Harlow & Milner Ltd v Teasdale (No.2) 2

United Kingdom

A Final Charging Order in respect of an unpaid judgment sum pursuant to an adjudicator’s decision cannot be opposed on the grounds that arbitration proceedings in respect of the same dispute are under way. To do so would wholly undermine the adjudication process and run the risk that unsuccessful parties to an adjudication could commence arbitration proceedings to avoid the adjudicator’s decision. In providing parties with a prompt (albeit temporary) result, the statutory adjudication process is precisely designed to avoid such delaying tactics.

His Honour Judge Coulson, Technology and Construction Court

This case concerns an application by the Claimant (‘Harlow’) to make Final an Interim Charging Order against the Defendant (‘Teasdale’). The parties went to adjudication for a construction dispute, Teasdale lost and a sum was awarded in Harlow’s favour. When Teasdale failed to pay, Harlow went to the TCC to enforce the award. The Court found in Harlow’s favour but Teasdale failed to pay the judgment sum. Thereafter Harlow successfully sought an Interim Charging Order.

Teasdale, who did not appear in Court, was taken to have the following two arguments as to why the Interim Order should not be made Final:

1. An on-going arbitration was underway between the parties and therefore the application in respect of the Final Charging Order should either not be allowed at all, or should in some way be suspended until the resolution of the arbitration; and

2. She was not given sufficient notice of the hearing in respect of the Final Charging Order; CPR 73.5 provides for 21 days’ notice of a hearing however, due to an error on the face of the Order, the 21 day period was reduced by three days.

Judge Coulson held that there was no evidence to support an argument that the Interim Charging Order should not be made Final.

In response to Teasdale’s first point he stated “…the adjudication process is designed to give rise to a prompt (albeit temporary) result, with which the parties are obliged to comply in full.” The Adjudicator ordered Teasdale to pay Harlow £90,000 9 months ago; Teasdale refused to do so in breach of her contractual obligations and the Court’s judgment.

Having regard to the Housing Grants, Construction and Regeneration Act 1996 and previous Court of Appeal authority (e.g Macob Civil Engineering v Morrison Construction [1999] BLR 93 and Bouygues (UK) v Dahl-Jensen (UK) [2000] BLR 522), the Judge stated that adjudicator’s decisions are to be ‘peremptorily enforced’. He added that attempts to suspend Charging Orders until the outcome of arbitration proceedings would ‘wholly undermine the adjudication process’ and run the risk that parties could commence arbitration proceedings against a successful party in order to avoid an adjudicator’s decision. Judge Coulson explained that the very purpose of the statutory adjudication process is to avoid such delaying tactics.

As to the timing issue, Judge Coulson stated that this was a purely technical point with no detrimental effect on Teasdale. He explained that CPR 73.5 does not prohibit the Court, in appropriate circumstances, from abridging the 21-day period in accordance with the wide powers set out in CPR 3.1(2). In his view, an adjournment would lead to wasted costs and would not affect the outcome. The overriding objective required that the Interim Charging Order be made Final.

For full judgment, please click here