Wimbledon Construction Company 2000 Ltd. v Vago

An adjudicator’s decision should ordinarily be enforced promptly. On an application to stay enforcement, the court must exercise its discretion with the temporary and binding character of adjudication firmly in mind. A probable inability to repay the award when repayment may fall due can amount to a special circumstance, particularly where the successful party is insolvent. A stay will usually be inappropriate where the successful party’s financial position is materially unchanged from that accepted when the contract was made, or where its financial difficulty was caused substantially by the paying party’s non-payment. An unparticularised counterclaim which does not identify any contractual breach has no real prospect of defeating summary judgment for an agreed debt.

Wimbledon Construction Company 2000 Ltd. v Vago concerned enforcement of an adjudicator’s award arising from residential extension and refurbishment works. The adjudicator awarded the contractor £122,923.34 inclusive of VAT. The employer consented to judgment but sought a stay of execution pending arbitration, alleging that the contractor’s financial position meant that any repayment could not be recovered.

The contractor also sought summary judgment for £6,507.97 for agreed post-contract works. The employer relied on an alleged set-off and counterclaim concerning heating and ventilation defects. The central issues were whether that counterclaim had a real prospect of success and whether enforcement of the adjudication award should be stayed.

1. Judgment was entered for the claimant and a stay was refused. The defendant’s proposed counterclaim did not provide a real prospect of defending the agreed £6,507.97 debt. The evidence did not identify the contractual obligations allegedly breached, did not correlate the fitter’s report with the proposed remedial costs, and was internally uncertain as to value.
2. Adjudication under the Housing Grants, Construction and Regeneration Act 1996 and the contractual scheme is intended to give a rapid, temporarily binding answer. Adjudicators’ decisions should therefore be enforced summarily and the successful party should generally receive the money awarded.
3. Under Rules of the Supreme Court Order 47, rule 1(1)(a), probable inability to repay the judgment sum when repayment might arise may be a special circumstance. The court should assess that risk at the prospective date of repayment, not merely at the date of enforcement. Insolvent liquidation, or uncontroverted insolvency, will usually justify a stay. The court declined to import the precise test in section 726(1) of the Companies Act 1985, although its established discretionary guidance was generally relevant.
4. The defendant had not proved that the claimant would probably be unable to repay in nine to twelve months. The claimant was then making a modest profit and its accountant’s evidence answered the allegation of insolvency. Loans from directors and others did not establish a probable inability to repay.
5. Independently, a stay would have been wrong because the claimant’s financial position was substantially the same as when the defendant contracted with it. Further, the financial problems on which the defendant relied were caused in significant part by the defendant’s failure to pay sums later found due in adjudication. Summary judgment was entered for £129,431.31 inclusive of VAT, with interest, and execution was not stayed.

High Court (Technology and Construction Court): Enforcement proceedings followed an adjudicator’s decision of 21 February 2005. Arbitration proceedings challenging aspects of that decision had also been commenced. No appellate history is stated in the judgment.