Construction Case Update - Adjudication - Part 5 of 2018

5. Stay of execution pending provision of guarantee bond BN Rendering Ltd v Everwarm Ltd 10 The Claimant was a small company with limited assets controlled by a sole director and shareholder. The Defendant employed the Claimant to carry out construction works and disputes arose over payment under two contracts. The disputes were referred to adjudication and the adjudicator found in favour of the Claimant who now applied to enforce the decisions. The Defendant resisted enforcement and alternatively sought a stay of execution on the basis of uncertainty over the Claimant’s cashflow and financial position. The evidence showed that the Claimant’s director used the Claimant as his personal bank, and that despite the Claimant’s financial position he borrowed money and took dividends, not all of which was repaid, thus moving money around regardless of the Claimant’s needs. The Defendant knew at the time of the contracts that the Claimant was a small company with limited assets under the control of a sole director; but it could not have known of the recent movements of large funds. These movements indicated that the Claimant might have no compunction about organising its affairs such as to prevent the Defendant from recovering any sums awarded to it, in related proceedings if the adjudicator’s decisions were later reversed. Accordingly, applying Wimbledon 11 principles, summary judgment was granted but execution stayed pending the provision by the director’s of a guarantee bond or similar security.

6. Stay of execution—relevance of fraud not raised in adjudication Assesmont Ltd v Brookvex IMS Ltd 12 The applicant Assesmont Limited (“Assesmont”) provided a quote to the respondent Brookvex IMS Limited (“Brookvex”) to carry out steelwork to four columns at an office block in Croydon and a contract was entered into between the parties based on that quote. Brookvex requested additional works which were carried out by Assesmont with Assesmont’s final account totalling £71,716.33. Brookvex requested documentation to support the final account. A dispute over the amount due was referred to adjudication where the adjudicator, a Mr. Nigel Dight gave a decision that Brookvex should pay Assesmont £59,763.61 plus VAT and the adjudicator’s fees in full. Brookvex failed to pay the sums found due and Assesmont applied for summary judgment to enforce the adjudicator’s decision. In its defence and counterclaim, Brookvex argued that the final account provided by Assesmont was fraudulent and relied on forged time sheets and argued that summary judgment should be refused or in the alternative a stay of execution granted as Assesmont had not shown it would be able to fund its counterclaim if Brookvex were ultimately successful. Jefford J. held that the issue of fraud could and should have been raised in the adjudication. Therefore, fraud was not relevant to the issue of enforcement; but it was relevant to whether the Court should stay the enforcement. Even if that view was wrong, Brookvex had not established clear and unambiguous evidence of fraud. Only 3 out of 21 timesheets showed discrepancies and these could have easily been caused by error as of fraud. Further it was for Brookvex to show that Assesmont could not afford to pay and it had not done so. A stay of execution was refused and summary judgment granted.


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