The applications before the Court were:

i.  A&V's stay of execution against J&B's successful summary judgment enforcing the July Adjudication Decision

ii. J&B's stay of the Hight Court Proceedings issued by A&V for a true valuation of the final account; and

iii. J&B's security for costs against A&V in the High Court Proceedings.

 FACTS

J&B was the mechanical and electrical contractor for a project at the University of Sussex. By a subcontract dated 18 December 2019, J&B engaged A&V to carry out certain mechanical works. A&V's works were delayed. A&V claimed this was the result of breaches of the subcontract on the part of J&B.

Towards the end of A&V's time on site it submitted interim applications for payment. A&V submitted Application No. 14 on 22 March 2021. J&H responded to the application, setting out its valuation and concluding that, in its view, no further sums were due to A&V.

On 17 November 2021 A&V commenced an adjudication based on its Application No. 14. The adjudicator decided that a further Interim Payment was due from J&B to A&V in the sum of £138,010, excluding VAT. He also ordered J&B to pay A&V 50% of his fees of £29,000 plus VAT, namely £14,500 plus VAT ("the First Adjudication Decision").

Meanwhile, on 2 December 2021, at a time when the adjudication was still ongoing, J&B issued Part 8 proceedings , seeking declarations as to the invalidity of application No. 14. J&B made no payment to A&V in respect of the First Adjudication Decision.

On 12 April 2022 Eyre J. made an order declaring that Application 14 was not a valid payment application under the Sub-Contract because it was issued too late and A&V was not entitled to any payment in respect of Application 14. A&V was ordered to pay J&B the costs of the proceedings summarily assessed in the sum of £27,750.

A&V commenced a further adjudication seeking a decision on matters pertaining to A&V's claim for the breach of contract and the ensuing value of the Final Account. The Adjudicator issued his Decision on 6 July 2022. He decided that A&V had been overpaid and ordered A&V to pay £82,956.88 to J&B and, for A&V to pay his fee of £13,962 ("the Second Adjudication Decision").

A&V appealed against Eyre J.'s order regarding the validity of Payment Application No. 14. The Court of Appeal's judgment was delivered on 27 July 2023. The appeal was successful to the extent that Application 14 was found to be a valid payment application and the order as to costs was set aside.

However, before that appeal was heard, J&H issued proceedings seeking to enforce the Second Adjudication Decision. The enforcement application in that action was decided on 15 February 2023 and the Court granted J&B summary judgment in the sum of £96,918.88. It was against this Summary Judgment decision that A&V sought a stay of execution.

DECISION

Before turning to the three applications before it, the Court raised the relevance of A&Vs financial position to all of the applications. On this issue, it identified that A&V could not afford to pay any further sums at present and that it was improbable that A&V would be able to secure any private or commercial lending.

With this in mind the Court turned to A&V's application for a stay of execution in relation to the summary judgment enforcing the Second Adjudication Decision. The Judgment details the authorities considering the balance between the policy of the Courts to give effect to the intention of Parliament to apply the "pay now, argue later" principle and the Court's discretion to prevent any manifest injustice.

The Court held that this is one of those cases where the Court should, exceptionally, grant a stay of execution, based on the following reasons:

1. The Court of Appeal had ruled in its Judgment of 27 July 2023 that J&B was in breach of contract because it had not paid the First Adjudication Decision.

2. The First Adjudication Decision had been made complicated by a number of "unmeritorious" jurisdictional challenges made by J&B.

3. J&B launched Part 8 Proceedings which the Court of Appeal held to be wrong (overruling the decision of Eyre J).

4. The Costs arising from the these legal actions had exacerbated A&V's financial difficulties.

5. J&B was seeking to insist on the "pay now, argue later" principle which it had itself ignored.

6. A&V's case was arguable that the Second Adjudication Decision was wrong and subject to live proceedings seeking a final true value determination.

7. There was no prospect of execution of the judgment producing any financial reward for J&B.

Based on these reasons the Court held that to refuse a stay in execution would or might cause a manifest injustice to A&V.

In terms of J&B's application for a stay of the High Court proceedings issued by A&V seeking a final true valuation of the final account, the Court held that it would be inconsistent for a stay of execution to be granted on the grounds of the risk of manifest injustice and then on the other hand order a stay in the proceedings issued by A&V. Therefore the Court dismissed J&B's application.

Equally, in relation to J&B's application against A&V for security for costs in those High Court proceedings, the Court held that as result of the conclusions on A&V's financial position, any order for security for costs would "result in a stifling of an arguable claim". Therefore again the Court dismissed the application.

COMMENT

No doubt this case is distinguishable on its facts from the usual cases seeking a stay of execution before the TCC. However, it serves as a useful outline of the approach the Courts will take when balancing the principles underpinning adjudication whilst safeguarding against any manifest injustice caused by the stifling of a valid claim.