Complete Ceiling and Partitioning Systems Limited v DE1 Limited

A claimant seeking to enforce an adjudicator’s award has no general obligation to provide confidential financial information before enforcement proceedings. That principle does not give a claimant immunity from costs consequences in every case. Where the claimant’s filed accounts plainly show serious insolvency, and the defendant reasonably seeks information which only the claimant can provide to explain its ability to repay the judgment, the claimant should cooperate consistently with the Overriding Objective. Refusal to provide that information may justify denying the claimant its costs of both enforcement and stay applications, even where the defendant accepts that judgment is due and later abandons its stay application.

The claimant obtained an adjudicator’s award against the defendant and applied for summary judgment to enforce it. The defendant accepted that the award was enforceable and that judgment should be entered, but applied for a stay because the claimant’s latest filed accounts indicated serious insolvency and raised concerns about repayment following a future true-value adjudication.

After the claimant served evidence explaining its finances, including management accounts and shareholder support, the defendant withdrew its stay application. The issue before the court was therefore limited to costs. The central question was whether the claimant’s refusal to provide the relevant financial information before proceedings were issued should affect the costs order.

1. No general disclosure obligation. The authorities establish no general obligation on a claimant seeking enforcement to disclose confidential financial information merely to assist a defendant in deciding whether to seek a stay. That principle must be read in context and does not create an absolute rule that a claimant can refuse a reasonable request without costs consequences.
2. Burden and apparent insolvency. The defendant bears the burden of showing that the claimant is likely to be unable to repay the judgment when required and that the claimant’s financial position deteriorated for reasons not substantially attributable to the defendant’s non-payment. The claimant’s filed accounts showed serious balance-sheet insolvency, declining assets and a substantial shortfall. Without further evidence, a stay application was highly likely to succeed.
3. Application of the Overriding Objective. The defendant was not conducting a fishing expedition. It sought information explaining matters known only to the claimant, including the treatment of a substantial shareholder loan as long-term support and the claimant’s asserted ability to trade profitably. Under CPR 1.3 and the Overriding Objective, parties must act reasonably, save expense and avoid unnecessary hearings. The claimant’s refusal to provide the information was inconsistent with those obligations.
4. Costs consequence. The information eventually supplied would have satisfied the defendant and avoided both applications. The claimant was therefore not entitled to its enforcement costs or its costs in resisting the stay. The court made no order for costs on either application.