Partner Projects Ltd V Corinthian Nominees Ltd
Technology and Construction Court
23 November 2011
The employer’s grounds for its application for a stay of execution on the summary judgment to enforce the adjudicator’s decision were that: (i) There would be a serious injustice to it if, as appeared likely, the owner of the contractor company would call in part or all of his £1.13 million loan to the contractor once it was put in funds by the sum awarded by the adjudicator being paid to it in the absence of any undertaking on the owner’s part not to do so (ii) The fact that the owner had not waived the loan, converted it to share capital or made some agreement by which repayment of the loan was deferred suggested that he wished to preserve his right to call in the loan at any time (iii) There could be no injustice in granting a stay in view of the fact that the contractor was dormant and had been for a number of years (since completion of the project in question) (iv) The contractor’s owner’s assertion that further work might become available to it if the sums awarded were paid to it should not be accepted.
Edwards-Stuart J held that the employer’s application for a stay of execution should be refused. It was more likely than not that the contractor would be able to repay a major part of the sum awarded in about a year’s time (when the trial of the disputed issues might take place). The fact that the contractor would probably be unable to repay the full amount awarded by the adjudicator if ultimately ordered to do so was not decisive in the exercise of the court’s discretion. The contractor's present position had been brought about to a significant extent by the employer’s default, which was a factor that militated strongly against ordering a stay. The contractor genuinely wished to try and trade itself out of its present indebtedness if it could do so but could only do so if it received payment of the sum awarded by the adjudicator. The court was also entitled to take into account the employer’s conduct generally in the exercise of its discretion. The employer’s conduct which should be taken into account was that (i) The employer was trading whilst insolvent during the course of the project and (ii) The inference that trading whilst insolvent was at the direction of the employer’s owner since the company was wholly controlled by him.