08 May 2018 #Dispute Resolution
There is a long history of the court supporting the enforcement of adjudication awards. Typically, summary judgment will be granted unless a lack of jurisdiction or breach of natural justice can be established. The court will not look behind the findings in the adjudication award itself.
Two recent cases give further examples of the limited exceptions to the general principle.
Gosvenor London Ltd -v- Aygun Aluminium UK Ltd concerned an adjudication award based on outstanding labour costs. The contractor sought to enforce the adjudication award by issuing part 8 proceedings and immediately applying for summary judgment. The defendant opposed summary judgment, claiming the adjudication award had been fraudulently obtained and, in the alternative, sought a stay of execution.
Summary judgment was awarded. The defendant had not raised the allegations of fraud in the adjudication and it was too late to do so now. However, it was appropriate to grant a stay of execution. The claimant’s financial position was not healthy. There was a risk that if the defendant successfully overturned the adjudication award through litigation the claimant might have dissipated its assets, leaving such judgment unsatisfied. The court was entitled to take into account the allegations of fraud when considering this issue.
In Re A Company the court had to consider whether a winding up petition based on an order for summary judgment should be allowed to proceed. The petitioner referred an interim payment application to adjudication and duly obtained summary judgment on the adjudication award in its favour. It then made a further application for payment which resulted in another adjudication. The respondent paid £8.5m on account of the £11m sought. However, the second adjudication resulted in a valuation of less than the sum paid by the respondent. The petitioner’s next step was to issue a winding up petition in relation to the unpaid order for summary judgment on the first adjudication.
It is well-established that a winding up petition should not be issued where a debt is disputed on substantial grounds or there is a genuine cross-claim. This case concerned the latter. If the petitioner had paid the judgment debt it would immediately be entitled to a refund because it had already paid more than the latest valuation. This amounted to a cross-claim, which was sufficient for the petition to be dismissed.