05 March 2019

New ground for staying adjudication

Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018] EWHC 227 (TCC) (“Gosvenor v Aygun”)

In this case, we see the introduction of a new ground for staying an adjudication award:

“If the evidence demonstrates that there is a real risk that any judgment would go unsatisfied by reason of the claimant organising its financial affairs with the purpose of dissipating or disposing of the adjudication sum so that it would not be available to be repaid, then this would justify the grant of a stay.”

What happened in the case?

  • The parties entered in to a contract under which Gosvenor would perform cladding and associated works at a hotel.
  • The project fell into delay and Gosvenor referred the dispute to adjudication, during which Aygun alleged that Gosvenor had overcharged for labour costs and refused to pay.
  • The adjudicator awarded Gosvenor a substantial sum for labour costs.
  • Aygun failed to pay and Gosvenor started court proceedings to enforce the adjudications award.
  • Aygun opposed, alleging fraud by Gosvenor in respect of labour costs.

Decision

The Court of Appeal granted Gosvenor’s application, but also stayed execution. The basis of the decision was as follows:

  1. The enforcement was allowed as Aygun had not used the fraud claim during the adjudication; in fact, it had not served any evidence. In comparison, Gosvenor served a range of witness statements supporting its position.
  2. The stay of execution in favour of Aygun was granted under CPR 83.7(4)(a) due to the ‘special circumstances’ of the claim, namely Gosvenor’s unsatisfactory accounts, discrepancies within the account and the relevant allegations of fraud.
  3. In deciding this, the Court added a further ground (g) to those referred to in the Wimbledon case:
  4. “(g) If the evidence demonstrates that there is a real risk that any judgment would go unsatisfied by reason of the claimant organising its financial affairs with the purpose of dissipating or disposing of the adjudication sum so that it would not be available to be repaid, then this would justify the grant of a stay.”
  5. The Court noted this ground should only be used in exceptional factual circumstances.

For more information, assistance or advice on adjudication in construction claims, contact a member of our Construction team.