Harlow & Milner Ltd v Teasdale

A court which made a charging order has jurisdiction to order sale under CPR 73.10, even where a practice direction allocates such claims to another Division. Where the rule and practice direction conflict, the rule prevails.

An adjudicator’s decision must ordinarily be complied with promptly. A party cannot resist enforcement, set off other claims, or rely on a pending arbitration or anticipated adjudication. In exercising discretion over sale, the court may consider whether the property is an investment property, whether default is persistent, whether payment is otherwise realistic, and whether arrangements adequately preserve evidence. A stay is not justified merely because later proceedings may alter the parties’ ultimate rights.

The claimant obtained an adjudicator’s decision for substantial sums arising from refurbishment works. That decision was enforced by judgment, followed by interim and final charging orders over three investment properties owned by the defendant.

The defendant did not pay the judgment debt. She opposed an order for sale under CPR 73.10, relying principally on ongoing arbitration, the need to preserve evidence concerning the properties, and her procedural position. She also sought a stay. The issues were whether the court had jurisdiction, whether the defendant could participate, whether discretion should be exercised in favour of sale, and whether execution should be stayed.

1. Jurisdiction. The court had jurisdiction to make the order for sale because it had made the charging order. CPR 73.10(2) admitted of no other interpretation. Any conflict with paragraph 4.2 of the relevant practice direction had to be resolved in favour of the rule. The practice direction was subordinate to the CPR. The approach was consistent with Godwin v Swindon Borough Council [2004] 4 All ER 641 and R (Mount Cook Land Ltd) v Westminster City Council [2003] ECWA Civ 1346.
2. Participation. The defendant had failed to acknowledge service and file evidence in accordance with the CPR. Nevertheless, permission was granted for her to participate fully, and the court considered her documents and submissions.
3. Effect of pending proceedings. The ongoing arbitration did not justify withholding enforcement. Adjudicators’ decisions were to be enforced peremptorily. A party could not set off an existing or anticipated claim, or rely on the prospect of a later award, against the sum due under a binding adjudicator’s decision. The court followed the approach in Interserve Industrial Services Ltd v Cleveland Bridge (UK) Ltd [2006] EWHC 741, and treated Macob Civil Engineering v Morrison Construction [1999] BLR 93, Bouygues (UK) v Dahl-Jensen (UK) [2000] BLR 522, MJ Gleeson Group plc v Devonshire Green Holding Ltd (19 March 2004), David McLean Contractors Ltd v The Albany Building Ltd (10 November 2005), and Hillview Industrial Developments (UK) Ltd v Botes Building Ltd [2006] EWHC 1365 (TCC) as supporting that conclusion.
4. Discretion and preservation of evidence. Sale was appropriate. The properties were investment properties rather than the defendant’s home; the default was persistent; the judgment debt was unlikely to be paid otherwise; and the debt was approaching the stated property value. The proposed period before possession allowed further inspections, records and other steps needed for the arbitration, so no irredeemable evidential injustice arose.
5. Stay. No stay was justified. The adjudication and enforcement process would be undermined by delaying sale until arbitration concluded. Nor should the proceeds be paid into court. Applying the guidelines in Wimbledon Construction v Vago [2005] BLR 374, there was no evidence that the claimant could not repay any sum later awarded to the defendant. An order for sale was therefore made in the terms sought, subject to the defendant’s opportunity to seek variation of the proposed sale price.

The claimant had previously obtained judgment enforcing the adjudicator’s decision and then obtained interim and final charging orders. The defendant’s application to appeal or stay the final charging order was dismissed by the Court of Appeal on 3 July 2006. The present court then granted the order for sale.