Glazing contractors Southern Glass Services (SGS) have been successful in what is being hailed by some as a "landmark case" in the construction industry. The details are as follows:
Facts And Issues
SGS were awarded contracts to fabricate, supply and install glazing on two phases of the Ocean Boulevard project in Southampton. Subsequent to rates being agreed between SGS and Barratt Southampton (Barratt), Barratt wrote to SGS advising that "discounts" of 3% would be taken from payments to the firm with immediate effect. The "discount" was to be in addition to any discounts already agreed under the contract. On completion of the project, SGS sought to formally challenge these deductions, and adjudication proceedings commenced on 12 January 2008. Were such deductions legitimate?
Decision
The Adjudicator found that there was no contractual basis for making such deductions, and ruled that Barratt "improperly withheld" the cash. Imposing pay cuts on existing contracts without agreement is unlawful. Accordingly, Barratt were ordered to return the discounts which totalled more than £19,000. In addition, the Adjudicator found that Barratt were to make payment to SGS of £5,400 in terms of interest due on the money retained.
Contractors are therefore being urged to check payments made to them are in line with the contracts agreed, and to reclaim their money in the event sums have been unlawfully deducted.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
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