JPA Design and Build Ltd v Sentosa (UK) Ltd  EWHC (2312) (TCC) [Lawtel AC0122206]
The enforcement of an adjudicator’s award by a contractor against an employer was stayed in light of the contractor’s precarious fi nancial position and the fact that it was contractually obliged to repay the monies that were the subject of the adjudicator’s award as soon as the fi nal account was issued. In reaching this decision, the court noted that, where every possible feature of a building case is in dispute, serial (and obviously tactical) adjudications are not the best method of achieving a comprehensive and binding resolution of the disputes between the parties.
The court noted that the addition of Clause 4.6 in the JCT Design and Build Form, 2005 Edition, 2007 Revision affects any application for a stay of execution. Clause 4.6 provided that Sentosa would make an Advance Payment to JPA of £300k on 7th October 2007 “and will be reimbursed to the Employer at the time of the agreement of the Final Account as calculated in accordance with Clause 4.12.” JPA referred a dispute over this Advance Payment to adjudication and the adjudicator ordered that the amount be paid. By the time of the enforcement application, the contract had been ended for almost six months, yet JPA had still not put forward any sort of Final Account claim.
The court held that Clause 4.6 of the JCT Design and Build Form, 2005 Edition, 2007 Revision makes this case different to – and stronger than – those cases in which the court has considered whether or not the existence of a potential cross-claim makes any difference to the enforcement process. Typically, a paying party cannot avoid the consequences of an adjudicator’s decision simply because it has a claim against the receiving party that will be brought imminently. Similarly, a stay of execution should not be awarded on those grounds. Clause 4.6, however, made this a very different case, because the £300k found due to JPA following an adjudication referral that had not been made until after the contract had come to an end, was a sum which JPA was required to pay back to Sentosa when the Final Account was considered and resolved. In circumstances where the Final Account process should have been completed, and the delay rested with JPA, the court held that the £300k must be treated as being imminently repayable to Sentosa in any event and that it would be wholly unjust and inequitable for Sentosa to pay the £300k plus interest, particularly in circumstances where there was an overwhelming risk that they would not be reimbursed that sum by JPA because of its current precarious fi nancial position. The court therefore ordered a stay of execution.
To read the judgment, go to http://www.bailii.org/ew/cases/EWHC/TCC/2009/2312.html