Contract adjudicators' awards, even if disputed, must generally be satisfied straight away. That principle – often referred to as 'pay now, argue later' – was applied by the High Court in ordering an immediate six-figure payment to a small building company.
A family trust had engaged the company to carry out extensive refurbishment works to a listed residential building at a contract price of almost £1.5 million. After the company submitted an invoice for £485,216 plus VAT, the trust failed to promptly issue a pay less notice. The company referred the matter to an adjudicator, who directed the trust to pay its bill in full.
After the company launched enforcement proceedings, the trust conceded that it was entitled to summary judgment in the amount of the adjudicator's award. The trust, however, sought a stay of execution in respect of the entire judgment sum on the basis that it represented a gross overvaluation of the company's work. It was submitted that, in reality, it was the company that owed the trust money.
In refusing a stay, however, the Court noted that several months had passed since the adjudicator made his award and the trust had since shown no great enthusiasm or urgency in challenging his decision, either by instituting a further adjudication or by way of formal court proceedings. It was in any event not open to the trust to launch another adjudication whilst the award remained unpaid.
The trust had failed to establish that the company's financial position was so weak that it would be unable to repay the amount of the award if subsequently required to do so. It had also failed to meet the heavy burden of showing that the company was likely to dissipate funds paid to it in satisfaction of the award so as to prevent their repayment. Summary judgment was entered in the company's favour for the full amount of the award, plus continuing interest.
For help on dispute resolution contact Katie Mawell-Stewart or a member of the dispute resolution team on 0808 166 8860 or email k.maxwell-stewart@sydneymitchell.co.uk
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