Total M&E Services Ltd V ABB Technologies Ltd

The management contractor's application for execution to be stayed on the summary judgment awarded in the trade contractor's favour to enforce the adjudicator's decision on the ground of the trade contractor's financial position should be rejected
 
TOTAL M AND E SERVICES LTD v ABB BUILDING TECHNOLOGIES LTD

Technology and Construction Court
His Honour Judge David Wilcox
26 February 2002
 
One of the issues for determination by the court was the management contractor's application for execution to be stayed on the summary judgment awarded in the trade contractor's favour to enforce the adjudicator's decision on the ground of the trade contractor's financial position.
 
Judge Wilcox held that the management contractor's application should be rejected save to the extent of that part of the judgment represented by the management contractor's unsuccessful set-off for defective and incomplete work (by reason of its failure to serve an effective notice of intention to withhold payment under section 111 of the Construction Act 1996), which part should be paid into court pending final resolution of the dispute or further order. This was on the basis that the management contractor's evidence as to the risk of the trade contractor not being able to repay the judgment sum (in the event of the adjudicator's decision being subsequently reversed) was not compelling or uncontradicted with the result that there were no special circumstances rendering it inexpedient to enforce the judgment.
 
In giving judgment the judge stated that CPR Part 50.1 provided that the court could order a stay of execution on a judgment where there were special circumstances rendering it inexpedient to enforce it. The approach to be adopted by the court when considering whether there were any special circumstances was as follows (1) The risk of the claimant’s inability to repay at the appropriate time was one of a number of factors to be taken into account (2) Where the risk of inability to repay was high, for example where there was strong uncontradicted evidence of a present inability to pay or where the claimant company was in administration, a stay might be appropriate on terms safeguarding the disputed monies (3) The burden was on the defendant to adduce evidence of a very real risk of future non payment and (4) The court’s balancing exercise was subject to: (i) The overriding considerations of the CPR to ensure justice and fairness between the parties (ii) Not reallocating the commercial risks accepted by the parties in entering into their contract and (iii) The general safeguards of insolvency law.
 
Advice Note
Judge Wilcox in his judgment in this case helpfully set out the nature of the “balancing exercise” the court must carry out when deciding whether execution of a judgment enforcing an adjudicator’s decision should be stayed.
 
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