Nicholas James Care Homes Limited v Liberty Homes (Kent) Limited

An adjudicator may request security for fees from both parties during an adjudication. Such a request is not, without more, an unlawful lien or evidence of partiality. Enforcement will be refused where the adjudicator improperly makes release of the decision conditional on payment within the statutory or agreed period.

An applicant for a without-notice freezing injunction must make full and frank disclosure and conduct reasonable enquiries. Materiality is assessed objectively. Where an innocent and minor non-disclosure is established, the court retains a discretion to continue the injunction if the interests of justice require it, particularly in the context of substantial unjustified asset dissipation.

The claimant sought summary enforcement of an adjudication decision concerning works at Beacon Hill Lodge Nursing Home. The defendant challenged enforcement on the basis that the adjudicator’s repeated requests for advance security for fees amounted to an unlawful lien and demonstrated bias.

The defendant also sought discharge of a freezing injunction continued by O’Farrell J on 19 May 2022, alleging that the claimant had failed to disclose information concerning corporate restructuring and a pending transfer of one property. A stay of enforcement was also sought. The issues were whether the adjudication decision was enforceable, whether the injunction should continue, and whether enforcement should be stayed.

1. Adjudication enforcement. The challenge to enforcement failed. The Scheme prohibits an adjudicator from exercising a lien over delivery of the decision within the statutory or agreed period. The authorities establish that an improper attempt to impose such a lien may render a decision unenforceable.
2. On the evidence, however, the adjudicator or his clerk never used the word “lien”, threatened to withhold the decision, or made delivery conditional on payment. Requests for security for fees from both parties were not objectionable in themselves. They did not demonstrate bias or improper conduct. Judgment was therefore entered for the claimant for £2,589,737.76, together with £291,583.14 interest to 18 February 2022 and continuing interest at £361.85 per day.
3. Freezing injunction. The duty of full and frank disclosure extends to making reasonable enquiries for documents that might undermine a without-notice application. Materiality is objective and concerns matters relevant to the court’s weighing exercise. The court must consider the interests of justice when deciding whether to continue an injunction despite innocent non-disclosure.
4. The claimant’s earlier knowledge of the incorporation of a holding company was not materially significant. Knowledge, or presumed knowledge, that one of seven properties was subject to a pending transfer was material but only marginally so. The defendant did not prove deliberate misleading conduct. The omission was an innocent mistake, and the wider evidence showed substantial and unjustified dissipation of assets. The interests of justice favoured continuation of the injunction. The application to discharge or set it aside was dismissed.
5. Stay. The proposed stay depended on establishing deliberate dishonesty and discharging the freezing injunction. That basis failed, so enforcement was not stayed.