The ATE policy The policy terms contained a number of cancellation provisions and thus the policy lacked the necessary certainty of payment.
Whatever safeguards were offered by the company in liquidation, they must seek to place the responding party in such a position. The ethos of adjudication was "pay now, argue later". The purpose of the "argue later" element of that phrase, (contained in section 108 of the 1996 Act), was that the "pay now" element could be ‘rewound’, if the court or arbitrator later decided the outcome of the dispute in the responding party's favour. The decision here rested on the actual nature and form and terms of the instruments of security proffered by JDC.
As the judge put it:
“ I do not consider the proposed arrangement to be sufficient, nor do I consider it comparable to undertakings from the liquidators which Lord Briggs plainly had in mind, nor do I consider it similar to ringfencing the proceeds.”
Therefore, the application for summary judgment failed.
Issue 3: If so, should the court order a stay of execution, as was done in Bouygues v Dahl Jensen, in light of the Supreme Court decision in Bresco and applying the principles in Wimbledon Construction Company 2000 Ltd v Derek Vago? Had summary judgment been granted, the court would have had to consider as a matter of discretion, whether or not to grant a stay under RSC Ord 47(1)(a). This rule had been considered on an application to stay the execution of summary judgment obtained on enforcement of an adjudicator's decision, in a number of cases particularly Wimbledon in which all of the different decisions up to that date were considered, and the principles summarised. That case has been used as the definitive statement for the principles to be considered for the last 15 years. In Wimbledon it was expressly stated that "if the claimant is in insolvent liquidation, then a stay of execution will usually be granted" unless there were some exceptional circumstances that would justify not ordering a stay of execution.
The letter of intent
JDC did not offer to ring fence the amount awarded and there was no undertaking from the liquidators to retain and repay it if ordered to do so. Instead H&J put forward what it called a letter of credit from its bankers. The court found it to be no more than a letter of intent to provide a letter of credit and then only after actual receipt of the monies awarded by the adjudicator. The court did not regard this as offering any protection.
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