Adjudication Update - Mead General Building Ltd -v- Dartmoor Property Ltd

Profession:Collyer Bristow LLP

The TCC has recently looked again at the question of whether there should be a stay of execution of an adjudicator's award where the successful party in the adjudication is insolvent. In Mead General Building Ltd (subject to a Company Voluntary Arrangement) –v- Dartmoor Property Ltd [2009] EWHC200 (TCC), Mr Justice Coulson looked at the position of a company subject to a company voluntary arrangement (CVA). The courts had not previously considered this type of insolvency procedure although they have considered others such as administration, administrative receivership and liquidation.

Mead had been awarded just under £350,000 in an adjudication against Dartmoor. Dartmoor refused to pay. Mead applied to the TCC for enforcement of the award and Dartmoor resisted, one of the grounds being that Mead were subject to a CVA and therefore insolvent and unable to pay back any sums that might be awarded in the event of future arbitration.

The Judge reiterated the principles he had set out in Wimbledon Construction Co 2000 Ltd –v- Derek Vago [2005] BLR374. He set out six general principles, which can be summarised as follows:

(a) Adjudication is designed to be a quick and inexpensive method of arriving at a temporary result in a construction dispute.

(b) In consequence, adjudicator's decisions are intended to be enforced summarily and the claimant should not generally be kept out of its money.

(c) In an application to stay the execution of summary judgment arising out of an adjudicator's decision, the court must exercise its discretion under Order 47 CPR with considerations (a) and (b) firmly in mind.

(d) The probable inability of the claimant to repay the judgment sum at the end of the substantive trial, or arbitration hearing, may constitute special circumstances within the meaning of Order 47 rule 1(1)(a) rendering it appropriate to grant a stay.

(e) If the claimant is in insolvent liquidation, or there is no dispute on the evidence that the claimant is insolvent, then a stay of execution will...

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