Construction Case Update - Adjudication - Part 3 of 2018

Adjudication Cases The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 3 of 2018 Kenneth T. Salmon and Katy Ormston

Construction & Engineering

Contents 1. Introduction 2. Enforcement of judgment debt based on adjudicator’s decision —use of winding up petition  page 3 Victory House General Partner Ltd, Re company 3. Jurisdiction - correct interpretation of the Scottish Scheme  page 3 Pentland Investments Limited v Aitken Turnbull Architects Limited 4. Jurisdiction—disputed oral novation— effect of mis-description in adjudication notices  page 4 (1) M Hart Construction Ltd and (2) P K Maintenance Ltd v Ideal Response Group Ltd 5. Jurisdiction—oral contracts  page 5 Dacy Building Services Ltd v IDM Properties LLP 6. Natural Justice  page 6 E7 Building Services Ltd v R G Carter Cambridge Ltd 7. Stay of execution—effect

Legislation The Act means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Pt 8. The ‘new’ provisions apply to contracts entered into on or after 1 October 2011. The main regulations are contained in the Scheme for Construction Contracts (England & Wales) Regulations 1998 (the Principal Regulations). 1 They have been amended by the Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 2 (the new Regulations). The new Regulations apply only to contracts for construction operations in England entered into on or after 1 October 2011. For earlier contracts the Principal Regulations apply. There are separate regulations for contracts for work in Scotland applicable to contracts made on or after 1 November 2011. 3 The new regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts the Scheme for Construction Contracts (Scotland) Regulations 1998 4 applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011. 5 A reference to “the Scheme” is to the Principal Regulations for England and Wales, or the Scheme for Scotland, as the context so requires. .

of allegation of fraud— addition of new (g) to the Wimbledon factors 

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Gosvenor London Ltd v Aygun Aluminium Ltd 8. Stay of execution—financial position of both parties  page 8 Energo A.S. v Bester Generacion UK Ltd 9. Summary  page 8

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1. Introduction The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Part 3 of 2018. Kenneth T. Salmon Consultant Solicitor and Katy Ormston Trainee Solicitor at Slater Heelis LLP. The law is stated at May 2018 and covers cases about enforcement by way of winding up petition, jurisdiction, natural justice and stay of execution. 2. Enforcement of judgment debt based on adjudicator’s decision—use of winding up petition Victory House General Partner Ltd, Re company 6 The company had engaged the contractor for the development and conversion of an office building into a hotel. There was a disagreement over the amount due and payable under the contract by the company to the contractor. The contractor had served an interim payment application IA30. A dispute over payment of which was referred to adjudication. The adjudicator found in favour of the contractor and awarded the sum sought. The contractor obtained summary judgment for the sum awarded. The company paid a sum on account in excess of £8.5 million, although the contractor believed the value of the works to be in excess of £11 million. There was then a second adjudication in which the adjudicator was asked to value the contractor’s works up to and including interim payment application IA31. The second adjudicator valued the works at less than the gross sum due on the previous application IA30 and which was also less than had already been paid. Thus he valued the IA31 at nil. The contractor petitioned for the winding-up of the company after its refusal to pay the balance of the judgment debt arising from the first adjudication decision. The company submitted that if it paid the judgment debt it would immediately become entitled in the law of restitution to be repaid that sum, resulting in a cross-claim, which made it inappropriate to order its winding up for non-payment of the judgment debt. Morgan J held that where a debt was bona fide disputed on substantial grounds, a petition was normally to be regarded as inappropriate, and as being an abuse of process and one that should be dismissed. This case was, however, not one of a disputed debt, but a judgment debt. In the case of Re Bayoil SA, 7 a company applied for a petition to be dismissed or stayed on the ground that it had a genuine and serious counter-claim. The Court of Appeal considered that the established rule about disputed debts applied to disputed cross-claims and held that the rule was essentially the same unless there were exceptional circumstances

making it appropriate to allow a petition to proceed even where there was a disputed cross-claim. In that case, the Court of Appeal found that the presence of an interim award in favour of a petitioner did not amount to a special circumstance. Following Re Bayoil SA , it was necessary to consider whether the employer’s cross-claim in restitution was a bona fide claim on substantial grounds. Held: there was no doubt but that it was, and what was more, it was a claim that was likely to succeed. There were no special circumstances in the case to take it outside the general rule and the petition was dismissed. 3. Jurisdiction - correct interpretation of the Scottish Scheme Pentland Investments Limited v Aitken Turnbull Architects Limited 8 The pursuer (“Pentland”) engaged the defender (“Aitken Turnbull”) to act as project architect for remedial works on the Raeburn Hotel, Edinburgh. Pentland noted defects with the kitchen floors and further defects following this and claimed payment from Aitken Turnbull, which denied liability. Pentland referred the matter to adjudication and Mr Hunter was appointed as adjudicator. Mr Hunter had also been appointed as the adjudicator in a dispute between Pentland and the structural engineer on the same project. Aitken Turnbull did not consent to the adjudicator’s appointment and invited Mr Hunter to resign. Mr Hunter did not resign from the adjudication noting that the adjudication with the structural engineer was separate from the dispute between Pentland and Aitken Turnbull. Aitken Turnbull continued the adjudication under reservation of its position. Following the adjudicator’s decision, Pentland sought enforcement proceedings in Sheriff Court. Sheriff Ross held that parties may not refer multiple disputes to a single adjudicator under a single adjudication, as the adjudicator will lack jurisdiction under s108 of the Act. If another dispute arises between the same parties or if one party has a dispute under a different contract then a separate adjudication must be started. S108 of the Act does not directly regulate the relationship of two simultaneous adjudications. The question before the Court was whether there was anything in the legislation that prevents a party simultaneously referring multiple related disputes in multiple referrals to a single adjudicator. The Court considered English authority on this 9 in which Coulson J held that under regulation 8(1) of the Scheme in England and Wales an adjudicator cannot adjudicate two disputes under the same contract in different adjudications at the same time without consent of the parties. The Scottish Scheme is substantially the same. Regulation 8(2) of the Scottish Scheme further expressly allows an adjudicator to hear multiple adjudications on related disputes under different contracts at the same time

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but the adjudicator may not do so without the consent of all the parties. In this instance, Mr Hunter did not receive or request that consent. Sheriff Ross held that he came to the same conclusion even on the ordinary construction of plain wording on s108 of the Act and regulation 8(2) of the Scheme: that consent was required to hear two related adjudications at the same time. The Court commented that the Scheme appears to limit simultaneous adjudications but not consecutive adjudications to ensure that each one is done properly as an incorrect decision carried out through correct procedure is difficult to challenge. The Sheriff Court held that the adjudicator did not have jurisdiction as he had not obtained consent from all parties and the adjudication could not be enforced. 4. Jurisdiction—disputed oral novation—effect of mis-description in adjudication notices (1) M Hart Construction Ltd and (2) P K Maintenance Ltd v Ideal Response Group Ltd 10 The factual background is simplified and condensed for the sake of brevity. There were three adjudications. 1. The Hart Retrofit adjudication The first claimant, M Hart Construction Limited (“MHCL”) claimed payment of invoices on account of profit share. MHCL said its entitlement arose from a novation to it by inference of the original construction made between Mr Hart and Ideal Response Group Limited (“Ideal”). It relied on an oral agreement and subsequent conduct as evidence of novation by inference. Ideal denied any novation of the contract it had with Mr Hart and contested jurisdiction. It also relied on a pay less notice. The adjudicator found there was a novation and awarded MHCL £750,000 on invoice 2589 but nothing else. 2. The Hart Defects adjudication MHCL claimed £450,000 on two invoices. It appeared to allege that it was the original contracting party (though the company MHCL did not exist at the date of the contract). It later contended there had been a novation of the contract to it. Ideal denied any novation and said the contract was with Mr Hart and the adjudicator had no jurisdiction. It also relied on pay less notice. The adjudicator found for MHCL and awarded them £450,000. 3. The PKM Defects adjudication P K Maintenance Limited (“PKM”) relied on a single tripartite oral agreement between itself, MHCL and Ideal. Although it did not so claim in the notice of adjudication or referral, its case was that the original contract was made with Mr Hart and novated to PKM. Ideal denied any novation, said the contract was with Mr Hart in person and therefore the

adjudicator had no jurisdiction and relied on its pay less notice. The adjudicator found for PKM and ordered payment on three invoices totalling £176,620. Ideal did not pay any of the sums awarded and MHCL and PKM each sought summary judgment. Their defence was that the adjudicator in each case lacked jurisdiction because on each case he was appointed under a contract alleged to have been made with MHCL whereas it was common ground the original contracts were with Mr Hart. Implied novation raised mixed questions of fact and law. The evidence revolved around oral conversations - the date, circumstances and content of which were contested, as well as on conduct and emails, on applications for payment and payments on account. There was such a conflict as could not be resolved on an application for summary judgment and on such basis it was difficult to see how it could be decided there was no realistic prospect of Ideal succeeding in its case that there was no novation. The question of the validity or otherwise of the pay less notices did not assist in putting the question of novation beyond argument. Thus on the claims of MHCL, Ideal had a real prospect of successfully defending the claims of the first claimant, MHCL. Although not necessary to that decision, the Court also dealt with three further arguments raised by Ideal. Whilst fact sensitive, the issues raised are of general interest. 1. The adjudications were not brought under the alleged novated contracts because the notices of intention to refer in each case relied on specific contracts that did not exist. 2. The Scheme expressly or impliedly required the notice to identify the contract under which the dispute arose. 3. The adjudicators each acted under two contracts because they derived jurisdiction from the contracts relied on in the notices, but made their decisions on the basis of a novated contract. The Court considered section 108 of the Act, the Scheme and the terms of the notices of intention to refer and the referrals and concluded as follows. • There was no discrete procedural requirement to set out the contract giving rise to the dispute. • The absence of particularity in the notices of intention to refer to a particular contract did not render them invalid or restrict the adjudicator’s jurisdiction to determine the dispute referred. • The description of the contract formation was factually incorrect but the notices of intention to refer captured the legal effect of the alleged novation. Even if the contracts particularised did not exist, then a contract did exist between Ideal and MHCL under which a dispute about entitlement to profits could be and was referred to adjudication.

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• It would be an overly technical approach to the identification of the dispute referred for the Court to insist that the contract must be precisely as particularised in the notice of intention to refer. Further it was not in accordance with the spirit it of the Act to do so. The same point answered the submission that the adjudicators acted under a second contract. They did not. They decided the dispute referred to them as more fully set out in the course of the adjudication. • Support for the view that the adjudicator had jurisdiction though the contract was misdescribed was found from the judgment of Stuart-Smith J in Purton v Kilker Projects Ltd. 11 • In respect of PKM, there was never an issue that PKM was a party to the contract with Ideal. The issue of novation was only addressed in response to Ideal’s jurisdictional challenge. If there was no novation then the dispute arose under the admitted tripartite contract. Only the reference to the contract being with MHCL provides Ideal with any defence. The notice of intention to refer misidentifies one of the three parties, but not one of the parties to the adjudication, and the misdescription had no relevance to the substantive dispute. PKM was entitled to judgment. Even if the Court had been satisfied there had been a novation it would have given summary judgment. Comment Adjudications involving contested novation can and do give rise to difficulties on enforcement, as this case shows. The interest in this case lies in the absence in the notice of intention of any details of the contract from which the dispute arose. The Court adopted a purposive approach and decided this was not fatal to the validity of the notices, nor did it deprive the adjudicators of jurisdiction. The notice of intention to refer did not need to expressly identify as a separate procedural requirement, the contract under which the dispute arose though as the Court pointed out that in describing the dispute it would often be the case that the contract was identified. Though not necessary it is no doubt good practice to identify the contract in the notice. It is also worthy of note that whilst a misdescription in the notice as to the parties to the contract was not relevant, a misdescription of the parties to the adjudication might have had very difference consequences. 5. Jurisdiction—oral contracts Dacy Building Services Ltd v IDM Properties LLP 12 The preliminary issue in this case concerned whether a contract had existed between two parties to an adjudication, where the contract was alleged to have been made orally. A contract was entered into between an employer and HOC (UK) Limited (“HOC”) as the main contractor on a mixed use development project in London. The defendant (“IDM”) was the Employer’s Agent. HOC ran into financial difficulties during the project with sub-contractors having left site due to non-payment by HOC and the project was in delay.

HOC had previously engaged the claimant (“Dacy”) on other projects with Dacy leaving its last project being owed approximately £17,000 by HOC. HOC’s senior construction manager contacted Dacy to see if it would be involved in the struggling project, knowing that Dacy would not contract with HOC due to its previous non-payment. Contemporaneous evidence showed that discussion had taken place between HOC and IDM about an IDM company, of which there were many entities, contracting directly with sub-contractors to complete the project. Dacy came to site on 3 December 2015 and a short meeting took place in a bus shelter adjacent to the site with Mr Keran of Dacy, HOC’s senior construction manager and Mr Mcloughlin of IDM. It was Dacy’s case that an oral contract was formed between Dacy and IDM at that meeting. IDM contended that the meeting was a casual “meet and greet” which came about by chance. Dacy continued to work on the project from this date. Dacy submitted applications for payment to HOC for approval with HOC passing the paperwork to IDM for processing and payment after HOC had approved the amounts. The first three invoices were fully paid but the second three were not. Dacy left site in May 2016 and subsequently commenced adjudication for the balance of the value of the performed works. At adjudication, IDM’s consultant asked the adjudicator to resign on the basis that there was no contract between the parties and consequentially there could be no dispute. Thus, the adjudicator would have no jurisdiction. In his decision, the adjudicator set out that there was an oral contract between the parties and he had jurisdiction. He decided that IDM were liable to make payment to Dacy. Dacy applied for summary judgment on the enforcement of the decision and the application was resisted by IDM on the basis that the adjudicator lacked jurisdiction. Jefford J held that IDM had a realistic prospect of succeeding on its defence of there being no contract and ordered a trial on that specific issue. This issue came before Fraser J who agreed with Dacy’s argument that there was a valid oral contract between Dacy and IDM formed at the meeting on 03 December 2015. This was based on consistent and reliable evidence from Dacy and HOC that it made complete business and common sense for Dacy not to contract directly with HOC. It followed that the adjudicator’s decision was reached with jurisdiction and Dacy were entitled to judgment. The Court supported Coulson J’s comments in Penten Group Ltd v Spartafield Ltd 13 that the courts should give adjudicators “latitude” in grappling with the difficulties of dealing with all of the issues within the limited timetable for adjudication. Fraser J held that it is rarely justifiable that a trial of issues is necessary in an adjudication enforcement application, even on the question of the existence of a contract.

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6. Natural Justice E7 Building Services Ltd v R G Carter Cambridge Ltd 14 The defendant R G Carter Cambridge Limited (“RGCC”) engaged the Claimant E7 Building Services Ltd (“E7”) to carry out mechanical and electrical works. E7 made an application for payment. RGCC referred the matter to adjudication, seeking an assessment of the gross value of E7’s works at the assessment date (adjudication no 1). The adjudicator was entitled to find and found the value of the works to be £2,338,653.33, which was £388,888.81 more than RGCC had paid. The adjudicator had no jurisdiction to order payment to be made. E7 requested payment of the difference between the valuation and the payment to date. RGCC countered by claiming delay damages and contra- charges of £769,201.90. E7 commenced adjudication no 2 seeking a declaration that it was entitled to the outstanding balance based on the valuation in adjudication no 1 and an order for payment. The adjudicator determined that E7 was entitled to the sum claimed. He found contract clause W gave him power to amend the payment notice. He also found contract clause Y entitled him to exclude RGCC’s cross-claim to set-off the money it alleged it was owed of delay and contra-charges. RGCC commenced adjudication no 3 seeking valuation of its claims for delay and contra-charges. The adjudicator dismissed its claim on the basis that it was not made on the right day, as the assessment date contended for by RGCC had not been set as required by the contract. RGCC submitted that the adjudicator had breached natural justice by reaching his decision in adjudication no 2 by reference to two clauses that had not been referred to by either party and in that as a result he had exceeded his jurisdiction. The Court decided that the issues had been fairly canvassed by both parties. The adjudicator had to determine whether the valuation in adjudication no 1 could be used to found a claim for payment as was done in adjudication no 2. E7 had relied on sections 111(8) and (9) of the Act as affording the adjudicator that right. There was no material difference between those sections in the Act and contract clause W, both of which entitled the adjudicator to decide that the sum specified in a notice could be paid, and when it could be paid. The parties had been aware of the relevant material. No breach of natural justice arose from the adjudicator relying on clause W. He had not exceeded his jurisdiction. Likewise on the second issue, for which the adjudicator relied on clause Y, the parties had been well aware of the relevant material in regards to that clause and the matter had been fairly canvassed. There was no breach of natural justice. RGCC had also applied for a stay if the adjudicator’s decision was enforced. The Court decided there were no special circumstances to justify a stay.

Comment This is a further exampleof theCourt upholdinganadjudicator’s right to determine the facts and the law. The adjudicator is entitled to use the materials placed before him and to refer to and rely on provisions of the contract even if the parties have not expressly referred to and or relied on them. What the adjudicator cannot do is to decide the dispute upon a basis that neither party has advanced without first giving them the opportunity to comment on that basis. It is not always easy to appreciate the difference and all these cases are fact sensitive. All that can safely be said is that the courts will strive to uphold a decision made on a rational basis. 7. Stay of execution—effect of allegation of fraud—addition of new (g) to the Wimbledon factors Gosvenor London Ltd v Aygun Aluminium Ltd 15 The claimant Gosvenor London Limited (“GL”) applied for summary judgment in respect of an adjudicator’s decision awarding it £553,958 plus VAT against the defendant Aygun Aluminium Limited (“AA”). The application was resisted by AA on the basis of fraud. AA also applied for a stay of execution. Following the distribution of a draft judgment GL applied to recall and reconsider the findings following further argument, to adduce fresh evidence, and (in the alternative) for permission to appeal. The contract was described as a secondary sub contract for installation only of cladding and associated works at the Ocean Village Hotel Southampton. GL referred a dispute to adjudication under the TECBAR adjudication rules, which rules incorporated the Scheme. No question arose as to jurisdiction nor did AA raise any arguable breaches of natural justice. Ordinarily the decision would be enforced on well known principles. Evidence in support of the applications for summary judgment was contained in a conventional witness statement. It did not and could not have been expected to address the issue of fraud which had not been raised in the adjudication. AA served a defence settled by counsel with three witness statements in response, alleging that a substantial proportion of GL’s award was based on sums fraudulently invoiced. AA contended that the allegations could not all have been raised in the adjudication as much of the relevant information was not available to AA at the time. The details in the draft defence relied on “enormous discrepancies” in the sums invoiced. The Court noted that counsel who settled the pleading was under a professional obligation to obtain specific instructions and to satisfy himself that the allegations were supported by prima facie evidence. Fraud could only be alleged if pleaded so it was proper to serve a defence.

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The witness evidence broadly supported what was pleaded. GL had served no evidence in response and only sought to adduce evidence in response to the circulation of the draft judgment. The Court held that it was far too late and refused to admit further evidence which could and should have been served as provided for by directions. The Court reviewed earlier authorities where fraud had been alleged in adjudication 16 . Jackson LJ had agreed with Akenhead J that if fraud was to be relied on in an effort to avoid enforcement or support an application to stay execution of the enforced judgment, it must be supported by clear and unambiguous evidence and argument. This led to the conclusion that fraud could be potentially relevant to a stay execution as well as enforcement. The principle of temporary finality meant that there would normally be no second bite at the cherry where fraud was unsuccessfully raised or could have been raised in the adjudication. This case was unusual. It was extraordinary that in the face of serious allegations GL chose not to put in a single word of evidence in response. However, the fact that the allegations or at least some of them could have been raised in the adjudication was a major obstacle for AA. One reason for this given by AA was the alleged intimidation of a witness which deterred her from giving evidence of fraud in the adjudication. Intimidation of witnesses was wholly unacceptable and would not be tolerated. A judge could refer matters to the Director of Public Prosecutions if necessary. No finding was made but the allegation remained un-rebutted. In addition, several of the allegations of fraud related to collateral matters and were independent of and did not directly impact on the subject matter of the decision. For the above reasons the Court felt the correct result was to grant summary judgment of the decision itself. That left the application for a stay. The same allegations of fraud were relevant together with other stay specific factors, in summary as follows: 1. Alleged fraud by GL during the works, including the gross disparity between the value of works and the values claimed on invoices. 2. The lack of financial viability of GL. 3. If paid the money would be dissipated before any substantive hearing to finally determine the dispute. 4. Statements made by GL’s director that if GL were to face a claim he would “immediately wind up the company” and that AA would “never get a penny out of him”. 5. Other companies owned by the same director had been liquidated.

The financial viability of GL was an important factor to consider. The Companies House filing history of GL was very unsatisfactory There were discrepancies in GL’s accounts which stretched credulity and were unexplained. Overall there was an air of suspicion over the financial affairs and probity of GL. The Court considered the Wimbledon v Vago 17 principles and decided that a new principle should be added: “(g) If the evidence demonstrates that there is a real risk that any judgment would go unsatisfied by reason of the claimant organising its financial affairs with the purpose of dissipating or disposing of the adjudication sum so that it would not be available to be repaid, that this would also justify the grant of a stay.” The Court was at pains to point out that this feature was only likely to arise in a small number of cases and in exceptional factual circumstances. This addition was not intended to reopen the whole issue of the basis upon which stays of execution might be ordered, nor to define a specific and closed set of circumstances that could constitute “special circumstances” under CPR Part 83.7(4). A high test would be applied as to whether the evidence reached the necessary standard to satisfy this new principle (g), broadly being that necessary to justify a Freezing Order. Nothing was intended to prevent a claimant dealing with the adjudication sum in the ordinary course of business or make evidence as to such intention or use of money in the ordinary course of business relevant or admissible. In all the circumstances AA was entitled in the exceptional circumstances of this case to a stay of execution in respect of the judgment sum. Comment Although it is likely to rarely apply, the Court added a new principle (g) to those well known principles from Wimbeldon v Vago . The Court also reviewed the law on fraud and concluded that it could potentially be as relevant to an application to stay execution as well as one for summary judgment. At paragraph 62 of the judgment, the Court grants a stay “in all the circumstances of this case”. Thus it would appear that regard was had to the alleged fraud as well as the evidence under new factor (g) and G’s unsatisfactory financial position in deciding to impose a stay. The judgment also pointedly states that the circulation of a draft judgment is not to be treated as an opportunity to embark on an additional round of the litigation, or for raising further arguments which could and should have been raised at the hearing.

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8. Stay of execution—financial position of both parties Energo A.S. v Bester Generacion UK Ltd 18 The Adjudicator ordered the defendant Bester Generacion UK Limited (“Bester”) to repay sums drawn down by way of performance security amounting to £2.72 million together with his fees and expenses of £38,500. D failed to pay. It did not challenge the decision but sought a stay of execution on two grounds: one, the probability that the Claimant Energo A.S. (“Energo”) would be unable to repay the judgment sum at the end of a substantive trial and, two, Bester’s own financial position, if there was no stay. The evidence as to Energo’s financial position was inconclusive. The starting point, and usually end point, was that the Court would enforce the decision of an adjudicator, whether right or wrong, unless he did not have jurisdiction or there had been a material breach of the rules of natural justice. The jurisdiction to stay execution was encapsulated in CPR 83.7 and depended upon the Court being satisfied as to one of two ‘gateways’: (1) there were “special circumstances” which rendered it inexpedient to the enforce the judgment or order, or (2) that the applicant (for a stay) was “unable for any reason to pay the money”. Where the latter gateway was relied on, the debtor was required to file a witness statement which “must” disclose its means. The Court respectfully agreed with and adopted the summary of principles set out by Coulson J in Wimbledon v Vago 19 , relying on an additional principle identified by Fraser J. 20 , namely evidence showing that the claimant had organised its financial affairs for the purpose of dissipating or disposing of the adjudication sum to avoid repayment. Bester said evidence of Energo’s financial position was “unsatisfactory”. But the Court held it was for the debtor who raised the issue of the claimant’s financial position to at least put before the Court sufficient information to call for an answer to allay concern. Energo’s evidence though incomplete, was sufficient for the purpose in that it showed that in the event of failure in subsequent legal proceedings, Energo would be able to cover its liability from its own resources. Turning to Bester’s financial position, there was no satisfactory evidence of Bester’s inability for any reason to pay the money (namely the £2.72 million). It failed to meet the first requirement of CPR 83.7(3). Though accepting that counsel was instructed to say the sum could not be repaid, that was no substitute for witness evidence of inability to pay. As neither gateway had been satisfied, the Court declined to impose a stay. Even if either gateway had been satisfied by evidence the Court would still have declined to exercise its discretion to impose a stay. There was no good reason for the money to be left with Bester when it accepted Energo’s entitlement to summary judgment.

The Court’s first instinct was that adjudicator’s orders were binding and should be complied with and that had nothing to do with the source of the money (i.e. coming from the draw down of a performance security). The source made no difference. There was nothing in the particular circumstances of other cases to provide a compelling analogy requiring a stay. Ordering the money to be brought into Court might have seemed superficially attractive, but since there was no prospect, according to Bester’s counsel, of such an order being complied with, it would have been an exercise in futility. 9. Summary Enforcement of judgment debt based on adjudicator’s decision—use of winding up petition Victory House General Partner Ltd, Re company Where the petitioner had summary judgment on an adjudicator’s award, and the Company had a bona fide cross claim on substantial grounds and there were no special circumstances in the case to take it outside the general rule, the petition based on the judgment debt was dismissed. Jurisdiction - Correct interpretation of the Scottish Scheme Pentland Investments Limited v Aitken Turnbull Architects Limited Where an adjudicator wishes to hear multiple adjudications on related disputes under different contracts at the same time, they will need to obtain consent of the parties to do so under the Scheme. Jurisdiction—disputed oral novation—effect of mis- description in adjudication notices (1) M Hart Construction Ltd and (2) P K Maintenance Ltd v Ideal Response Group Ltd Where the adjudicator’s decision was that a novation had taken place, but this was contested and the conflict of evidence could not be resolved on a summary judgment application, it could not be said the defendant had no reasonable prospects of succeeding in its defence and summary judgment could not be granted. There was no discrete procedural requirement to set out in the notice of intention to refer, details of the contract giving rise to the dispute. The absence of particularity in a notice of intention to refer to a particular contract did not render it invalid or restrict the adjudicator’s jurisdiction to determine the dispute referred. Jurisdiction—oral contracts Dacy Building Services Ltd v IDM Properties LLP An oral contract is a sufficient pre-condition to the application of the statutory adjudication regime. If there is no contract between the parties there can be no dispute capable of being referred to adjudication and no adjudicator appointed will have jurisdiction to deal with the dispute. The existence of an oral contract gave the adjudicator jurisdiction to make his decision and such decision was enforceable.

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Natural Justice E7 Building Services Ltd v R G Carter Cambridge Ltd The adjudicator was entitled to refer clauses in the contract not expressly relied on by either party. It was part of the materials before him and on which the parties had had every chance to comment. Stay of execution—effect of allegation of fraud— addition of new (g) to the Wimbledon factors Gosvenor London Ltd v Aygun Aluminium Ltd The need for temporary finality of adjudicators’ decisions coupled with the defendant’s failure to raise known fraud in the adjudication meant that that it was correct to grant judgment on the decision. Comments made on the circumstances in which fraud could be raised on an application for summary judgment or to stay enforcement. In the exceptional circumstances of this case, the risk of dissipation or disposal of the judgment sum by the claimant, coupled with unsatisfactory evidence of its financial position (and possibly unanswered allegations of fraud) led the Court to impose a stay of execution of the judgment. The Court added a new principle or factor (g) to those listed in the judgment in Wimbledon v Vago , albeit it would rarely apply and would require a high standard of proof of the risk. Stay of execution—financial position of both parties Energo A.S. v Bester Generacion UK Ltd It was for a defendant who relied on its inability to pay the judgement debt to support the claim by written statement including evidence of means. Even though the evidence of the claimant as to its ability to repay the judgment debt if called upon to do so was unsatisfactory, the Court refused in its discretion to stay execution.

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References: 1. Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 1998/649). 2. Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333). 3. Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371). 4. Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34). 5. Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations 2011 (SI 2011/1715) (W.194). 6. [2018] EWHC 1143 (Ch) Morgan J. 7. [1999] 1 W.L.R. 147. 8. [2018] SC EDIN 16. 9. Deluxe Art & Theme Ltd v Beck Interiors Ltd [2016] EWHC 238 (TCC). 10. [2018] EWHC 314 (TCC) Jefford J., DBE, 7 March 2018. 11. [2015] EWHC 2624 (TCC). 12. [2018] EWHC 178 (TCC). 13. [2016] EWHC 317 (TCC). 14. TCC (unreported 3 May 2018) Alexander Nissen QC. 15. [2018] EWHC 227 (TCC) Fraser J., 28 March 2018. 16. SG South Ltd v Kingshead Cirencester LLP [2009] EWHC 2645 (TCC); GPS Marine Contractors Ltd v Ringway Infrastructure Services Ltd [2010] EWHC 283 (TCC); and Speymill Contracts Ltd v Eric Baskind [2010] EWCA Civ 120. 17. Wimbledon Construction Company Ltd v Derek Vago below. 18. [2018] EWHC 1127 (TCC) Stuart-Smith J., 13 April 2018. 19. [2005] EWHC 1086. 20. Gosvenor London Ltd v Aygum Aluminium UK Ltd above.

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