Mead General Building Ltd V Dartmoor Properties Ltd
The summary judgment entered against the employer for the enforcement of the adjudicator's decision in the contractor's favour should not be stayed pursuant to RSC Order 47, rule 1
4 February, 2009
The contractor was awarded a specified sum by the adjudicator and brought court enforcement proceedings against the employer in which it successfully applied for summary judgment to be entered in its favour but was subject to a company voluntary arrangement. The employer applied to have execution on the judgment stayed on the ground that the contractor would be unlikely to be able to repay the judgment sum if the employer was successful in the arbitration it intended to commence to overturn the adjudicator's decision. Coulson J held that the summary judgment should not be stayed pursuant to RSC Order 47, rule 1. The contractor's financial troubles had been directly caused by the employer's failure to pay the sums found by the adjudicator to be due insofar as the contractor was too small a business to be able to withstand losses of the magnitude created by the employer. The company voluntary arrangement to which the contractor was subject was the result of the employer's failure to pay the sums due. The supervisor of the company voluntary arrangement believed that the contractor was a viable ongoing concern which could trade its way out of its financial difficulties. The contractor was currently trading successfully and there was no reason to believe that it would not be in a position to pay back any part of the judgment sum if, in a subsequent arbitration, the arbitrator concluded that they had been overpaid. The fact that a claimant was the subject of a CVA was a relevant factor for the court to take into account when deciding whether or not to grant a stay. The mere fact of the CVA did not, however, mean of itself that the court should automatically infer that the claimant would be unable to repay any sums paid out in accordance with the judgment such that a stay of execution should be ordered. Matters relevant to whether a stay should be granted included the circumstances of both the CVA and the claimant's current trading position and whether or not the claimant's financial position and/or the CVA was due wholly or in significant part to the defendant's failure to pay the sums awarded by the adjudicator .