Kier Regional Ltd V City And General (Holborn) Ltd (Part II)

Assuming that there had been a debt due and owing from the third parties to the developer (as judgment debtor), the courts discretion should not be exercised by making final the interim third party debt orders obtained by the contractor (as judgment creditor)



Technology and Construction Court
Coulson J
17 October 2008

A number of adjudications took place between the developer and the contractor. Various extensions of time were awarded to the contractor. The developer did not pay the sum awarded. Some 18 months later the contractor obtained summary judgment enforcing the decision. The contractor obtained a charging order against the property which formed the subject matter of the development to enforce the decision. The charging order was not enforced because of doubts as to whether such an enforcement would have been effective taking into account the fact that the funder had a first charge on the property which was probably for a larger sum than the value of the property. The sum awarded remained unpaid. The contractor began proceedings for a third party debt order against two third parties, namely the two companies associated with the developer (by shared directors) which had entered into a joint venture agreement with the developer in respect of the developer. The contractor obtained interim third party debt orders and applied for them to be made final.


Coulson J discharged the interim orders obtained on the basis that it could not be said that there was a debt due and owing from the third parties (as the developer’s partners under the joint venture agreement) to the developer (as judgment debtor). He also decided that on the assumption that there had been a debt due and owing from the third parties to the developer, the interim orders should not be made final. The factors to which the judge attached particular significance in exercising the court’s discretion in this way were (i) the prejudice to the third parties if a final order had been made and (ii) the imminence of the arbitration begun by the developer to seek to overturn the adjudicator’s decision (and a consideration of the issues involved in that arbitration). The factors to which the judge held that little significance should be attached in exercising the court’s discretion were (i) the contractor’s delay in seeking to enforce the adjudicator’s decision and (ii) the fact that the original adjudicator's decision was based on the judge in the enforcement proceedings thought might well be an error.