Herschel Engineering Limited v Breen Property Limited (No. 2) 1

It may be appropriate for the Court to grant a stay of execution in respect of a sum awarded by an adjudicator if the party receiving the money will be unable to repay it if the adjudicator's decision is overturned subsequently. It will be for the party seeking the stay to prove its case.

HHJ Humphrey LLoyd QC, Technology and Construction Court

28 July 2000

This application followed on from Dyson J's decision reported at page 28 of Adjudication Watch between these two parties. Dyson J had indicated that he may have granted a stay of execution had there been a doubt over H's ability to repay the monies if the adjudicator's decision have been reversed in subsequent proceedings.

B now applied to the Court for a stay based on recent searches conducted at Companies House (but not relying upon company accounts since none had yet been filed).

The Court found that it was open to B in principle to apply for a stay since the material it had produced could not with diligence have been obtained when the original application was made. It also did not matter that B had not participated in the original adjudication although it would not be able to adduce argument to say that the adjudicator could or should have taken certain things into account.

The Court held that it was necessary to conduct a balancing exercise when deciding whether to grant a stay of a judgment enforcing an adjudicator's decision. The Court must be persuaded that it would not be just that payment should be made; that it would result in such injustice to the defendant that it would not be consistent with the Court's overriding objective. Further, the Court must take into account damage to the claimant's financial position if the money is not paid.

In this case, the Court found that there was insufficient evidence for it to draw the conclusion that H would be unable to repay the monies to B if the adjudicator's decision was held to be incorrect. B also had not helped its position by failing to do anything to progress the ongoing County Court proceedings. Thus it was not possible for the Court to know when the adjudicator's decision might be overturned and H would have to repay monies to B.

B argued that it was for H to show that it would be able to repay the monies, but the Court rejected this. It will be for the party seeking the stay to make out its case by, for example, seeking credit references. The Court also noted that it could not draw an inference that H, to whom B had deemed worth giving business within a few months of H's formation, had changed its nature in the course of a year to become a company near to collapse.

The Court confirmed that there may be circumstances in which an application for a stay of execution may be granted in an appropriate case, but this was not such a case on the facts.

It may be appropriate for the Court to grant a stay of execution in respect of a sum awarded by an adjudicator if the party receiving the money will be unable to repay it if the adjudicator's decision is overturned subsequently. It will be for the party seeking the stay to prove its case.