PBS Energo AS v Bester Generacion UK Limited

Adjudication decisions are ordinarily enforced summarily under the statutory construction adjudication scheme, reflecting the principle of temporary finality and payment first, argument later. A fraud allegation does not by itself justify resisting enforcement. The court must distinguish fraud that was, or should have been, raised before the adjudicator from fraud that allegedly procured the adjudication decision and was reasonably discovered only afterwards. In the latter exceptional case, credible evidence giving the defendant a real prospect of establishing fraud will ordinarily prevent summary judgment. The court should not re-engineer or sever an adjudicator’s decision concerning a single dispute to enforce an adjusted sum.

PBS sought summary judgment to enforce an adjudicator’s decision ordering Bester to pay £1,701,287.22 plus interest. The adjudication valued works performed under a terminated engineering and construction subcontract. Bester resisted enforcement, alleging that PBS had made false representations about bespoke equipment, including its existence, availability and possible credit on resale. Bester relied on documents disclosed in related litigation after the adjudication had concluded and argued that the representations had influenced the adjudicator’s valuation.

The central issues were whether the alleged fraud was properly arguable on credible evidence, whether it could reasonably have been raised in the adjudication, and whether the court could nevertheless enforce part of the decision.

1. Disposition. PBS’s application for summary judgment was dismissed.
2. Under CPR rule 24.2, the claimant had to establish that Bester had no real prospect of successfully defending enforcement and that there was no other compelling reason for trial. Adjudication decisions are ordinarily enforced summarily because, under Housing Grants, Construction & Regeneration Act 1996 section 108(3) and regulation 23(2) of The Scheme for Construction Contracts (England & Wales) Regulations 1998, they bind the parties temporarily and must be complied with pending final resolution.
3. The court applied the approach in SG South Ltd v Kingshead Cirencester Ltd [2009] EWHC 2645 (TCC), approved in Speymill v Baskind [2010] EWCA Civ 120. Fraud or deceit may be raised where it is a real defence. If the alleged fraud was, or should reasonably have been, raised before the adjudicator, enforcement will ordinarily follow. The position is different where the adjudication decision itself was allegedly procured by fraud discovered reasonably only after the adjudication.
4. In that exceptional category, the policy favouring enforcement yields to the principle that court procedures must not facilitate fraud. Summary judgment will usually be refused where credible evidence makes it properly arguable that false representations were knowingly, recklessly or dishonestly made, materially influenced the adjudicator, and could not reasonably have been discovered earlier.
5. The evidence made it properly arguable that PBS had misrepresented the status and availability of the water-cooled grate, flue gas cleaning equipment and SNCR, and that the representations had influenced the rejection of Bester’s argument for credit. Bester could not reasonably have raised the point during the adjudication because the relevant documents became available only during subsequent disclosure.
6. The court rejected arguments based on PBS’s other claims, Bester’s financial position and the existence of some equipment in storage. It was not appropriate to reconstruct the adjudicator’s decision or sever the award. Under Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC), a decision on a single dispute was either enforceable or not enforceable.