England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		22 December 2009

Mr Justice Akenhead:

Introduction

1. By this Claim, two sisters Cynthia Jacques and Elise Jacques Grombach trading as the C&E Jacques Partnership ("the Employer") seek to enforce an adjudication decision dated 26 October 2009 whereby the Adjudicator ordered Ensign Contractors Ltd ("the Contractor") to pay the Employer £96,868.18 plus VAT as applicable and to pay the Adjudicators' fees of £25,623.15. The case raises issues of natural justice, the extent to which one can and should infer that an adjudicator has simply not addressed defences raised in adjudication and the quality of evidence which can and should be raised when one comes to consider a stay of execution on any enforcement.

History

2. The Employer acquired residential apartment premises at 29-31 Sefton Park Road, Liverpool and wished to renovate them. The object of the two sisters was to provide a rental income for Cynthia Jacques to live off as well as providing a home in one of the flats for her. They have provided evidence that they spent their life savings on the purchase and development. Following an abortive contract with another contractor, the Employer engaged the Contractor by a contract made in about May 2006 to carry out the renovation works for a Contract Sum of £339,300. The Contract Administrator was Byrom & Thomas, a Mr Huw Thomas being involved, and works were to start in mid-May 2006 and be completed (subject to extension of time) by 6 November 2006. There was an adjudication clause which required compliance with the Scheme for Construction Contracts. An earlier adjudication decided that Practical Completion took place on 3 November 2006 but issues arose thereafter in relation firstly to whether outstanding works were being completed promptly, and secondly as to the presence of defects and their making good. The services of the Contract Administrator, who had certified payment of £319,058.56, were dispensed with and a Mr Irvin was appointed in substitution.
3. There had been a number of adjudications between the parties. Adjudication No 1 decided that a valid withholding notice had been served in relation to an interim certificate. Adjudication No 2 decided the issue of Practical Completion. Adjudication No 3 decided that, of the sum of £50,974 which had been deducted from Certificate No 7, only £43,994.13 should have been deducted. A Mr Sutcliffe was the adjudicator on Adjudication No 3; he was a chartered quantity surveyor.
4. For Adjudication No 4, Mr Sutcliffe was again appointed adjudicator. This adjudication was commenced in August 2007 by the Employer who claimed that there were deficiencies in the work carried out by the Contractor and that of the sums paid (well over £300,000) some £198,000 was repayable. He produced his decision in October 2007 and decided that the "fair and reasonable value" of the Contractor's final account was £297,737.86; he directed that the Contractor should pay the Employer the overpayment some of £28,764.15 plus VAT. The decision itself shows that there was a full factual investigation involving the exchange of submissions, witness statements and documentation as well as a site visit on 18 September 2007 attended by representatives from both parties. He expressed the view (Paragraph 32) that the Employer's "unilateral decision to remove the Contract Administrator from [the] intended role and to act…as 'on-site administrator' amounted to [the Employer] usurping the power and authority of the Contract Administrator". He attached considerable weight to the contents of Mr Thomas' witness statement which had been provided to him and he expressed the view (Paragraph 36) that the standard of workmanship achieved by the Contractor "was generally in accordance with that demanded by the contract". He went through each and every item in issue and reached his view as to the fair and reasonable value overall allowing for such defects and omissions as he found established. He purported to make several "slip rule" revisions to his decision.
5. Adjudication No 4 was never enforced. The Contractor raised a number of jurisdictional objections which at least included an omission to address the Contractor's disruption claim and an assertion that a "final account" dispute could not have been referred to the Adjudicator as the final accounting stage had not been reached. Following a further abortive adjudication in the summer of 2009, the parties reached a written agreement on 30 July 2009 which expressly confirmed agreement that the decision of Mr Sutcliffe of was "null and void". This was reflected in a Consent Order in the TCC (in Manchester) dated 30 July 2009, in proceedings which had been brought by the Employer in relation to Adjudication No 4:

"(1) The adjudication decision of Mr Jeremy Sutcliffe dated 16 October 2007 alternatively…18 October 2007 alternatively 22 October 2007 is null and void and does not bind the Claimant and the Defendant.

(2) The Claimant is entitled to adjudicate at any time a dispute concerning the amount to be paid to the Claimant pursuant to a final certificate issued…pursuant clause 4.8 of the JCT Minor Works Contract 2005 with Contractor's Design."

6. The following day, on 31 July 2009, the Employer served Notice of Adjudication in what was to become Adjudication No 5. The dispute referred to adjudication related, essentially, to what the value of the final account was with the Employer asserting that the true value of the adjusted contract sum (reflecting the Final Certificate issued by Mr Irvin) was £138,724.23. Allowing for the amounts previously paid (£319,058.56) and a claim for lost rent (£6,742), a sum of £187,076.23 was sought to be repaid together with VAT, interest and adjudicator's fees. Mr Paul Jensen was appointed as the adjudicator. He is a chartered surveyor and arbitrator.

Adjudication No 5

7. The Referral dated 6 August 2009 highlighted the Employer's assertions that there were substantial defects in the Works done by the Contractor. Although it is clear that the large bulk of the alleged defects had not been rectified, what was essentially sought was the value of the works said to have been properly carried out, taking into account such defects. It was made clear both in the Referral and in a witness statement that the Employer could not afford and did not have sufficient funding to pay for remedial works, although it is clear that most of the flats had been occupied by tenants since 2007 and were thus income producing. The Final Account on which it was based was dated 12 June 2009 and prepared by Mr Irvin; this was based on various "adds" and "omits" and also by reference to some 21 "defects", including external and internal decorations complaints. The Referral was accompanied by witness statements from Mr Irvin and the sisters. In all six files of documentation was provided.
8. On 21 August 2009 a detailed Response was served by the Contractor, accompanied by witness statements from Messrs Carter and Gray of the Contractor, Mr Thomas and a number of others, together with the Contractor's version of the final account and supporting documentation running to several files' worth. Allowing for a disruption claim of £91,993.50 and previous payments, the Contractor blamed that there was a net amount of £98,786.73 due to it.
9. The Response attached not inconsiderable importance to the "null and void" decision of Mr Sutcliffe in Adjudication No 4. Examples are as follows:

"1.4 …the Referring Party would have the adjudicator believe that the Responding Party's work was carried out to such a poor standard that the Referring Party should be paid the sum of almost £200,000…in connection with the project with an original contract value of some £340,000. The Referring Party adopted a similar approach in the previous adjudication which was referred to Mr Sutcliffe. Indeed, Mr Sutcliffe noted this very point at paragraph 195 of his decision and stated that the Referring Party's claim was "tantamount to saying that almost 60% of the project value had either not been carried out or has been carried out so badly that 60% of its value should be abated. I respectfully submit that that stance is unrealistic, untenable and doomed to failure".

1.8 As Mr Sutcliffe found in October 2007 when a similar case was presented to him, it is difficult to believe that the alleged defects in the works were not apparent before 3 November 2006. It will be noted that at paragraph 26 of his decision Mr Sutcliffe stated that "I am somewhat perplexed by aspects of the workmanship issue. The works which are now alleged to be no-complaint (sic) did not become so overnight. It is surely fair to assume that the works in question had been non-compliant since the time they were carried out. This being the case, I am at a loss as to why they were apparently only identified as such, at a much later date. Why, for example, was at work not identified as non-compliant at the time of execution, or very soon thereafter, and (the Responding Party) advised that the work was unacceptable and would need to be remedied".

1.10 It is noted that the Referring Party is keen to stress that Mr Sutcliffe's decision "is irrelevant and its contents should not be reviewed or revisited in determining the dispute now referred"…It is hardly surprising that the Referring Party is taking this stance given Mr Sutcliffe's reasons for his decision…The Responding Party of course accepts that the decision was a nullity, as a result of Mr Sutcliffe's procedural failings. However, it is clear that the Referring Party itself accepts that the Responding Party's submissions in that adjudication at least are relevant, as it states that it has factored those submissions into Mr Irvin's final account calculation. In any event, the fact remains that, notwithstanding Mr Sutcliffe's procedural errors which served to nullify his decision, this final account dispute has been previously considered by an independent adjudicator who, without taking into account the Responding Party's delay and disruption claim, decided that the sum of £298,587.86 represented a fair and reasonable value for the Responding Party's final account."

The Response then went on to deal over some 10 pages with the Referral on a paragraph by paragraph basis.

10. Part of the Response was a 31 page document entitled "Response to salient points of Supporting Documents of Referral". The first three pages were a general refutation of the Employer's assertions. Serious complaints were made about the way in which the Employer hampered progress and about the involvement of Mr Irvin. A flavour of this appears on page 3:

"Proper instruction was hampered by the Employer's insistence that they carry out the 'day to day' role of project manager. Indeed this is a point recognised by the previous Adjudicator, which is discussed… below and ultimately led to the position we find ourselves in.

At ' practical completion', a defects schedule composed by the Employer and rejected by Mr Thomas was issued. EC maintained that, subject to getting agreement with Mr Thomas that the list should properly reflect the Contract, defects would be rectified in accordance with the Contract. The Employer (assisted by Mr Trevor Irvin) refused to recognise the Contract and pursued the works considered to be out with the contemplation of the parties. In addition Mr Thomas was removed from his position and Mr Irvin appointed. The Employer in implementing this significant change removed any form of impartiality. Mr Irvin was now in a position which required total impartiality, despite previously being the Employer's 'hatchet man'. Additionally, during a previous adjudication Mr Irvin provided a signed 'witness statement' to suggest he was only involved from January 2007 onwards. This is a straight forward falsification…

In addition to this another individual was introduced, that of Mr Anthony Nelson. Mr Nelson claimed to be someone who, on the 12^th March 2007, only recently became involved with the project…This too is a lie. Mr Nelson was involved in the scheme prior to the appointment of EC. Indeed he provided a tender for the works. Furthermore, Mr Nelson provided opinion on the roof works during the currency of the scheme… with site inspections on behalf of the Employer.

A more worrying point is that Mr Nelson and Mr Irvin were actually co- directors of another company at that time, despite masquerading as independent operatives. Thus their joint involvement in this scheme allowed them to effectively generate their own work; possibly something the Employer was not aware of…Impartiality, thus, was never on the agenda.

Mr Irvin's further impropriety included Mr Irvin masquerading as a member of the Chartered Institute of Architectural Technicians when he in fact wasn't…"

11. This document then analysed in detail the defects (pages 4 to 21), the lost rent claim (page 21) and the Schedules of Omissions (pages 21 to 30); and is included in some detail the external and internal decorations complaints. The Summary at page 31 was blunt, albeit partly poetic:

"The TRUE facts do not support the Referring Party's contentions. They merely rely on fabrication and subterfuge.

The Employer removed all impartiality. This was a point raised in the previous adjudication when the adjudicator described the Employer as '…judge, jury and executioner…'. When the one person positioned to properly administer the works was removed by the Employer, EC was left vulnerable. It would appear on the face of it that the Employer never sought EC to fulfil its obligation [per se] but merely to remove all obstacles to allow for this 'mugging'. The plot to put in place Mr Irvin and Mr Nelson was merely an exercise in recouping the alleged £200,000 overpayment to the previous contractor. Why was this necessary? Because the Employer had no legal basis to pursue them.

The case put together by the Referring party relies entirely on ignoring the Contract between the parties…

Paraphrasing Shakespeare, 'lies cannot be hid long; but at length the truth will out'.

12. By letter dated 1 September 2009 to the Adjudicator, the Employer's solicitors referred to those paragraphs in which there were references to the Adjudication No 4 decision in the Response and the Response to Salient Points and asked the Adjudicator to "confirm that you will take no cognisance of [the Contractor's] submissions which referred to or relate to the 4^th Adjudication Decision nor to the 4^th Adjudication Decision itself". They went on:

"In circumstances where the 4^th Adjudication Decision is null and void its contents cannot be given any cognisance and it must be treated as if no such decision had ever been given…

The scheme which governs this Adjudication requires the adjudicator to "act impartially" and to ascertain themselves "the facts and law necessary to determine this dispute". You must not be influenced by a previous adjudicator's decision, when that decision has been declared null and void and is in any event is now irrelevant.

In order to avoid any influence being presented by way of reference to or reliance on the 4^th adjudication decision we propose that you direct the revised copy of the Response and "Response to Salient Points" these submitted, admitting there from any reference to, quotation from or reliance on the 4^th Adjudication Decision…"

13. The Adjudicator responded to the parties on 2 September 2009 in these terms:

"I acknowledge with thanks receipt of the Claimant's letter to me of 1^st September 2009 asking me to take two actions as follows:

1. Confirm that I will take no cognisance of the Respondent's submissions which referred to or relate to the 4^th Adjudication Decision nor to the 4^th Adjudication Decision itself, and

2. Direct the revised copy of the Response and "Response to Salient Points" be submitted, omitting therefrom any reference to, quotation from or reliance on the 4^th Adjudication Decision.

An Adjudication Decision is the view of that Adjudicator based upon the evidence and submissions presented to him; I must make my Decision based on my view of the evidence and submissions presented to me. I find therefore that the previous Adjudicator's Decision is irrelevant and therefore inadmissible as evidence and consequently I should not even read it let alone have regard to it.

It is part of an Adjudicator's role to exclude inadmissible evidence from his considerations and therefore there is no need for me to direct the Respondent to revive its Response."

14. By letter dated 4 September 2009, the Contractor's solicitors responded to this letter:

"…Your decision to "not even read (the earlier adjudicator's decision) let alone have regard to it" seems to us to breach the principles of natural justice.

As is explained in the Response…our client relies upon the earlier adjudicator's decision in submitting that, notwithstanding Mr Sutcliffe's procedural errors which served to nullify his decision, this final account dispute has been previously considered by an independent adjudicator, whose findings our client maintains are relevant to this dispute and to the issue of your fees (and, more specifically, which party should be required to pay them), as the earlier decision sheds light on the Referring Party's previous conduct. Moreover, our client is concerned that having decided to "not even read" the earlier decision, you will not be able to properly consider our client's Response, given the manner in which that Response is drafted.

In the circumstances, you will appreciate that we must reserve our client's right to challenge your decision in due course on the basis of this apparent breach of the principles of natural justice."

No point was taken that the adjudicator had formed the view expressed by him in his letter of 2 September 2009 without giving the Contractor the opportunity to put forward its views first.

15. Thereafter further submissions and evidence were exchanged, including a Reply from the Employer on 23 September 2009, a Rejoinder from the Contractor on 5 October 2009, a Reply to that Rejoinder from the Employer on 7 October 2009 and a Response thereto on 14 October 2009. As averted to in the third witness statement of Emma Judge, there was no site visit or meeting called for by the Adjudicator or requested by the Contractor.

The Adjudicator's Decision

16. The Adjudicator issued his decision on 26 October 2009. He decided that the Contractor should within 7 days of the decision pay the Employer £96,868.18 plus VAT as applicable and pay the Adjudicator's fees, £25,623.15. He also stated that if the Employer paid his fees, then the Contractor was forthwith to reimburse the Employer. Having referred to the contract between the parties, his appointment, the procedure and the dispute between the parties, he set out his "reasoned decision". At Paragraph 8 he said:

"I have confined my notes to the essentials only but nevertheless I have carefully considered all the evidence and submission although not specifically referred to in this Decision".

At pages 5 to 9, he set out on a table which identified every item on the final account (variations, omissions of "further agreed works", delay/disruption charges, "other omissions by Claimant", "omissions and related losses" and defects, as well as a reference to the "lost rent" claim). In that table he summarised in money terms what he found fell to be omitted or added to the contract sum. Of the 88 items, some 25 had been agreed. In respect of each item which had not been agreed, he identified a note by number (Notes 1-64) which sets out his reasoning as to why he found what he did. Two examples are:

"Note 3-Item 13-Redundant Hearth

The Respondent claims that a further hearth was made redundant because of the decision of the Employer to change it and it claims £89.00, reduced in the Response to £59.00. The Respondent however has given no proper explanation or documentation or an invoice, and therefore I accept the Claimant's case that it has not provided the evidence to support its claim, and therefore the claim under this head fails

Note 4-Item 17-Surplus Carpet from Ground Floor Lobbies

This item is agreed in principle. The Respondent claims £345.12 but with no explanation as to that charge. The Respondent has produced a statement from its supplier that the cost of the redundant carpet would be £300 and the claimant has valued this item at £300.00. I add 15% and therefore value the item at £345.00."

17. The Adjudicator concluded that allowing for all the "adds" and "omits", with a small amount (£590) for lost rent, the net total value of the work carried out by the Contractor was £223,939.02 and that allowing for payments made (£319,058.56), there was a net sum due and re-payable to the Employer of £95,119.54; he added to that interest in the sum of £1748.64 to produce the total sum net of VAT due. The decision ran to 35 pages.
18. The Contractor has not paid either the sum said to be due or the Adjudicator's fees, as decided by the Adjudicator.

These Proceedings

19. Consequently, the Employer commenced the current proceedings on 19 November 2009 seeking enforcement of the decision in Adjudication No 5 and has issued an application to summary judgement. Directions were given in the normal way. Witness statements have been exchanged including, belatedly, evidence from the Contractor upon which it relies to seek a stay of execution of any judgement against it on the grounds, as alleged, of the poor financial position of the two sisters. This was responded to.
20. Although a number of points were taken by the Contractor, ultimately only one was relied upon, namely that the Adjudicator did not apply the rules of natural justice by refusing to read or take into account the decision of the adjudicator in Adjudication No 4. It is said that the Adjudicator must, by inference, have failed to consider or address the arguments and defences put forward by the Contractor by reference to that earlier decision. By not reading that earlier decision, it is argued that he can not have understood all considered the defences which were put forward fully or effectively.

The Law

21. It is a well established defence to a claim which seeks to enforce of the decision of an adjudicator that the adjudicator has materially failed to apply the rules of natural justice or, put more simply, has acted unfairly to a material extent. However, the courts tend to adopt a reasonably robust approach to challenges to adjudicator's decision. In Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358, Lord Justice Chadwick giving the judgement of the court said:

"85.The objective which underlies the Act and the statutory scheme requires the courts to respect and enforce the adjudicator's decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of an adjudicator. The courts should give no encouragement to the approach adopted by DML in the present case; which (contrary to DML's outline submissions, to which we have referred in paragraph 66 of this judgment) may, indeed, aptly be described as "simply scrabbling around to find some argument, however tenuous, to resist payment".

86. It is only too easy in a complex case for a party who is dissatisfied with the decision of an adjudicator to comb through the adjudicator's reasons and identify points upon which to present a challenge under the labels "excess of jurisdiction" or "breach of natural justice". It must be kept in mind that the majority of adjudicators are not chosen for their expertise as lawyers. Their skills are as likely (if not more likely) to lie in other disciplines. The task of the adjudicator is not to act as arbitrator or judge. The time constraints within which he is expected to operate are proof of that. The task of the adjudicator is to find an interim solution which meets the needs of the case. Parliament may be taken to have recognised that, in the absence of an interim solution, the contractor (or sub-contractor) or his sub-contractors will be driven into insolvency through a wrongful withholding of payments properly due. The statutory scheme provides a means of meeting the legitimate cash-flow requirements of contractors and their subcontractors. The need to have the "right" answer has been subordinated to the need to have an answer quickly. The scheme was not enacted in order to provide definitive answers to complex questions. Indeed, it may be open to doubt whether Parliament contemplated that disputes involving difficult questions of law would be referred to adjudication under the statutory scheme; or whether such disputes are suitable for adjudication under the scheme. We have every sympathy for an adjudicator faced with the need to reach a decision in a case like the present.

87. In short, in the overwhelming majority of cases, the proper course for the party who is unsuccessful in an adjudication under the scheme must be to pay the amount that he has been ordered to pay by the adjudicator. If he does not accept the adjudicator's decision as correct (whether on the facts or in law), he can take legal or arbitration proceedings in order to establish the true position. To seek to challenge the adjudicator's decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest cases) is likely to lead to a substantial waste of time and expense – as, we suspect, the costs incurred in the present case will demonstrate only too clearly."

22. In the same case at first instance [2005] EWHC 778 (TCC) , Jackson J (as he then was) said at Paragraph 81:

"May I now turn from general principles to five propositions which bear upon this case:

1. If an adjudicator declines to consider evidence which, on his analysis of the facts or the law, is irrelevant, that is neither (a) a breach of the rules of natural justice nor (b) a failure to consider relevant material which undermines his decision on Wednesbury grounds or for breach of paragraph 17 of the Scheme. If the adjudicator's analysis of the facts or the law was erroneous, it may follow that he ought to have considered the evidence in question. The possibility of such error is inherent in the adjudication system. It is not a ground for refusing to enforce the adjudicator's decision. I reach this conclusion on the basis of the Court of Appeal decisions mentioned earlier. This conclusion is also supported by the reasoning of Mr Justice Steyn in the context of arbitration in Bill Biakh v Hyundai Corporation [1988] 1 Lloyds Rep 187…

3. It is often not practicable for an adjudicator to put to the parties his provisional conclusions for comment. Very often those provisional conclusions will represent some intermediate position, for which neither party was contending. It will only be in an exceptional case such as Balfour Beatty v the London Borough of Lambeth that an adjudicator's failure to put his provisional conclusions to the parties will constitute such a serious breach of the rules of natural justice that the Court will decline to enforce his decision…

5. If an adjudicator is requested to give reasons pursuant to paragraph 22 of the Scheme, in my view a brief statement of those reasons will suffice. The reasons should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on those issues. It will only be in extreme circumstances, such as those described by Lord Justice Clerk in Gillies Ramsay, that the court will decline to enforce an otherwise valid adjudicator's decision because of the inadequacy of the reasons given. The complainant would need to show that the reasons were absent or unintelligible and that, as a result, he had suffered substantial prejudice."

This was quoted with apparent approval in the Court of Appeal in the same case.

23. In Cantillon Ltd v Urvasco Ltd [2008] BLR 250, the Court recognised the following:

"54. It is, I believe, accepted by both parties, correctly in my view, that whatever dispute is referred to the Adjudicator, it includes and allows for any ground open to the responding party which would amount in law or in fact to a defence of the claim with which it is dealing. Authority for that proposition includes KNS Industrial Services (Birmingham) Ltd -v- Sindall Ltd 75 Con LR 71."

24. In Quartzelec Ltd v Honeywell Control Systems Ltd [2009] BLR 328, HHJ Stephen Davies addressed a case in which the adjudicator refused to consider a particular defence. Materially so far as the current case is concerned, he said, having referred to Paragraphs 54 and 55 of my judgement in the Cantillon case as follows:

"30. I respectfully agree with what is said by Akenhead J. Where the dispute referred to adjudication by a claimant is one which involves a claim to be paid money, it is difficult to see why a respondent should not be entitled to raise any defence open to him to defend himself against that claim, regardless of whether or not it was raised as a discrete ground of defence in the run-up to the adjudication, and subject to any considerations of natural justice. The adjudicator has jurisdiction to, and should, consider any such defence. That may result in him accepting or rejecting the defence, in whole or in part. It may be the case that one ground for rejecting a defence not previously raised is that it cannot properly be advanced in the absence of a withholding notice. It may be the case that another ground for rejecting a defence not previously raised is that the failure to raise it at an earlier stage is fatal to the adjudicator's assessment of the genuineness of that defence. But it does not seem to me that a decision to either such effect is a decision by the adjudicator as to his jurisdiction to consider the defence; instead it is a decision within his jurisdiction about the merits of that defence.

31. I consider, therefore, that Ms. McCredie was right to submit that if the adjudicator had considered the defence and decided, even if wrongly, that it could not succeed in the absence of a withholding notice, that would be a decision within his jurisdiction and would not be one which this court could review on an enforcement hearing. This is consistent with the judgment of Lord MacFayden in SL Timber Systems Limited v Carillion Construction Limited [2001] BLR 516, to which she referred me, at paragraph 23. However the corollary of that, in my judgment, is that since the adjudicator has jurisdiction to consider such defences, he ought to do so, and if he does not do so then he does not properly perform the task which he has been appointed to do. In those circumstances, he also does not in my judgment act in accordance with natural justice, because he has not heard the respondent on all of the defences which he seeks and is entitled to put forward.

32. Ms. McCredie submitted that in paragraph 54 of his judgment Akenhead J. was saying no more than that where a defence was properly open to a respondent, then the adjudicator ought to consider it. I do not accept this. Apart from the objection that such a reading would deprive the paragraph of any meaningful content, it is wholly inconsistent with paragraph 55, where Akenhead J. says in terms that 'it is open to any defendant to raise any defence to the claim when it is referred to adjudication or arbitration' (emphasis added).

33.I conclude, therefore, that in this case the adjudicator did make a significant jurisdictional error and that he did not act in accordance with the requirements of natural justice in refusing to consider the omissions defence. It was a defence which was open to Honeywell to advance as a defence to Quartzelec's money claim, and it should have been considered by the adjudicator on its merits. In fairness to him, the adjudicator appears to have decided not to do so at the express invitation of Quartzelec and without, it would appears, having had the advantage of Cantillon having being cited to him."

25. Ms Rawley for the Contractor in this case also argued that it was open to the Court to infer from what was put before the Adjudicator and what was said or not said in the Adjudicator's decision that the Adjudicator had not considered or addressed the defences properly put forward by a defending party. I agree that the Court can so infer; indeed, it may be a rare case (CJP Builders Ltd v William Verry Ltd [2008] BLR 545 being one) that the Adjudicator will admit that he or she has not considered a proper defence. Accordingly, where the breach of natural justice complained of is a failure to consider defences properly put forward, the Court will often have to infer whether there has been such a failure.
26. In the context of this case, I draw the following conclusions:

(a) The Adjudicator must consider defences properly put forward by a defending party in adjudication.

(b) However, it is within an adjudicator's jurisdiction to decide what evidence is admissible and, indeed, what evidence is helpful and unhelpful in the determination of the dispute or disputes referred to that adjudicator. If, within jurisdiction, the adjudicator decides that certain evidence is inadmissible, that will rarely (if ever) amount to a breach of the rules of natural justice. The position is analogous to a court case in which the Court decides that certain evidence is either inadmissible or of such little weight and value that it can effectively be ignored: it would be difficult for a challenge to such a decision on fairness grounds to be mounted.

(c) Even if the adjudicator's decision (within jurisdiction) to disregard evidence as inadmissible or of little or no weight was wrong in fact or in law, that decision is not in consequence impugnable as a breach of the rules of natural justice.

(d) One will need in most and possibly all "natural justice" cases to distinguish between a failure by an adjudicator in the decision to consider and address a substantive (factual or legal) defence and an actual or apparent failure or omission to address all aspects of the evidence which go to support that defence. It is necessary to bear in mind that adjudication involves, usually, the exchange of evidence and argument over a short period of time and the production of a decision within a short time span thereafter. It is simply not practicable, usually, for every aspect of the evidence to be meticulously considered, weighed up and rejected or accepted in whole or in part. Primarily, the adjudicator, needs to address the substantive issues, whether factual or legal, but does not need (as a matter of fairness) to address each and every aspect of the evidence. The adjudicator should not be considered to be in breach of the rules of natural justice if the decision does not address each aspect of the evidence adduced by the parties.

27. So far as a stay of execution is concerned, HHJ Coulson QC (as he then was) properly summarised the relevant practice in Wimbledon Construction Company 2000 Ltd v Derek Vago [2005] BLR 374 at Paragraph 26:

"In a number of the authorities which I have cited above the point has been made that each case must turn on its own facts. Whilst I respectfully agree with that, it does seem to me that there are a number of clear principles which should always govern the exercise of the court's discretion when it is considering a stay of execution in adjudication enforcement proceedings. Those principles can be set out as follows:

a) Adjudication (whether pursuant to the 1996 Act or the consequential amendments to the standard forms of building and engineering contracts) is designed to be a quick and inexpensive method of arriving at a temporary result in a construction dispute.

b) In consequence, adjudicators' decisions are intended to be enforced summarily and the claimant (being the successful party in the adjudication) should not generally be kept out of its money.

c) In an application to stay the execution of summary judgment arising out of an Adjudicator's decision, the Court must exercise its discretion under Order 47 with considerations a) and b) firmly in mind (see AWG).

d) The probable inability of the claimant to repay the judgment sum (awarded by the Adjudicator and enforced by way of summary judgment) at the end of the substantive trial, or arbitration hearing, may constitute special circumstances within the meaning of Order 47 rule 1(1)(a) rendering it appropriate to grant a stay (see Herschell).

e) If the claimant is in insolvent liquidation, or there is no dispute on the evidence that the claimant is insolvent, then a stay of execution will usually be granted (see Bouygues and Rainford House).

f) Even if the evidence of the claimant's present financial position suggested that it is probable that it would be unable to repay the judgment sum when it fell due, that would not usually justify the grant of a stay if:

(i) The claimant's financial position is the same or similar to its financial position at the time that the relevant contract was made (see Herschell); or

(ii) The claimant's financial position is due, either wholly, or in significant part, to the defendant's failure to pay those sums which were awarded by the adjudicator (see Absolute Rentals)."

Discussion

28. One must first analyse whether or not the Adjudicator acted within his jurisdiction in deciding that he would have no regard to Mr Sutcliffe's decision in Adjudication No 4. In my view, he was acting wholly within his jurisdiction. Whilst it was not as such part of the dispute referred to him, it was within the ambit of his jurisdiction to rule, one way or the other, as to whether one aspect or facet of the defences raised in the Response was in effect admissible. The decision in the Adjudication No 4, having been agreed by the parties and declared by the court to be null and void, was obviously not binding on Mr Jensen; accordingly, the decision in the earlier adjudication in itself was not inherently a defence in Adjudication No 5. This can not be described or categorised as an adjudicator failing or refusing to consider and address a defence as such. Even if Mr Jensen had decided that he could have regard to the substantive decision in Adjudication No 4, that would have been a decision within jurisdiction, provided that he did not go on to abnegate his own responsibility to decide the dispute referred to him. It can not be said that Mr Jensen's decision to ignore the earlier "null and void" decision was irrational or perverse; his view that in effect he had to consider the evidence and argument placed before him and that the earlier adjudicator's decision was irrelevant and inadmissible was a respectable one with which many adjudicators and even judges might have concurred in similar circumstances.
29. Following the wording adumbrated by Jackson J in the Carillion case above, the Adjudicator's declining to consider evidence which, on his analysis of the facts or the law, was irrelevant and inadmissible, was neither (a) a breach of the rules of natural justice nor (b) a failure to consider relevant material which undermines his decision on Wednesbury grounds or for breach of paragraph 17 of the Scheme. The possibility of such error is inherent in the adjudication system. It is not a ground for refusing to enforce the Adjudicator's decision.
30. However, Ms Rawley pursues a more subtle point which is that the references in the Response and the "Response to Salient Points" to what Mr Sutcliffe decided in the Adjudication No 4 decision were so intimately and verbally tied up with separate substantive points on the evidence and arguments put forward in those documents that it is clear by inference, she argues, that the Adjudicator failed to address them. I am satisfied that in context the Adjudicator did not fail to apply the rules of natural justice in this context. My reasons are as follows:

(a) When one comes to consider the points made in the Response and "Response to Salient Points", it is clear on analysis that primarily the Contractor was merely praying in aid what Mr Sutcliffe had said in his decision as opposed to saying simply that, because Mr Sutcliffe had said what he said, he must be right without more. Put another way, Mr Sutcliffe's findings were used merely to underpin the evidence and argument which the Contractor was putting forward in Adjudication No 5 in any event. A good example is Paragraph 1.8 of the Response, as set out above, which is prefaced with the words: "As Mr Sutcliffe found in October 2007…it is difficult to believe that the alleged defects in the works were not apparent before 3 November 2006". Thus, on this example, the assertion was being made independently in the Response that it was not credible that the alleged defects were not apparent, which assertion was thought to be underpinned by Mr Sutcliffe's finding.

(b) The Contractor had the fullest opportunity following the Adjudicator's ruling on to September 2009 that he was going to disregard the Adjudication No 4 decision to put in any further evidence or argument which it wished to do in the light of that ruling.

(c) It is absolutely clear that on every material point in issue on the final account the Contractor not only had but also took the opportunity to adduce evidence and argument. The general points about the suggested unreliability of Messrs Irvin's and Nelson's unreliability (whether good or bad points) were independently and emphatically made. The very large bulk (and I suspect all) of the points made by the Contractor (both general and specific) were made by reference to evidence and argument put forward by it in Adjudication No 5 as opposed to what was contained in Mr Sutcliffe's decision.

(d) The essential defences put forward by the Contractor were that on numerous items on the Employer's final account the Employer's representative was simply wrong. For instance, it was asserted that omissions were made which should not have been, that defects were asserted which did not exist or were not the contractual responsibility of the Contractor, that various variations were ordered and implemented and that there were numerous examples of the quantum of omissions and defects being significantly exaggerated. It cannot be said that the Adjudicator did not do a proper job in considering each and every one of those items in issue and giving at least brief reasons for deciding what he did. Jackson J in the Carillion case indicates, properly, that brief reasons will suffice. It really is not necessary for an adjudicator to analyse in his or her decision each and every aspect of the evidence as to why he or she accepts or rejects it in whole or in part.

(e) The Adjudicator makes it clear at Paragraph 8 of his decision that he has confined his notes to "the essentials only" but that he has "carefully considered all the evidence and submissions although not specifically referred to" in the Decision. It is not possible to draw an inference let alone an unavoidable inference that what he said there was incorrect or untrue. Indeed, the 23 pages in the decision in which he deals with every item in dispute would if anything lead to the inference that what he said at Paragraph 8 was true.

(f) A point was made that there was a breach of the rules of natural justice on the part of the Adjudicator in that he reached his decision to ignore the Adjudication No 4 for decision before hearing from the Contractor. This point was not argued with any great force and indeed was not referred to in the extensive written submissions of the Contractor's Counsel. Whilst it would have been better if he had waited for the Contractor to respond, it was not in material breach in any event.

31. Ms Rawley sought to support her assertion that inferentially the adjudicator must have ignored defences and evidence which the Contractor had put forward by reference to the two items of Decoration (external and internal) put forward in the final account as requiring deductions of £11,350.28 and £14,526.05 (totalling £25,876.33); this work was said to have been done either badly or not at all. Mr Sutcliffe decided partly on the basis of Mr Thomas' evidence (also put before Mr Jensen) that generally the workmanship was not to a lesser standard than that demanded by the contract but found that a total deduction of £2500 should nonetheless be made. Mr Jeneon decided, partly on the basis of photographs, that a total deduction of £7920 should be made. In reducing the Employer's claim by about £18,000 or 70%, Mr Jensen had clearly taken on board and accepted a substantial part of the Contractor's arguments and evidence on the two items.
32. Ms Rawley also argues that Mr Jenson invariably allowed the Employer sums by way of assessment when the Employer had not fully proved its case but did not do so when the Contractor within similar position. Whilst it is true that there are examples of Mr Jensen doing this, there is no pattern in what he did in this context which suggests that he was doing anything other than acting fairly. When he rejects the assertion made by the Contractor on an individual item, that is often because, as he finds, the Contractor has given no proper explanation or documentation to prove what it was asserting. In other cases (for instance item 19), he does "do the best that he can" in allowing the Contractor some amount, albeit that it is not supported by adequate records, when it is clear that some work was done. This complaint is simply not established on the facts.
33. For all these reasons, I reject the challenge which has been made by the Contractor that in any material sense the Adjudicator failed to apply the rules of natural justice. It will follow that the decision of the Adjudicator in Adjudication No 5 should be enforced.

Stay of Execution

34. As confirmed by in the Wimbledon case, the probable inability of a claimant to repay an adjudicator's decision enforced by the Court following a final resolution of the underlying dispute between the parties may constitute special circumstances within Order 47 rule 1(1)(a) rendering it appropriate to grant a stay. Given that the Court has a discretion and the inability to repay may go only to part of the enforcement judgement sum, it is open to the Court to impose a stay of execution in relation to part of that sum.
35. I am satisfied that in this case the Contractor has raised a prima facie case on the evidence that the Claimants would be unable to repay the judgement sum or at least a significant part of it. The Claimants made repeated statements in its evidence before the Adjudicator in Adjudication No 5 that it could not afford to carry out remedial works to the property. An example is at Paragraph 34 of the Referral in which the Employer says that it:

"…has not yet been able to afford to rectify [other items of defective works] because of the losses it is currently standing because of the overpayments currently paid to [the Contractor] for it Works and because it does not have sufficient funding from another source to fund the rectification works still required".

In her witness statement in an earlier adjudication, the second-named Claimant said:

"The purchase and the renovation [of the property] was financed primarily from the proceeds from the sale of our personal residences and inheritance. It has taken our entire life savings. Our intent was to purchase the property, renovate it, and for Cynthia to manage the property and live from the income".

She went on to say that the first contractor whom the sisters employed had taken "the money and ran".

36. More recently on 19 November 2009, when faced with a request from Mr Jenson to pay his bill, doubtless on instructions, the Employer's solicitors wrote to him unequivocally:

"Our clients appreciate that they are jointly and severally liable for your fees but, as explained previously, our clients have limited available funds and without receiving payment of the principal award from [the Contractor] they are not currently in a position to satisfy your fees themselves and then have to look to recovery from [the Contractor]."

A somewhat different picture however is presented in the witness statement of the second-named Claimant dated 11 December 2009 presented to the Court. She is resident in Switzerland. At Paragraph 15, she says that she has in her bank account "sufficient funds to repay the sums in one instalment". I do not find that credible in the light of everything which she and her sister had been saying before and through her solicitors. The amount of the judgement will be with interest and costs probably over £130,000. Counsel for the Employer was unable to provide any convincing answer to the point put to him that the Employer was deliberately lying either through its solicitors as recently as 19 November 2009 or in the latest witness statement; all that he could say was that the witness statement, containing a Statement of Truth, was more likely to be right.

37. Ms Grombach also refers to a valuation of the property, said to be £1,300,000 and what are said to be secured loans totalling £641,000, thus giving the property an unsecured value of £659,000. However, this evidence is not particularly sound or reliable because the valuation, albeit prepared for the Bank which has lent the Employer money, is dated 24 September 2008 and given the recession is unlikely to represent the current value. It provides two values for the property using comparative and investment methods of valuation at £1,300,000 or alternatively £1,000,000, albeit that the latter is based on a sale on a three months basis; which is the more robust one is unclear. The valuation also assumes that Flat No 1 at 33, Sefton Park Road has been purchased (which it has not been apparently) and that Flat No 3 at 31, Sefton Park Road has been renovated (it being unclear whether this has been done). There is also no up-to-date statement of what the current loan account is. Whilst there may be some equity, it is difficult to guess whether or not it is sizeable; I suspect strongly that there is some small equity
38. Ms Grombach also, somewhat obliquely, says that "the monthly rental income from the apartments within the Property currently totals around £7500 which exceeds our usual operating costs of the Property". There is no indication as to by how much income exceeds costs. Assuming that the yearly income is about £90,000, one would assume that yearly outgoings would include insurance, maintenance, agency letting fees, council tax (possibly) and electricity for any common parts. Last but not least will be the costs of servicing the loan and Schedule A tax. All in all, doing the best that I can, I can safely proceed on the assumption that there is unlikely to be more than £30,000 per annum available from the yearly rental income.
39. All this evidence leads me to the conclusion that the Employer would be unable to repay the judgement sum in full. These are circumstances which I can and should take into account in deciding whether or not to impose a stay of execution. I bear in mind that there is a genuine and extensive dispute between the parties relating to the value of the final account, defects and each party's delay or disruption related claims. Two adjudicators both thought that the Employer's claim was substantially exaggerated to a greater or lesser extent and there are said to be doubts about the reliability and independence of those upon whose evidence that Employer relied in each adjudication. Again, on a best assessment basis, I consider that it is appropriate to impose a stay of execution on £60,000 of the total judgement sum including interest. Costs should be dealt with separately.

The Adjudicator's fees

40. The Employer also claims judgement for the amount of the Adjudicator's fees in the sum of £25,623.15. The problem however is that the Employer has not paid the fees albeit that I suspect that the Adjudicator will look to the Employer for payment, certainly once it has become clear that the Employer has had some success in these proceedings. The danger is that, given the misgivings that I have expressed about the Employer's financial position, if the fees are included in the judgement as part of the judgement sum, there is at least a risk that the Contractor will pay twice if the Employer does not then pay the fees. Against that, there is a risk that, if there is nothing in the judgement about what is to happen, the Employer may be faced with having to pay the Adjudicator in any event. All in all, I consider that the appropriate course of action is to grant declarations that (a) the Claimant shall be indemnified by the Defendant against any payment which it makes to the Adjudicator up to the sum of £25,623.15 and against any interest after such payment at the judgement rate until the Defendant repays any such payment to the Claimant and (b) that the Defendant is obliged by the decision dated 26 October 2009 of the Adjudicator to pay the Adjudicator's fees and expenses as directed by the Adjudicator.

Decision

41. There will be judgement for the Claimant but there will be a stay of execution on £60,000 of the judgement. Put another way, the Defendant will have to pay within a time to be fixed the net amount of the judgement sum (that is the gross judgement sum including interest less £60,000).

The Unfortunate Development

42. Since the circulation of the draft judgement, there has been a most unfortunate development which is that now the Claimant seeks to reduce yet further evidence from one of the sisters to seek to persuade me change my mind on the stay of execution.
43. In accordance with the usual practice, the draft judgement was circulated to Counsel on a confidential basis (that is, confidential to the parties and their legal representatives) with a view to obtaining "a list of typing corrections and other obvious errors in writing", as the heading note to the draft states. It also has the advantage of enabling the legal teams to prepare any arguments which they may have on consequential matters such as costs.
44. At the hearing on 14 December 2009, I received evidence and heard full argument on the issue as to whether or not there should be a stay and if so on what terms. I indicated to the parties at the conclusion of the argument that I was satisfied that there had been no failure to comply with the rules of natural justice but that I had not then made my mind up about a stay of execution; I indicated that I would reserve my judgement. There was no application, hint or suggestion from the Claimant's legal team that it was even considering submitting further evidence or argument about the stay of execution. Ms Rawley for the Contractor indicated at the handing down of the judgement her client would or might wish to apply for time to pay. I suggested to the parties that they should discuss matters about whether time to pay was a commercially sensible course of action but they should proceed on one of three alternative bases so far as stay of execution was concerned: either there would be a stay in full or no stay or there might be a stay of execution as to about half of the judgement sum. For the convenience primarily of Counsel for the Claimant (who was not available on 18 December 2009), today's date, 22 December 2009, was fixed for the handing down, any costs argument and the hearing of the Contractor's application for time to pay.
45. The draft judgement was circulated to Counsel just after midday on 17 December 2009. At 15.47, the Court received from the Employer's solicitors a Second Witness Statement of Ms Grombach dated 17 December 2009.
46. I have received by e-mail an explanation from Counsel for the Employer (also on 17 December 2009) that it was his understanding that I "would hear further submissions on the question of the stay application (the options being (1) no stay (2) 50% stay or (3) 100% stay)"; he says that he was "surprised to find that you have already in your draft judgement set out your draft decision on the stay application". To be fair to Counsel, he accepted in oral argument that he had "got the wrong end of the stick". Counsel for the Defendant shares my recollection.
47. It must be an exceptional case for a judge to have to reconsider his or her draft judgement upon the basis of further evidence, which could have been submitted beforehand, but which is submitted by a party after the circulation of the draft. It can not be in the interests of the due administration of justice that parties continue to exchange substantive evidence and argument after the close of the evidence and argument. Of course, established practice relating to the submission of new or fresh evidence which could not have been easily or readily deployed beforehand would still apply; similarly, purely legal arguments, for instance based upon another newly issued judgement, are more readily accommodated.
48. I am not minded as a matter of discretion to permit the submission of Ms Grombach's Second Statement at this late stage. There is no good reason why any of the information contained in it could not have been provided in her First Statement, which the Second Statement seeks to supplement in the light of the evidence and argument deployed during the oral hearing by the Contractor's Counsel.
49. That said, even if I had allowed it in at the 12^th hour, it would not, upon reflection, have altered the views expressed above. My reasons for this view are:

(a) She seeks in the Second Statement to explain why her solicitors wrote as they did on 19 November 2009 that "our clients appreciate that they are jointly and severally liable for your fees but, as explained previously, our clients have limited available funds…they are not currently in a position to satisfy your fees themselves and then have to look to recovery from [the Contractor]." She says that she had always drawn a distinction between her personal wealth and the position of the funds actually in the partnership which she had with her sister and so, she says, the solicitors were writing on behalf of the partnership which had insufficient funds.

(b) With respect to her, that is not a credible explanation, on three counts. On her current evidence, the partnership was more than capable of paying out £25,000 at that stage. Secondly, the letter itself makes it clear that the two sisters appreciate that they are "jointly and severally liable" for the fees: if that is right, it would seem to be, there can have been no real doubt that funds "severally" available from each of the sisters could be deployed. Thirdly, from all the evidence, Ms Grombach appears to be an intelligent, astute and sophisticated person who would have known that it was material that she had substantial assets and funds available. Indeed, she has asserted in correspondence which I was shown on the costs issues that she was the USA equivalent of a UK barrister; if that is so, she will have been well aware of the importance of accuracy in statements to be submitted to the Court, particularly those signed with a Statement of Truth

(c) There is amaterial discrepancy between the two Statements. In the First, she says Paragraph 15: "I further confirm that I have in my bank account sufficient funds to repay the sum in issue in one instalment"; the sum in issue in the proceedings was and is some £113,000. In her Second Statement, she says:

"10. [My husband and I] have a number of bank accounts with cash (in Swiss Francs). I attach…a computerised printout of my bank balance on one of my accounts. The account is in my husband's name, but it is a joint account and I am free to use the money as I see fit. The balance in the account is [equivalent to £45,675.62].

11. In addition to our operating bank accounts, which I have not provided as these are relevant to our regular cash flow, I also have about (approximately £20,590) in a safe."

The clear inference from this is that there is only some £66,000's worth of cash readily available. It thus appears to be in direct contradiction to what she said in her first statement.

(d) I conclude therefore that her evidence in the Second Statement is inherently unreliable.

(e) Much of the latest evidence is at best inconclusive. The new evidence from the valuer of the properties does not assist much. He does not identify which of the two values in his September 2008 report is the appropriate one (and there is a £300,000 difference); he does not identify by how much the value falls to be reduced in relation to Flat 1 at No 33, which is not owned by the partnership. She provides no reliable evidence as to what is owed to the bank, without which one can not start to determine whether there is any equity; for instance a current or recent statement from the bank as to what is owed would spell this out. Although he says that he would not anticipate a deduction of more than 5 to 10% from his September 2008 valuations, he qualifies this by saying that his comments "do not in any way constitute a revaluation".

(f) She says that she has a joint bank account with her husband in the Switzerland, albeit that the account is in her husband's name. There is no independent evidence that she is free to use the money in it, as she says "as I see fit". She says, somewhat surprisingly that she has "about" 35,000 Swiss Francs "in a safe" but there is no explanation why it has to be kept there rather than in the bank earning (even) Swiss rates of interest.

(g) She says that she has some 10kg of gold in a safe, which is of course at the moment a particularly valuable commodity. She has produced some purchase receipts and she invites the Contractor to visit Switzerland with a gold expert to verify this. This assertion is surprising.

(g) She attaches a schedule, not apparently independently prepared, of income for 2009 and expenditure from 1 January to 15 December 2009. That schedule does not deal with any expected expenditure or exceptional items (other than legal fees and costs). She does say that the irrecoverable legal fees for the adjudication mean that there is no net income for 2009. She does not address the extent to which normally there will be Schedule A tax on net income from real property. Since it is unlikely that the Claimant will recover all of their costs of and occasioned by these proceedings, there will be an additional burden on the partnership income in 2010.

50. Unfortunately, the Defendant, whilst both properly opposing the introduction of the Second Statement of Ms Grombach and challenging its contents, was then tempted to argue that the adjudication decision was obtained by Ms Grombach's "dishonesty" in the adjudication to the effect that it was lack of funds which prevented remedial works being carried out the three years. This is an argument which could and should have been deployed at the substantive hearing on 14 December 2009 and it is inappropriate and contrary to the proper administration of justice for a point like this to be raised after the draft judgement has been produced. Again, to be fair to Counsel and her client, Ms Rawley made it clear on instructions that her client would not pursue these arguments if the stay of execution remained as above. In those circumstances it is unnecessary to consider what I would have done. However, as a matter of discretion, I would have declined to permit the Defendant to pursue that argument. However, even if I had permitted it, I would not have accepted it for the following reasons:

(a) In Adjudication No 5, the Contractor effectively argued that there was no good reason why, if there really were defects for which it was responsible, the remedial works had not been done. It was argued that the fact that the remedial works have not been done materially undermined the credibility of the whole defects claim.

(b) The whole issue of whether the Employer could afford to carry out the remedial works was an issue raised in the adjudication. It would have taken little or nothing to argue that the let premises must have been producing some net income such as would enable remedial works to be done; thus it was open to the Contractor to challenge the credibility of the assertions made by the Employer that it could not afford to carry out remedial works.

(c) The effect and impact of Ms Grombach's evidence leads me to the conclusion that what she said in her statements to the Court about her financial worth is unreliable and that what she says does not rebut or undermine the prima facie view that the Claimants would be unable to repay the judgement sum or at least a significant part of it. The prima facie view is based on what the Employer said in Adjudications Nos. 4 and 5 being true.

(d) For these reasons and those adumbrated in SG South Ltd. v King's Head Cirencester LLP & Anor [2009] EWHC 2645 (TCC), this is not a case therefore which merits refusing enforcement.

51. It follows from this that the view expressed above that there should be a stay of execution as to £60,000 is confirmed.

Time to Pay

52. For the reasons put forward in Yoram Ansalem v Raivid [2009] EWHC 3226 (TCC), the Court does have a discretion upon judgement to permit an unsuccessful Defendant time to pay. The Court said:

"5. So far as the law and practice is concerned, CPR 40.11 says this:

"A party must comply with a judgment or order for the payment of an amount of money, including costs, within 14 days of the date of the judgment or order unless-

(a) the judgment or order specifies a different date for compliance, including specific payment by instalments …"

It is clear that the court does have some discretion there to change the normal 14 day period to another one. It could indeed be less, it could be more, and it is clear that the court does have some discretion to order payment by instalments. It may be, for instance, that there are cases where it is appropriate to make payment by instalments.

6. But one then turns to the provisions in the Rules of the High Court about enforcement of judgments and orders. The introductory notes to CPR Part 70 say this:

"It is a feature of civil justice that the court does not automatically enforce its judgments, nor even decide how they should be enforced. It is up to the judgment creditor".

In broad terms, that does reflect the law and the practice. Part 70, and those provisions of the Rules of the Supreme Court which were retained by that Part, give a wide variety of different methods to a successful party to litigation for enforcing judgments. That can include the appointment of a Receiver, third party debt orders, charging orders, stop orders, stop notices, and other writs of execution such as a writ of fieri facias. There are provisions to seek to attach earnings as well. So there is a wide variety of recourses open to the successful party to enforce any given judgment. In addition, there is a statutory option available to a judgment creditor to initiate proceedings for bankruptcy or, in the case of a company, liquidation of the debtor.

7. Parliament has given a successful judgment creditor those rights and it should be an exceptional case, it seems to me, where the court interferes with those rights given by Parliament.

8. It is clear, however, that when those provisions for alternatives to enforcement are considered, the court, which may be dealing with the different methods of enforcement, is given a discretion. I have considered, for instance, RSC Ord.46, which deals with writs of execution, and those provisions relating to fieri facias writs. In certain circumstances, where there is a realistic prospect of payment being achieved by interim payments, then the court is sometimes prepared to consider making such an order.

9. I consider that the court, at this stage - that is the court which has given the judgment - can take into account similar factors to those which a court handling enforcement can take into account. I have indicated to Mr. Butler, in argument, that I do have some real sympathy, for the defendants in this sense, that, although they have lost the proceedings, they are ordinary individuals who have been caught up in litigation. The effect of my judgment is that that is a matter of their own making, but nonetheless they were not financially equipped to get involved in substantial litigation such as this proved to be. They are now suffering the consequences.

10. The problem that this court faces, however, is that there is no realistic prospect, on the figures and on the information that has been put forward, of the defendants being able to pay. They both, frankly, admitted, and accepted that, in effect, the only way that this judgment debt is going to be paid within the foreseeable future is by way of charitable donation or possibly lending, as the case may be, from charitable institutions or people within the Jewish community in this country. Unsurprisingly, they have been unable to secure yet any such offer or undertaking to provide any such financial assistance. In those circumstances, it is difficult for the court (sympathetic though it is) to think of a way in which, if justice is being observed for both parties, it can assist here."

53. The effect of the stay of execution will be that the Defendant has to pay some £54,000; it has made clear that it will pay £50,000 by 8 January 2010; this takes into account the impending Christmas period and the need for some time to procure the funds. Ms Rawley on instructions explained that her client's directors and possibly one other would have to provide personal loans to the company to enable them to pay and that they wished to be given time to pay the balance of the judgement in instalments of £10,000 per month. That seems to me to be contrary to Mr Gray's second statement. The Yoram Amsalem case turned on its own special facts and did not relate to the enforcement of an adjudication decision. I do not see that there is any difficulty in the Defendant having to pay some £54,000 rather than the £50,000 whichit was apparently perfectly able to pay when Mr Gray made his second statement.

Costs

54. The first issue is what the overall order on costs should be. The Claimant has succeeded in its application for summary judgement albeit that it has lost on the issue of stay of execution. Thus, in broad terms, the Claimant would in the ordinary course of events recover 80% of its costs up to and including the hearing date of 14 December 2009; this reflects the time and effort applied in relative terms on the summary judgement application which took up the vast bulk of the time and effort whilst the stay of execution aspects took only about 10% of each party's time, cost and effort.
55. However, three other factors come into play. First, each party has today pursued applications upon which it is lost, the Employer seeking to persuade me to change my mind on the question of stay and the Contractor seeking to re-argue the issue of enforcement and to pay by instalments. Although some time was spent in arguing costs, I have formed the view that each party should pay its own costs since the last hearing on the basis that each has won and lost on important matters.
56. Secondly, the Contractor argues that the Court should reflect its disapproval of (what I will call neutrally) the misleading evidence given by Ms Grombach in her two statements. CPR Part 44.3 requires the Court to take into account the conduct of the parties and there is authority to suggest that it is a legitimate exercise of discretion to reduce a successful party's costs by reason of lies made to the court or otherwise (see Sughra Sulaman v AXA Insurance PLC [2009] EWCA Civ 1331). I decline to attach weight in the costs decision on this count. It has already been taken into account to the Claimant's disadvantage in my decision on the stay of execution and it is unnecessary to "punish" the Claimant.
57. The third point carries more weight which is that there were exchanges between the parties before the first hearing in which the parties discussed settlement; any privilege on this has been waived. On 24 November 2009, the Contractor e-mailed Ms Grombach and offer in full and final settlement to pay the adjudicator's fees in full and pay the full amount claimed in instalments with £50,000 on 4 December 2009 and the balance in monthly instalments over the next seven months. On 25 November 2009, Ms Grombach replied requiring in effect personal guarantees from directors. So far as the disclosed documentation is concerned, matters foundered within the next two or three days with no agreement. On the 11 December 2009, the Contractor's solicitors sent a "without prejudice save as to costs" letter offering to pay the sum claimed in full with interest to 11 December 2009, the adjudicator's fees, costs on a standard basis and payment by instalments with the first payment of £50,000 paid on 8 January 2010 and the balance at £10,000 per month payable thereafter.. The offer was open for acceptance until the start of the hearing on 14 January 2009. It was only on 9 December 2009 that the argument about a stay of execution arose in the witness statement of the day from Mr Carter.
58. I have formed the view that it is legitimate to take these offers into account. There were commercial discussions in late November 2009, which were not put on a "without prejudice save as to costs". It was not wholly unreasonable of the Employer initially, given the reasons put forward as to why stage payments were offered (financial difficulties), to raise the issue of personal guarantees because in the usual case money judgements are payable within 14 days. However, the Employer in the result did not do better and, arguably did worse, than the offer made on 11 December 2009. However as that offer was open for acceptance until the commencement of the hearing, the large bulk of the costs would have been incurred in any event.
59. In all the circumstances I have formed the view that it would be appropriate and fair to allow it to be Claimant 50% of their costs entitlement up to and including 14 December 2009 (that is 50% of 80%-see Paragraph 54). That reflects the 20% reduction for its failure on the stay argument (see above) and the fact that it would have been sensible to agree, ultimately without personal guarantees (which would never have been available from the Court) the 100% enforcement judgement with a payment regime which reflects in effect what it has ended up with. I take into account that the Defendant has not provided any costs summaries to enable me to reach any other basis of assessment and I have had to do the best that I can on the information available.
60. The Claimant has provided a costs bill in a total sum of over £27,000 in the period up to and including 14 December 2009. Counsel has accepted that a 10% reduction would be fair to reflect arguable points on assessment. I am surprised that a relatively simple claim and application for summary judgement in relation to the enforcement of an adjudication decision should have cost this amount which compared with other enforcements is very much at the upper end of, if not currently beyond, the range for claims in the low six figure or high five figure area. In all the circumstances, I consider that an overall assessment of £20,000 is fair and reasonable. Much of the solicitors' time is charged at partner's rates when it would be reasonable for much of that time to be charged at an assistant solicitor's rate. Counsel explained that his fees were relatively high because the partner was for medical reasons unavailable at one stage. Whilst that is understandable, it would not be reasonable for the Defendant to have to pay the extra which I strongly suspect became payable in consequence of this unfortunate state of affairs.
61. It will follow that the Claimant should be paid 40% of this figure of £20,000, namely £8000. That sum should be paid by 22 January 2010.