Southampton FC lose High Court case over non-payment of construction costs

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P J English Associates announce that Southampton Football Club (“SFC”) has been ordered to pay £55,000 plus interest and costs to Hampshire based commercial fit-out and refurbishment specialists, Solent Interior Systems (“SIS”).

Many companies still do not understand their obligations under the Construction ACT.

The case was heard on the 15th November 2012 in the London Technology and Construction Court and, as Amy Amison LLB BCV, of P J English Associates, who represented SIS, comments: "This case highlights the continued poor payment practices of many major businesses towards smaller sub contractors. It also clearly demonstrates a lack of understanding of the new Construction Act and specifically, how, when and what to include within a Pay-less Notice."

According to court documents, the work related to the refurbishment of an entertainment facility known as the “Mick Channon Suite” and the contract terms clearly stated that the overall value of £315,000 + VAT would be paid in 5 stages, over the course of a 7 week programme.

The court heard that following a timely start, work commenced in accordance with the agreed schedule, all required deadlines were met and the first 4 payments were made on time. However, the final payment of £55,000.00 + VAT was not received. In addition, SIS had been instructed by the management of the club to carry out £44,000 worth of variations to the contract. To date, this sum has also not been paid. SFC offered no reasons as to why these sums were being withheld and chose to simply issue Pay-less Notices for the remaining value of the contract (£55,000) and the £44,000 worth of variations.

However, as Peter English FRICS FCIArb, of P J English Associates, the Chartered Surveyors and Dispute Resolution Experts engaged by SIS, comments: “Both Pay-less Notices were invalid because they failed to set out detailed reasons as to why the amounts were being withheld and the basis of the calculations used. They were also issued outside of the required timeframe.”

It was reported to the court that, having written numerous letters requesting payment to no avail, SIS had no choice but to commence two adjudications to recover the amounts owed. The first of which, in respect of the £55,000 was commenced on 30th July 2012 and the Adjudicator made a Decision that SFC shall immediately pay the £55,000 + VAT, together with appropriate interest and legal costs to SIS. However, SFC refused to pay and offered no reason for this illegal action.

Peter English went on to say that "SIS had no choice but to commence proceedings in the High Court in order to enforce the Adjudicators Decision. And, despite setting out to the Court their intention to defend the whole claim, SFC failed to even turn up at the Court Hearing in order to present their defence."

The court report shows that judgement has been entered against SFC, who have been ordered to pay to SIS, within 14 days, the amounts awarded by the Adjudicator, further interest payments and the entirety of SIS’s costs incurred to date.

Peter English concludes by saying "The second Adjudication was commenced on 9th November 2012 and the Adjudicators Decision is due to be announced on 15th December, and SIS anticipates the same result."

About P J English Associates
Over the last 25 years, PJ English Associates has established a respected position as genuine experts in the fields of dispute management, commercial and project management, programming, planning, delay analysis and quantity surveying.

Their work centres on identifying and mitigating key areas of risk at an individual project or corporate level, as well as using a combination of mediation, adjudication, arbitration and if necessary litigation, in order to successfully resolve disputes in a positive and commercially desirable manner.

Case number: HT-12-345 in the High Court of Justice, Queens Bench Division, Technology and Construction Court before Mr Justice Akenhead)

P J English Associates
698, Uppingham Road

Tel: +44 (0) 116 241 5599
Mob: +44 (0) 7939 136 857
Fax: +44 (0) 870 199 2504
E-mail: pete(at)pjeinternational(dot)co(dot)uk

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Ian Turner

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