Wimbledon Construction Company 2000 Ltd v Vago
The principles to be derived from caselaw which should always govern the exercise of the court's discretion when considering a stay of execution in adjudication enforcement proceedings
20 May, 2005
WIMBLEDON CONSTRUCTION COMPANY 2000 LTD v VAGO
His Honour Judge Peter Coulson QC
20 May 2005
Judge Coulson in this case summarised the principles to be derived from caselaw which should always govern the exercise of the court's discretion when considering whether to grant a stay of execution in adjudication enforcement proceedings (subject to the overriding consideration that each case had to turn on its own facts): (1) Adjudication (whether pursuant to the Housing Grants, Construction and Regeneration Act 1996 or consequential amendments to the standard forms of building and engineering contracts) was designed to be a quick and inexpensive method of arriving at a temporary result in a construction dispute (2) Adjudicators' decisions were therefore intended to be enforced summarily on the basis that a successful claimant should not generally be kept out of its money (3) The court had to exercise its discretion with the principles at (1) and (2) above firmly in mind (4) The probable inability of the claimant to repay the judgment sum at the end of the substantive trial or arbitration hearing might constitute special circumstances within the meaning of Order 47 rule 1(a) rendering it appropriate to grant a stay (5) If the claimant was in insolvent liquidation or there is no dispute on the evidence that the claimant was insolvent, a stay of execution would usually be granted (6) Even if the evidence of the claimant's present financial position suggested that it was probable that it would be unable to repay the judgment sum when it fell due, that would not usually justify the grant of a stay if the claimant's financial position (i) was the same or similar to its financial position at the time the contract was made or (ii) was due either wholly or in significant part to the defendant's failure to pay the sums awarded by the adjudicator.
Judge Coulson also stated in relation to the relevance to applications for a stay of the test relating to applications for security for costs under section 726(1) of the Companies Act 1985 (by which the defendant had to show that there was reason to believe that the claimant company would be unable to pay the defendant's costs if the defence was successful) that: (1) The application of this precise formulation when exercising the court's discretion would be to fetter the exercise of that discretion unnecessarily but (2) The well-known guidelines as to the exercise of the court's discretion under section 726(1) were of general application to the exercise of the court's discretion.