Gray & Sons Builders (Bedford) Ltd v Essential Box Company Ltd

Where the employer did not indicate that it would not be opposing the contractor's enforcement application until the day before the court hearing was to take place, the contractor should be awarded the costs of the court proceedings on an indemnity basis

Technology and Construction Court
His Honour Judge Peter Coulson QC
11 October 2006
The adjudicator made a decision in which he awarded the contractor a specified sum of money. The contractor began court enforcement proceedings. The employer's solicitors (1) sent letters to the court in which they took a number of technical points (2) filed an acknowledgement of service with the court and (3) failed to put in any evidence in opposition to the contractor's enforcement application, although they did not indicate that the application was accepted. The court therefore concluded that the employer was contesting the contractor's enforcement application on the jurisdictional grounds indicated by the employer during the adjudication itself. The day before the contractor's enforcement application was due to be heard the employer's counsel sent to the court a skeleton argument stating that: (1) the enforcement application was not being opposed and (2) there were various disputes to be resolved in relation to the costs of the court proceedings. The employer contended before the court that costs should not be awarded on an indemnity basis by reason of the employer (1) operating on a cyclical business basis and currently experiencing cash flow difficulties and (2) having made an offer to pay the sum awarded in about four months time that was reasonable in the light of those cashflow difficulties.
Judge Coulson rejected the employer's contentions and awarded the contractor its costs of the court enforcement proceedings on an indemnity basis. The employer knew or ought to have known that it had no defence to the claim to enforce the decision. It was clearly not unreasonable for the contractor to have rejected the offer bearing in mind the length of time the sum awarded had been outstanding. Ultimately the contractor had done better by getting a judgment today in the full amount with the result that the offer was irrelevant to any suggestion that the contractor should be deprived of any part of its costs. The employer's submissions as to its cash flow were ultimately also irrelevant insofar as: (1) the sum awarded had been due to the contractor for a considerable period of time pursuant to a contract freely entered into by the employer (2) it was irrelevant that the employer had a current cash flow difficulty and (3) cashflow was also important to a contractor and the Construction Act was designed to preserve that cash flow.