Issue 2. Are those circumstances present here, such that JDC is entitled to summary judgment? Although some of the same considerations arose under both this and Issue 3, the court considered that the two issues had to be addressed sequentially. Lord Briggs at [67] in Bresco had expressly stated that where there is a real risk that the summary enforcement of an adjudication decision would deprive the paying party of its right to have recourse to that claim as security for its cross-claim, then the court would refuse summary judgment. Although addressing the point covered much of the same ground that would need to be addressed when deciding whether to order a stay of execution, the imposition of a stay only arose if a claimant succeeded in obtaining summary judgment. Erith claimed it was owed £40,000 by JDC on a contract called Tooley Street. It raised it as set off in the adjudication and the adjudicator dismissed the claim on evidential grounds. Therefore there was no need to consider it again on enforcement. Even if it was taken into account it was far less than the sum awarded and would not prevent judgment for the balance. The mere existence of a cross claim was not sufficient to defeat a claim to summary judgment. It would depend on the size of the cross claim and possibly its nature.
The court then moved to what was described as the real battleground on the application namely whether there was “a real risk” that the summary enforcement of the adjudication decision would deprive Erith as paying party of its right to have recourse to that claim as security for its cross-claim. JDC relied on (a) a letter of credit and (b) an ATE insurance policy as providing sufficient security for the amount of the adjudication award (although there was an issue over liability for the VAT element) and Erith’s potential costs of seeking to overturn the adjudication decision in subsequent proceedings.
Safeguards (Security)
After considering the case of Meadowside and the judgment of Lord Briggs in Bresco , Fraser J stated that the “primary concern” was whether the grant of summary judgment would deprive the paying party of security for its cross claim, in this case to the extent of the sum to be paid over to satisfy the adjudicator’s decision.
The costs of ‘winning its money back’ were a “secondary concern” .
At paragraph 84 of his judgment Fraser J. said: “Both of these concerns can, in theory at least, be met by appropriate safeguards. However, it is recovery of the sum that would actually be paid out to the company in liquidation, were summary judgment to be granted, that is of the most importance, in my judgment.” Referring again to Meadowside at [84] where it was stated: "as near as possible, the safeguards must seek to place the responding party in a similar position to if the company was solvent" Fraser J said he agreed with that, and adopted that approach. He described it as the obverse of Lord Briggs reference to "real risk".
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