London Borough Of Camden V Makers Uk Ltd

The default judgment obtained by the local authority in default of the contractor having filed its defence with the court by the specified date should be set aside without any conditions being imposed by the court
Technology and Construction Court
Akenhead J
27 March 2009
The local authority obtained a default judgment in court proceedings in which its claims against the contractor arose out of the same dispute which formed the subject matter of the adjudication in which the contractor obtained a favourable decision. The contractor was effectively insolvent, although it had not formally been put into liquidation. The local authority contended that the court should exercise its discretion to set aside the default judgment on condition that the contractor did not institute any further adjudications covering issues addressed in the court proceedings.
Akenhead J rejected the local authority's contention. The contractor's failure to serve a defence within the permitted time was an oversight on the part of the contractor or its solicitors with the results that (i) It was therefore purely fortuitous that the local authority was able to enter judgment in default and (ii) If that had not happened, the court would have had no power to prevent the contractor from pursuing an adjudication concurrently with the court proceedings begun by the local authority. It would at best be an exceptional course for the court on setting aside a judgment to prevent a party from pursuing a statutory right to adjudicate at any time. This was not an exceptional case because whilst the evidence currently before the court clearly showed that the contractor was insolvent and would be in no position to pay back any money paid out by the local authority pursuant to any future adjudication, it was at least possible that other information and circumstances might be applicable at that later stage. Parliament had altered the commercial balance as between employers and contractors by passing the Construction Act which gave parties the lever of adjudication so that the threat to adjudicate might encourage settlement and an actual adjudication decision might induce a final settlement. If the contractor wished to take the risk of adjudicating, it had to bear in mind the potential advantages in so doing and the very real risk that a court could well stay any judgment to enforce any adjudication decision in the contractor's favour by reason of insolvency and inability to repay. The court should generally not interfere in the commercial relationship between the parties.