Kier Regional Ltd (t/a Wallis) v City & General (Holborn) Ltd & Ors

A final third party debt order requires a present debt due from the third party to the judgment debtor. The court must examine the underlying agreement and cannot treat disputed accounts as conclusive evidence of a debt.

Where the judgment debt enforces an adjudicator’s decision, the usual policy of prompt enforcement remains relevant. However, the discretion under CPR Part 72 must be exercised justly and equitably. Particular weight may be given to the prejudice that enforcement would cause non-parties to the construction contract and to an imminent arbitration which may overturn the basis of the judgment debt. In an exceptional case, those factors may justify refusing a final order and staying further enforcement.

Kier obtained judgment against City and General (Holborn) Ltd enforcing an adjudicator’s decision concerning loss and expense under a construction contract. Kier then sought final third party debt orders against Cambridge Gate Properties Ltd and Temple Guiting Manor Ltd, relying principally on company accounts which recorded sums as owing to Holborn.

Holborn sought a stay of execution pending an imminent arbitration in which the adjudicator’s decision and the final account were to be reconsidered. The principal issues were whether present debts existed, how the discretion under CPR Part 72 should be exercised if they did, and whether execution should be stayed under RSC Order 47.

1. No present debt. The accounts were unreliable and could not, without more, establish debts which the parties disputed. The written joint venture agreement did not provide for profit or loss shares to be calculated and paid on a rolling or annual basis. Payment was not due until the development costs could be ascertained, at least after the final account and forthcoming arbitration. No additional oral agreement was proved. Accordingly, no debt was presently due from Cambridge or Temple to Holborn, and the interim third party debt orders had to be discharged.
2. Discretion under CPR Part 72. Even if debts had existed, the court would not have made final orders. The ordinary enforcement policy applicable to adjudicators’ decisions did not require an inflexible result in favour of Kier. The court could consider all relevant circumstances, including the position of third parties who were not parties to the construction contract.
3. The proposed orders would probably force Cambridge and Temple into insolvent liquidation and might permanently deprive them of money which could later prove not to be due. That prejudice, combined with the imminent arbitration and the fact that the original delay analysis was no longer relied upon by either party, made enforcement inequitable on these facts. The court declined to make a general rule that third party debt orders enforcing adjudication judgments were impermissible, or permissible only exceptionally.
4. The delay in enforcement and the criticism that the adjudicator had failed to consider expert reports carried little weight. The earlier judgment enforcing the adjudicator’s decision remained an ordinary judgment of the court.
5. Stay of execution. A stay under RSC Order 47 was granted. Kier already had a final charging order, and further enforcement proceedings would distract from the imminent arbitration. Kier was restrained from taking further enforcement proceedings until the arbitration had concluded.