Tera Construction Ltd v Lam

Summary enforcement of an adjudicator’s decision should ordinarily follow the adjudication scheme’s purpose of securing prompt interim payment. A defendant must show a real prospect of successfully defending enforcement or another reason for a trial. A jurisdiction challenge will fail where the notice briefly identifies the dispute and the referral supplies particulars, contentions and relief. The court should not permit selective severance where the adjudicator determined one dispute embracing several issues. A stay based on counterclaims or the claimant’s alleged impecuniosity requires special circumstances. Uncertain liability or quantum, the defendant’s opportunity to raise the counterclaim in the adjudication, and evidence that non-payment caused the claimant’s financial difficulties may justify refusing a stay.

Tera Construction Ltd sought summary judgment to enforce an adjudicator’s decision requiring Yuk Tong Lam to pay sums arising under a JCT Minor Works Agreement. The adjudicator had determined issues including extension of time, valuation, retention, withholding, defects, termination and interest.

Lam resisted enforcement on jurisdictional grounds and relied on alleged defective works and Tera’s financial position. The central issues were whether the adjudicator had exceeded the scope of the notice and referral, and whether enforcement should be stayed pending determination of Lam’s claims.

1. Enforcement. The purpose of adjudication is to provide a speedy interim determination of payment disputes, pending final determination by arbitration, litigation or agreement. Under CPR 24.2(a)(1) and (b), the defendant had to show a real prospect of defending enforcement or another reason for a trial.
2. Jurisdiction. The notice was required to identify the dispute briefly. The referral was required to provide particulars, the relied-on contentions, the relief sought and relevant material. The referral developed each issue identified in the notice. The adjudicator therefore acted within jurisdiction in determining practical completion and the invalidity of the notice of determination, the payment and retention issues, and the value of outstanding work.
3. The court distinguished KNS Industrial Services (Birmingham) Limited v Sindall. That case concerned a party seeking to rely selectively on favourable parts of an adjudication. It did not prevent consideration of whether a particular determination was within the scope of the dispute referred.
4. Stay. The question whether enforcement should nevertheless be stayed was discretionary and required consideration of broad justice and the underlying purpose of adjudication. A stay was inappropriate. Payment had been due following practical completion more than a year earlier. The principal counterclaim was uncertain in both liability and quantum, and the relevant matters could have been raised in the adjudication.
5. Tera’s poor financial position did not justify a stay. It was not shown to be insolvent. The evidence suggested that its difficulties may have resulted from Lam’s non-payment. The reasoning in Herschel Engineering Ltd v Breen Property Ltd and Absolute Rentals Limited v Gencore Enterprises Limited was applicable. Judgment was entered for the adjudicated sum, without a stay, payable within fourteen days. Costs were assessed at £11,612.08.