The employer under a building contract did not serve a pay less notice in response to the contractor's interim payment notice. The sum applied for consequently became due, the contractor obtained an adjudication award in its favour and applied to enforce it. The contractor then entered into a Company Voluntary Arrangement (CVA). But would enforcement undermine the proper operation of the CVA?

The court ruled that it would. Since the adjudicator's decision did not determine the value of the contractor's claims or the value of any particular claim, but was in effect an order for an interim payment, it would have had no effect on the CVA setting-off exercise unless it had been complied with prior to the CVA. Had that happened, there would have been a payment made before the CVA which would form part of the parties' mutual dealings.

The existence of an unsatisfied adjudicator's decision prior to entering into the CVA was the significant factor distinguishing this case from previous cases. To order the employer to pay, after the CVA has been entered into, the sum determined by the adjudicator would distort the CVA accounting process, because the money would not be applied for the sole benefit of the employer but, instead, for the benefit of the creditors generally.

In addition, it would be distorted in a way that would always operate to the detriment of the employer, so that it would be wrong in principle to enforce the decision by ordering the employer to pay the contractor the sum found due. And if the judge was wrong on this issue, this was a case where the conclusions reached about the effect of ordering payment of the sum found due would amount to special circumstances under CPR 83.7(4)(a) so as to justify staying enforcement of the full amount.

Indigo Projects London Ltd v Razin & Anor [2019] EWHC 1205