Rainford House Ltd (in Administrative Receivership) -v- Cadogan Ltd
Execution of the summary judgement should be stayed pending the trial of the employer's counterclaim subject to the employer paying the judgement sum into court
13 February, 2001
The contractor began court proceedings to enforce the adjudicator's decision in its favour and applied for summary judgement. Judge Seymour held that the decision should be so enforced and that execution on the summary judgement should be stayed pending the trial of the employer's counterclaim by reason of the contractor being in administrative receivership. However, this would be subject to the employer paying the judgement sum into court and the contractor having permission to apply to lift the stay in the event of it being willing to provide security for the repayment of that sum. The judge stated that the question of whether to grant a stay of execution depended on the facts of each case. It was not necessary for the party applying for the stay to (1) predict when any challenge to the factual correctness of the adjudicator's determination would be heard by (2) put before the court positive evidence as to what the claimant's financial position would then be or (3) demonstrate beyond the possibility of error that the claimant would be unable to repay the sum determined by the adjudicator in the claimant's favour when the time came for the correctness (or otherwise) of the adjudicator's decision to be determined. The evidence to be adduced should be as to the claimant company's financial position as at the date of the hearing of the application on the basis that the court was invited to infer (and usually did infer) that the position would continue in the absence of any evidence to the contrary. In the instant case the evidence that the contractor was in administrative receivership raised a strong prima facie case that it was insolvent. That evidence had not been contradicted or explained. This meant that it was to be inferred that the contractor's financial position would not change and that the contractor would not be able to repay the amount of the judgment in the event of it being later found that the adjudicator's decision was incorrect. Advice Note Execution on a summary judgment enforcing a decision will usually be stayed where the claimant company is in administrative receivership unless that company can provide security for repayment of the sum awarded by the adjudicator in the event of subsequent court or arbitration proceedings reversing the decision.