The claimant applied for summary judgment to enforce an adjudicator’s judgment made in its favour under the Housing, Grants (Construction and Regeneration) Act 1996 pursuant to a construction contract between the parties. The defendant, having made no allegation of fraud during the adjudication hearing, subsequently resisted enforcement of the award, on the basis that a large part of the award derived from fraudulent invoicing by the claimant. The defendant also applied under CPR r 83.7(4) for a stay of enforcement of the award. The judge granted both applications. The issues on the claimant’s appeal against the grant of the stay were (i) the application of the court’s discretion to grant of stay of an adjudication award where there was evidence of a risk of a dissipation of assets before determination of the substantive dispute, (ii) the interaction between adjudication enforcement and an allegation of fraud, and (iii) the extent, if any, to which a party could apply for a stay by relying on evidence that was or could have been adduced in the adjudication proceedings.
On the appeal—
Held, appeal dismissed. An applicant for a stay of enforcement of an adjudication judgment due to a real risk of dissipation or disposal of the adjudication sum could not be prevented from relying on a matter that had been or could have been raised in the adjudication proceedings. It was a matter for the judge in each case to assess the extent, if any, to which there was material overlap between the evidence that was or could have been adduced at the adjudication hearing and the evidence adduced in support of the stay, and to determine any consequences of that overlap. The question of whether the evidence demonstrated a real risk of dissipation justifying a stay was a fresh discretionary exercise undertaken for the first time for a different purpose than the adjudication decision and required consideration of all relevant evidence irrespective of whether that evidence was or could have been raised at the adjudication hearing. The court was familiar with the risk of dissipation test when determining an application for a freezing order and the same test should apply to an application for a stay of enforcement of an adjudication judgment on the same ground. The test was high and mere assertions and isolated discrepancies in the parties’ accounts were not sufficient. In the present case, the judge was entitled to conclude that the defendant had presented evidence from which a real risk of dissipation could be inferred and that there had been the lack of a satisfactory explanation from the claimant which could give rise to an adverse inference. The judge was entitled to reach the conclusions he made on the evidence and, accordingly, was entitled in the exercise of his discretion to grant the stay (paras 31, 32, 33, 38, 40–41, 43, 47, 58, 59, 60, 61).
Decision of Fraser J [2018] EWHC 227 (TCC); [2018] Bus LR 1439 affirmed.
Steven Walker QC and Helena White (instructed by Womble Bond Dickinson (UK) llp) for the claimant.
Dr Timothy Sampson and David Sawtell (instructed by Arlington Crown) for the defendant.