Bernard Sport Surfaces Ltd v Astrosoccer4u Ltd

Where a valid payment notice has been given and no pay less notice served, the sum identified by an adjudicator is payable and must be enforced. Alleged defects that were not raised through a pay less notice may form the subject of a separate claim, but cannot affect the immediate payment obligation. Permission to continue enforcement proceedings after an intended administration remains exceptional, but may be granted where the proceedings are effectively complete, enforcement will not frustrate the administration, there is no unfair preference, and the debtor’s conduct strongly supports continuation. An apparently tactical or bogus insolvency process, used to avoid payment of an adjudicated debt, is a particularly powerful factor in favour of permission.

The claimant sought enforcement of an adjudicator’s decision awarding £175,962.47 in connection with works to a football pitch. A valid payment notice had been served and no pay less notice had been given. The respondent subsequently referred to alleged defects, but those matters had not been raised in the adjudication in a way capable of affecting the payment obligation.

The respondent then served a notice of intention to appoint an administrator after enforcement proceedings had begun. The central issue was whether the claimant should be permitted to continue the proceedings and obtain judgment despite the proposed administration.

1. Enforcement of adjudicator’s decision. The adjudicator’s award was for a sum due under a valid payment notice where no pay less notice had been served. Alleged defects in the pitch could be pursued in separate proceedings, but could not be relied upon to resist enforcement of the adjudicator’s decision. The court applied the pay-now-and-claim-later approach identified in Royal Davenport Dockyard v Carillion [2005].
2. Permission to continue. The party seeking permission bore the burden of showing that continuation was appropriate. Relevant considerations included proprietary interests, the parties’ conduct, the stage reached by the proceedings, whether continuation would frustrate the administration, and whether it would create an unfair or unreasonable preference. Enforcement proceedings which are effectively complete and require only entry of judgment may justify permission.
3. Application of the factors. The proceedings had reached their end; judgment would not frustrate the administration; and no unfair preference would result. The respondent’s conduct was decisive. The notice of intention to appoint an administrator was found to be bogus and part of a concerted attempt to avoid payment, including threats to use insolvency procedures, an apparently purposeless mortgage, unexplained corporate restructuring, defects in the notice, and the absence of evidence of actual insolvency. The reasoning in South Coast Construction Limited v Iverson Road Ltd [2017] EHHC 61 (TCC) therefore applied with even greater force.
4. Order. Permission was granted. Judgment was entered for £175,962.47, together with interest to be calculated and £8,000 for adjudicator’s fees.

First-instance decision. No prior or appellate decision is stated in the judgment.