J&B Hopkins Ltd v A & V Building Solution Ltd [2023] EWHC 2475 (TCC)
Following a series of adjudications, the question arose as to whether a stay of execution should be awarded in respect of a summary judgment obtained enforcing an adjudicator's decision.
Question for determination by the Court
Usually, it is the defendant against whom judgment has been entered enforcing an adjudication decision that seeks a stay of execution because, for example, the claimant's financial position is insecure, meaning that an eventual decision in the defendant's favour following arbitration or litigation may be an empty victory because the claimant could not satisfy a decision that decided that the adjudicator's decision was wrong. However, in this case, the stay of execution was being requested by the defendant because the defendant was unable to pay the adjudicators award that had been confirmed by summary judgment.
Decision
Pursuant to CPR 83.7 the court has discretion to order a stay of execution if it is satisfied that:
- there are special circumstances; or
- the applicant is unable to pay the sum awarded.
As legal practitioners and construction professionals will be well aware, a stay of execution is rarely granted. When considering whether to grant a stay of execution of a summary judgment arising out of an adjudicator's decision, the court must take into account the fact that:
- adjudication is designed to be a quick and inexpensive method of arriving at a temporary result in a construction dispute; and
- in consequence, adjudicators' decisions are intended to be enforced summarily and the claimant (being the successful party in the adjudication) should not generally be kept out of its money.
Nevertheless, the court took the exceptional step of granting a stay of execution. Mr Roger Ter Haar considered the defendant's financial predicament between the stay hearing and the conclusion of any litigation.
In considering the figures that may well be due and payable to the defendant, Mr Ter Haar concluded that it was certainly possible that the adjudicator's decision has given the claimant a windfall and that the unusual combination of factors that has arisen in the case could risk of irreparable prejudice to the defendant if the adjudicator's decision was enforced in full.
The Court confirmed that it has a discretionary power to order a stay of execution of judgments enforcing adjudicators' decisions in cases falling within CPR 83.7, particularly where the enforcement of the summary judgment might cause manifest injustice. An applicant applying for a stay of execution relying on its parlous financial situation does not have to establish that its financial situation is the result of any act or omission on the part of the judgment creditor, but its position will be stronger if it does demonstrate that link, particularly if it can be shown that that act or omission was a breach of contract.
The Judge took the exceptional decision to grant a stay of execution of the judgment to avoid manifest injustice to the defendant. Mr Ter Haar confirmed that this decision was reached because:
- the Court of Appeal had ruled that J&BH was in breach of contract because it had not paid the first adjudicator's decision "that should have been the first order of business";
- the Court of Appeal held that "the first adjudication was made more complicated than it needed to be, in particular because JB&H's solicitors raised a number of unmeritorious jurisdictional challenges and generally failed to provide the sort of assistance to a lay adjudicator that I would expect";
- J&BH launched Part 8 proceedings raising arguments which the Court of Appeal held to be wrong;
- whilst these actions were not the sole cause of A&V's financial difficulties, Mr Ter Haar was satisfied that the costs arising from these actions exacerbated A&V's financial difficulties;
- the Court cannot ignore that J&BH is seeking to insist upon the "pay now, argue later" principle which it itself refused to honour;
- there was no doubt that A&V's case that the second adjudicator's decision was wrong is arguable; and
- there is no prospect of execution of the judgment producing any financial reward for J&BH. The consequence of execution of the judgment would probably be an order winding up A&V, effectively preventing A&V from pursuing its claim which I have held to be arguable.
Commentary
Whilst this is an exceptional decision reached on the particular facts of the case, it is clear the court will take into account the conduct of the other party when deciding whether to stay enforcement of an adjudicator's award. Here the applicant's conduct in not paying an earlier adjudication award, as well as increasing the costs of the respondent by its conduct in past adjudications, weighed heavily on the judge's mind in relation to the possible manifest injustice that might arise from enforcing the adjudicator's award.
The decision provides a timely reminder that failing to abide by adjudications guiding principle of 'pay now argue later' and running jurisdictional arguments that have no merit, may well impact a party's ability to enforce an adjudication award later down the line.
Read the full judgement.
