Alexander & Law Ltd v Coveside (21BPR) Ltd

Adjudicators’ decisions should be enforced summarily, even where the adjudicator expressed reservations about a difficult conclusion. A pending winding-up petition does not, without more, justify refusing judgment or require the enforcement court to predict the petition’s outcome.

A stay may be granted where there is a high risk that an impecunious claimant could not repay the judgment sum. The court must then examine whether the defendant’s non-payment caused or significantly contributed to that financial position, focusing on the nature and timing of the default identified by the adjudicator.

The claimant contractor applied for summary judgment to enforce an adjudicator’s decision awarding approximately £215,983.26, including interest and VAT. The defendant resisted enforcement and sought a stay, relying principally on a pending winding-up petition, the claimant’s financial difficulties, and the risk that the award could not be repaid.

The adjudication had found that termination of the building contract was invalid and that sums were due to the claimant. The central issues were whether the pending winding-up proceedings prevented judgment and, if judgment should be entered, whether execution should be stayed pending resolution of the parties’ wider disputes.

1. Summary judgment. The court granted judgment for £215,983.26. The ordinary rule is that an adjudicator’s decision will be enforced unless the adjudicator lacked jurisdiction or acted in an obviously unfair manner. A difficult issue, or the adjudicator’s reservations about the result, does not create a “near miss” exception. Errors of fact or law are not ordinarily grounds for resisting enforcement, and a decision which may ultimately be wrong must likewise be enforced if jurisdiction and fairness are established.
2. Pending winding-up petition. The existence of a winding-up petition did not justify withholding judgment. The court should not anticipate the Registrar’s decision or assume that the petition and supporting creditors would maintain their claims. The enforcement proceedings and winding-up proceedings should be kept separate. Any insolvency issue was relevant to the stay application, not to the question whether judgment should be entered.
3. Stay of execution. The court applied the principles in Wimbledon Construction Company 2000 Ltd v Derek Vago [2005] BLR 374. Adjudication is intended to provide a prompt and temporary result, so the successful party should ordinarily receive the adjudicated sum. A stay may nevertheless be appropriate where there is a high risk that the claimant could not repay it after the substantive dispute was resolved.
4. The evidence established a very high risk that the claimant could not repay the award. It had ceased trading, had substantial undisputed and disputed debts, carried a significant overdraft, had no cogent evidence of a viable trading future, and appeared to have established a similarly named company capable of taking over future business without the existing debts.
5. In assessing causation, the court considered the nature and timing of the non-payment identified by the adjudicator. The defendant’s failure to pay the certified sums occurred after the claimant had ceased trading and after the principal debts had arisen. It therefore neither caused nor significantly contributed to the claimant’s inability to repay. Execution was stayed until resolution of all disputes between the parties. Consequential costs were left for agreement or a further hearing.