Unjust to enforce an adjudication decision?

This is a tale of a family-run housing development scheme gone horribly wrong. An elderly uncle and aunt enter into a joint venture with their nephew on unclear contract terms to create a development of houses on part of their farmland with a plan to share profits between them. The relationship gradually sours, culminating in enforcement proceedings by the nephew’s company after a ‘smash and grab’ adjudication for just under £1m. The nephew’s company is having financial difficulties and most likely wouldn’t be able to pay the sums back (see Jastinder’s blog setting out the judge’s findings on this issue). If the uncle and aunt’s company is forced to pay the award it will become insolvent before the court can hear their claim on the value of the final account. The judge decides there was a risk of manifest injustice if the adjudication award is enforced and grants a stay so the award does not have to be paid before the main hearing takes place.

In deciding to exercise his discretion to stay execution of the enforcement of the adjudication decision, the judge took into account that:

  1. the uncle and aunt’s company did not understand what the payment notice was or that it had to serve a pay less notice, and it was considering what sums were due in the context of a mediation proposed by the nephew;
  2. the disputed payment notice was the first notice issued under the contract, and it was issued several months after the contract had been terminated;
  3. the adjudication was awarded on the basis of a missed notice rather than because sums had been found due was considered relevant;
  4. the contract was operated as a joint venture and payments owed were assessed by the funder’s valuer rather than via the contractual process, and all of those assessed sums had been paid;
  5. the nephew’s company was only ever to be paid by the funder or from house sales, it was expressly agreed that costs would otherwise be the nephew’s risk;
  6. although the merits of the final account claims were not considered in detail, several substantial elements of the nephew’s company’s claim were found to be unlikely to be properly due;
  7. substantial issues of fact had prevented the uncle and aunt’s company from having its claim heard in Part 8 proceedings which it had issued promptly; and
  8. the uncle and aunt’s company would be forced into liquidation and would be deprived of the opportunity to seek redress through its claim.

Although this decision was highly fact dependent, this case does show that the factual background can sometimes be relevant in considering whether an adjudication will be enforced.  It is also an acknowledgement by the courts that ‘smash and grab’ adjudications can create genuine unfairness to defendants.  In these unusual circumstances, the court was prepared to do something about it.

JRT Developments Limited and TW Dixon (Developments) Limited HT-2020-BHM-000010

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