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Adjudication: Should execution of the judgment be stayed until the decision of the County Court?

Citation: NAP Anglia Limited v Sun-Land Development Co. Limited [2011] EWHC 2846 (TCC)

Keywords: Adjudication, enforcement, claim in County Court, final account

The Facts

The parties entered into a contract incorporating the terms of the CIOB Building Contract, December 2004 Ed to construct four houses and carry out ancillary work for the sum of £728,000.  The work was subjected to substantial delays and the contract was subsequently varied to include an additional four houses.  The Contract Administrator issued to NAP interim payment certificate 16 in the sum of £105,810.  Sun-Land (SL) did not pay and did not issue a withholding notice.  NAP subsequently terminated the contract for non-payment. NAP started proceedings in Autumn 2008 in Norwich County Court for the sum due under its final account.  By June 2011, NAP lost patience with the court proceedings and referred the dispute to adjudication.  NAP was successful in the adjudication proceedings and sought to enforce the decision in August 2011 by seeking summary judgment.  SL resisted the application on the basis that the timetable laid down by the adjudicator unfairly and unjustifiably favoured NAP and constituted a breach of the rules of natural justice.  Further, the adjudicator ignored substantial arguments raised by SL.

Held (Edwards-Stuart J)

It is clearly established by the decision in Herschel Engineering Ltd v Breen Property Ltd [2000] BLR 272, that a party to a construction contract may refer a dispute to adjudication even though the same dispute is the subject of current litigation.  This is because there is a statutory right to refer a dispute to adjudication “at any time.”  NAP is entitled to summary judgment in the sum of £96,334.41 plus interest. SL submits that there is a real doubt as to whether NAP would be able to repay the amount of the judgment if it loses in the county court, or all, of the judgment sum.

The case of Wimbledon Construction Co 2000 Ltd v Derek Vago [2005] 101 Con LR 99 (TCC) considered the authorities for the grant of a stay in the context of an application to enforce an adjudicator’s decision.  The power to order a stay is conferred by RSC Ord 47 (and CPR pt 50) and more specifically rule 1 (1) (a) where there are special circumstances which render it inexpedient to enforce the judgment or order.  The probable inability of the claimant to repay the judgment sum may constitute special circumstances.  On the facts it was established that NAP is in a less than healthy financial position than it was in January 2005.  Part of the judgment should be stayed insofar as it exceeds £65,000 and that SL must pay NAP £65,000 within 21 days. 

Interestingly, the judge commented upon the solicitors' conduct on behalf of SL where material inaccuracies were contained in witness statements.  The judge said that making fundamental errors such as this was unacceptable and that judges expect to rely on statements of fact made by solicitors as they are officers of the court.  Furthermore, the inclusion of 500 pages of unpaginated documentation which was not referred to in any witness statement increases costs for no useful purpose and must not be allowed to happen.