London Borough of Camden v Makers UK Ltd

An adjudicator’s decision should ordinarily be enforced where its enforceability is not challenged on jurisdictional or procedural grounds. The court may nevertheless stay execution where the successful party is insolvent and cannot repay the award if it loses forthcoming substantive proceedings. An unconditional stay may be appropriate where the defendant is financially sound and an imminent trial will materially clarify the parties’ rights.

Payment into court or an escrow account is not required merely to preserve a tactical settlement advantage. The court should consider whether such a condition has any practical benefit and whether it would unfairly tie up the defendant’s money.

Makers sought summary judgment to enforce an adjudicator’s decision requiring Camden to pay approximately £1.3 million, interest and the adjudicator’s fees. Camden did not challenge the decision as exceeding jurisdiction or having been reached unfairly.

The parties were already engaged in substantive proceedings concerning whether Camden had lawfully terminated the construction contract or had repudiated it. Makers had previously obtained an order setting aside judgment in default in those proceedings: [2009] EWHC 605 (TCC). The court had then found Makers insolvent and unable to repay money received if Camden succeeded at trial. The issues were whether execution should be stayed and whether payment should instead be made into court or escrow.

1. Judgment and stay. There was judgment for Makers because Camden did not dispute that the adjudicator’s decision was enforceable. The court nevertheless granted a stay of execution until further order.

2. Insolvency and repayment risk. Makers remained insolvent and would be unable to repay the adjudication sum if Camden succeeded at the imminent liability trial. The trial would provide substantially better information about the parties’ contractual rights and would occur within about three weeks. Those circumstances justified a stay.

3. No condition requiring payment into court or escrow. The court had power under Civil Procedure Rules 1998 Part 3.1, and under its stay of execution powers, to require the money to be paid into court or an escrow account. That condition was not warranted. It would temporarily deprive Camden, a financially sound local authority, of approximately £1.3 million without producing a realistic pragmatic benefit. Any possible advantage was tactical rather than a proper reason for imposing the condition.

4. Further application. Makers was given specific permission to apply to lift the stay after judgment on liability, because success at that trial could materially alter the position.

This was a first-instance Technology and Construction Court application. The judgment records that Camden had previously obtained judgment in default in related substantive proceedings, which was set aside on Makers’ application by the same court in [2009] EWHC 605 (TCC). The substantive liability trial was listed for November 2009.