedings in the TCC on 10 March 2020, seeking summary judgment to enforce the adjudicator’s decision.

Principles of Enforcement

The court reiterated the well-established principle that adjudicators’ decisions will be enforced by summary judgment, regardless of errors of law or fact, provided the adjudicator acted within their jurisdiction and broadly in accordance with the rules of natural justice. The judge cited Hutton Construction Limited v Wilson Properties (London) Limited [2017] BLR 344, where Coulson J stated: “If the decision was within the Adjudicator’s jurisdiction and the Adjudicator broadly acted in accordance with the rules of natural justice, such defendants must pay now and argue later.”

Correction Principle

Trant argued that entitlement under Payment Application 26 had been superseded by 6 subsequent interim payment cycles “correcting” the sum payable under the subcontract and it would be manifestly unjust to find otherwise. Trant relied on the principle that interim payments can be corrected in later payment cycles and argued that this correction had occurred long before the adjudication started. It stated in its skeleton:

“In the circumstances, it is submitted that it would be manifestly unjust to permit the Claimant to enforce a decision in respect of PA26, when that sum had ceased to be due, following later payment cycles which the Claimant went along with, before the adjudication started, and no longer represents the current payment entitlement under the Sub-contract. To enforce the decision would be inconsistent with, and undermine, the ‘correction’ principle set out in the case law, namely, that interim payments can be corrected in the next interim payment cycle. Here that correction occurred long before the adjudication was commenced and so the earlier payment entitlement ceased to exist and is replaced by the current sum due pursuant to s111. Alternatively, if the decision were enforced the Court should give effect to the current payment entitlement with the result that payment would be met with an immediate obligation to repay.”

The court held that subsequent interim payment cycles do not automatically extinguish disputes arising from earlier applications, particularly those concerning the validity of payment notices. The right to adjudicate on a specific payment application does not disappear simply because later applications are made.

While acknowledging the correction principle established in cases like S&T (UK) Limited v Grove Developments Limited [2018], the judge clarified its application. The principle allows for the true value of work to be corrected in later applications after a failure to serve valid notices in a previous cycle. It does not mean that the sum, which was correctly deemed due at the time due to the lack of valid notices, retroactively ceases to be payable. As the Judge put it:

“By ‘correction principle’ I mean that if an interim application is subject to a failure by a particular party to issue the required notices, leading to the result that by that failure the sum applied for becomes due, any correction to reflect the true value of the work (and the application) is permissible on later applications. However, the quid pro quo of that is that the amount due on the original application as a result of the failure to serve the required notices – here, Application Number 26 – is precisely that: the amount due.” [24]

Stay of Execution

Trant’s application for a stay of execution based on ‘manifest injustice’ was also dismissed. The judge emphasized that the purpose of the Act is to provide a statutory framework for interim cash flow and that requiring payment now with potential later repayment is consistent with the legislation. The judge stated: “There is a danger in considering a stay where the Claimant has a valid Adjudicator’s Decision of using the concept of manifest injustice as a wider examination of the supposed ‘merits’ of the underlying dispute. If that were to occur, it would frustrate the purposes of the Act and it would frustrate the intention of Parliament.”

The court found no evidence of the claimant’s inability to repay the sum if Trant were successful in a later determination of the true value of the works. The court distinguished the case from Galliford Try Building Limited v Estura Limited [2015], noting that the unusual circumstances in that case related to the paying party’s precarious financial position, which was not the case here.

Discussion

Following this judgment, adjudicators should be mindful that the correction principle does not retroactively apply to remove entitlement to be paid a notified sum and extinguish the infelicitous bi-product of the Act entitling a party to double payment. As occurred here, this might ultimately lead to further costs and proceedings, commencing with a true value adjudication.

The purpose of the Act was primarily to reduce insolvencies by improving cashflow through the industry, with the additional objective to reduce the burden on the legal system. It might be said that these authorities pertaining to the application of the correction principle are in conflict with the latter objective. To resolve this tension, it is suggested that the court could adopt a different approach and (as Trant appeared to have unsuccessfully argued) apply a simple set-off against the interim account balance, thus preventing any entitlement to a double payment.