Stays On Enforcement Of Adjudicators’ Decisions

The law is clear that an adjudicator’s decision in an adjudication under the Housing Grants, Construction and Regeneration Act 1996 will be enforceable by a court whether it is right or wrong, unless that is the adjudicator did not have the jurisdiction to reach it or the adjudication was conducted unfairly.

There is however a process in the court rules whereby a party can apply for a “stay of execution” in respect of a judgment against it. If a stay is granted by the court, the judgment is not enforceable immediately and would relieve the party from having to make an immediate payment under the adjudicator’s decision. This provides an opportunity to bring a substantive claim in relation to the dispute in an attempt to get a different decision to the one obtained from the adjudicator.

The circumstances in which the court would exercise its discretion and grant a stay were recently considered in the case of Mead General Building Ltd v Dartmoor Properties Ltd [2009] EWHC 200 (TCC). In this case, whilst recognising that adjudicator’s decisions are to be enforced summarily and that the successful party should not be kept out of its money, the court held that the inability of a party to repay the amount of a decision at the end of a substantive trial at court may constitute grounds to grant a stay. However, even if the evidence of the party’s present financial position suggests that it would be unable to repay any judgment sum at a later date, the court would not usually be prepared to grant a stay where (a) the party’s financial position is the same or similar to its financial position at the time the relevant contract was made; or (b) the party’s financial position is due either wholly, or in significant part, to the party which is seeking the stay’s failure to pay those sums awarded by the adjudicator.

In Mead the claiming contractor was subject to a Company Voluntary Arrangement (CVA). The court decided that whether or not a party is subject to a CVA would be a relevant factor in deciding whether to order a stay on any judgment. However, the mere fact of a CVA will not of itself mean that the court should automatically infer that the party would not be able to repay any sums at a later date with a result that the stay should automatically be granted.

In the Mead case, the court had compelling evidence that, subject to the general downturn in the economy, Mead would, despite the CVA, be in a position to trade successfully in future and that there were real grounds for believing that they could trade out of their financial problems. The court also found that (a) Mead’s financial troubles were directly caused by the failure of the other party to pay the amount due pursuant to the adjudicator’s decision; and (b) the CVA had actually resulted from the failure to pay the amount of the decision. In the circumstances, the court declined to order the stay and enforced the judgment.

Published 15/05/2009. The author of this article is Chris Hoar