Construction Case Update - Adjudication - Part 3 of 2018

8. Stay of execution—financial position of both parties Energo A.S. v Bester Generacion UK Ltd 18 The Adjudicator ordered the defendant Bester Generacion UK Limited (“Bester”) to repay sums drawn down by way of performance security amounting to £2.72 million together with his fees and expenses of £38,500. D failed to pay. It did not challenge the decision but sought a stay of execution on two grounds: one, the probability that the Claimant Energo A.S. (“Energo”) would be unable to repay the judgment sum at the end of a substantive trial and, two, Bester’s own financial position, if there was no stay. The evidence as to Energo’s financial position was inconclusive. The starting point, and usually end point, was that the Court would enforce the decision of an adjudicator, whether right or wrong, unless he did not have jurisdiction or there had been a material breach of the rules of natural justice. The jurisdiction to stay execution was encapsulated in CPR 83.7 and depended upon the Court being satisfied as to one of two ‘gateways’: (1) there were “special circumstances” which rendered it inexpedient to the enforce the judgment or order, or (2) that the applicant (for a stay) was “unable for any reason to pay the money”. Where the latter gateway was relied on, the debtor was required to file a witness statement which “must” disclose its means. The Court respectfully agreed with and adopted the summary of principles set out by Coulson J in Wimbledon v Vago 19 , relying on an additional principle identified by Fraser J. 20 , namely evidence showing that the claimant had organised its financial affairs for the purpose of dissipating or disposing of the adjudication sum to avoid repayment. Bester said evidence of Energo’s financial position was “unsatisfactory”. But the Court held it was for the debtor who raised the issue of the claimant’s financial position to at least put before the Court sufficient information to call for an answer to allay concern. Energo’s evidence though incomplete, was sufficient for the purpose in that it showed that in the event of failure in subsequent legal proceedings, Energo would be able to cover its liability from its own resources. Turning to Bester’s financial position, there was no satisfactory evidence of Bester’s inability for any reason to pay the money (namely the £2.72 million). It failed to meet the first requirement of CPR 83.7(3). Though accepting that counsel was instructed to say the sum could not be repaid, that was no substitute for witness evidence of inability to pay. As neither gateway had been satisfied, the Court declined to impose a stay. Even if either gateway had been satisfied by evidence the Court would still have declined to exercise its discretion to impose a stay. There was no good reason for the money to be left with Bester when it accepted Energo’s entitlement to summary judgment.

The Court’s first instinct was that adjudicator’s orders were binding and should be complied with and that had nothing to do with the source of the money (i.e. coming from the draw down of a performance security). The source made no difference. There was nothing in the particular circumstances of other cases to provide a compelling analogy requiring a stay. Ordering the money to be brought into Court might have seemed superficially attractive, but since there was no prospect, according to Bester’s counsel, of such an order being complied with, it would have been an exercise in futility. 9. Summary Enforcement of judgment debt based on adjudicator’s decision—use of winding up petition Victory House General Partner Ltd, Re company Where the petitioner had summary judgment on an adjudicator’s award, and the Company had a bona fide cross claim on substantial grounds and there were no special circumstances in the case to take it outside the general rule, the petition based on the judgment debt was dismissed. Jurisdiction - Correct interpretation of the Scottish Scheme Pentland Investments Limited v Aitken Turnbull Architects Limited Where an adjudicator wishes to hear multiple adjudications on related disputes under different contracts at the same time, they will need to obtain consent of the parties to do so under the Scheme. Jurisdiction—disputed oral novation—effect of mis- description in adjudication notices (1) M Hart Construction Ltd and (2) P K Maintenance Ltd v Ideal Response Group Ltd Where the adjudicator’s decision was that a novation had taken place, but this was contested and the conflict of evidence could not be resolved on a summary judgment application, it could not be said the defendant had no reasonable prospects of succeeding in its defence and summary judgment could not be granted. There was no discrete procedural requirement to set out in the notice of intention to refer, details of the contract giving rise to the dispute. The absence of particularity in a notice of intention to refer to a particular contract did not render it invalid or restrict the adjudicator’s jurisdiction to determine the dispute referred. Jurisdiction—oral contracts Dacy Building Services Ltd v IDM Properties LLP An oral contract is a sufficient pre-condition to the application of the statutory adjudication regime. If there is no contract between the parties there can be no dispute capable of being referred to adjudication and no adjudicator appointed will have jurisdiction to deal with the dispute. The existence of an oral contract gave the adjudicator jurisdiction to make his decision and such decision was enforceable.


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