Tera Construction Ltd v Lam

There should be no stay of execution on the summary judgment ordered in favour of the contractor enforcing the adjudicator's award of a specified sum

Technology and Construction Court
Clarke J
25 November 2005

The adjudicator awarded of a specified sum in favour of the contractor. Clarke J ordered summary judgment against the homeowner enforcing the decision. The homeowner contended that the judge should order a stay of execution on the summary judgment pending the trial of the homeowner's counterclaim in respect of outstanding and defective work (which was not formally raised by the homeowner in the adjudication).
Clarke J refused to order a stay on the basis that a stay would have been inconsistent with the underlying purpose of the adjudication system and was not necessary to do justice to the parties in the circumstances of the instant case. The judge gave a number of reasons for this refusal.
Firstly the adjudication system was designed to give a summary (albeit not final) remedy whereby the adjudicator could obtain payment as it became due as the contract proceeded but in the instant case (1) the adjudicator held that practical completion had taken place more than a year before the court hearing (2) payment should have been made by the homeowner against the certificate which should have been issued at that time and (3) it was not appropriate in the absence of special circumstances to hold up such payment by reason of counterclaims said to have arisen after that time. Secondly there was considerable doubt as to both liability and quantum in respect of the outstanding and defective work claim. Thirdly the homeowner's contention in relation to the amount allegedly due to incomplete snagging could have been raised within the adjudication insofar as the inspection which gave rise to the homeowner's contention first being advanced took place towards the end of the adjudication Fourthly the contractor's financial position did not mean that there should be a stay insofar as (1) the present financial position of the contractor was not clear on the material available to the court although whilst the contractor was not insolvent, it did not appear to be in good financial shape and there was significant material which the court did not have, for example any recent accounts and (2) there was evidence that its financial difficulties had been caused by the non-payment of the sum awarded by the adjudicator but no evidence that the contractor was in a worse position financially than it was when the contract was entered into.