Withholding notices continue to cause problems. In Letchworth Roofing Co v Sterling Building Co  EWHC 1119, the TCC held that, whilst a defendant can raise matters by way of defence for the adjudicator to consider, a defendant cannot rely on a cross-claim that should have been the subject of a withholding notice if no valid notice was issued. In such circumstances, an adjudicator will act entirely properly if he refuses to take the value of the cross-claim into account and the court cannot interfere with that decision. To read the judgment click here.
Letchworth v Sterling: In reaching this decision, the court noted that the interface between the adjudicator’s jurisdiction and the scope and validity of withholding notices can sometimes be said to give rise to difficulties which, on a proper analysis, are simply not there. The general position is clear - an adjudicator has to decide whether or not a withholding notice is required to permit a cross-claim to be raised as a defence and, if so, whether or not there has been a valid notice. If he concludes that no notice was required, or that a notice was required and that there was a valid notice, then he must take the cross-claim into account in arriving at his decision. If he concludes that a notice was required, and that either there was no notice or that the notice served was invalid for any reason, then he is not entitled to take the cross-claim into account when reaching his conclusion.
The court held that the adjudicator’s decision was not issued out of time and he had not failed to deal properly or at all with the particular dispute referred to him.