Gosvenor London Ltd v Aygun Aluminium UK Ltd, Court of Appeal - Civil Division, December 03, 2018, [2018] EWCA Civ 2695

Resolution Date:December 03, 2018
Issuing Organization:Civil Division
Actores:Gosvenor London Ltd v Aygun Aluminium UK Ltd
 
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Case No: A1/2018/0996

Neutral Citation Number: [2018] EWCA Civ 2695

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

TECHNOLOGY & CONSTRUTION COURT

Mr Justice Fraser

HT2017000377

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 03/12/2018

Before :

LORD JUSTICE PATTEN

LORD JUSTICE NEWEY

and

LORD JUSTICE COULSON

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Between :

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Mr Steven Walker QC & Ms Helena White (instructed by Womble Bond Dickinson (UK) LLP) for the Appellant

Dr. Timothy Sampson & Mr David Sawtell (instructed by Arlington Crown Solicitors) for the Respondent

Hearing date: Tuesday 6th November 2018

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JudgmentLord Justice Coulson:

1. Introduction

1. By an order dated 28 March 2018, Fraser J gave judgment in favour of the claimant (``Gosvenor'') in the sum of £553,958.47 (together with VAT and interest) on their application for summary judgment to enforce the decision of an adjudicator ([2018] EWHC 227 (TCC)). However, the judge also imposed a stay of execution. Gosvenor now appeal against the imposition of the stay. The appeal raises issues as to the court's discretion to stay a judgment enforcing an adjudicator's decision where there is evidence of a real risk that assets will be dissipated before the substantive dispute is determined; the interplay between adjudication enforcement and allegations of fraud; and the extent, if at all, to which a party can seek a stay by reference to evidence which was or could have been deployed in the adjudication.

2. The Relevant Principles

2.1 Enforcement of Adjudication Decisions

2. It is trite law that, in accordance with the policy behind the Housing, Grants (Construction and Regeneration) Act 1996, the courts will endeavour to enforce the decisions of construction adjudicators. The relevant principles were explained by Chadwick LJ in Carillion Construction Limited v Devonport Royal Dockyard Limited [2005] EWCA Civ 1358; [2006] BLR 15:

``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...''

2.2 Fraud

3. In SG South v King's Head Cirencester LLP [2009] EWHC 2645; [2010] BLR 47, the defendant employer made allegations of fraud in the adjudication but failed to establish a factual basis for them. In the subsequent enforcement proceedings, the employer raised the allegations again in defence of the claim. Akenhead J considered fraud in the context of adjudication enforcement:

``20. Some basic propositions can properly be formulated in the context albeit only of adjudication decision enforcements:

(a) Fraud or deceit can be raised as a defence in adjudications provided that it is a real defence to whatever the claims are; obviously, it is open to parties in adjudication to argue that the other party's witnesses are not credible by reason of fraudulent or dishonest behaviour.

(b) If fraud is to be raised in an effort to avoid enforcement or to support an application to stay execution of the enforcement judgement, it must be supported by clear and unambiguous evidence and argument.

(c) A distinction has to be made between fraudulent behaviour, acts or omissions which were or could have been raised as a defence in the adjudication and such behaviour, acts or omissions which neither were nor could reasonably have been raised but which emerge afterwards. In the former case, if the behaviour, acts or omissions are in effect adjudicated upon, the decision without more is enforceable. In the latter case, it is possible that it can be raised but generally not in the former.

(d) Addressing this latter case, one needs to differentiate between fraud which directly impacts on the subject matter of the decision and that which is independent of it... Whilst matters in the first category can be raised, generally those in the second category should not be. The logic of this is that it is the policy of the 1996 Act that decisions are to be enforced but the Court should not permit the enforcement directly or at least indirectly of fraudulent claims or fraudulently induced claims; put another way, enforcement should not be used to facilitate fraud; fraud which does not impact on the claim made upon which the decision was based should not generally be deployed to prevent enforcement.''

4. It should be noted that when Akenhead J came on to address the stay application, he dealt with it in the conventional way, addressing the points raised about the claimant contractor's accounts and the underlying cause of their financial difficulties. No issue arose as to any overlap between the allegations of fraud in the adjudication and the matters relied on in support of the stay, because the fraud allegations were not the basis of the stay application.

5. The approach in SG South was expressly approved by Jackson LJ in Speymill Contracts Ltd v Baskind [2010] EWCA Civ 120; [2010] BLR 257. In that case, the judge at first instance had declined to enforce the adjudicator's decision because of the alleged theft, by two employees of Speymill, of files belonging to the employer, Mr Baskind. Despite the fact that the adjudicator had expressly addressed (and rejected) that allegation, the judge concluded that the theft/fraud issue gave rise to an arguable defence. This decision was reversed on appeal. At paragraph 44 of his judgment, Jackson LJ said:

``I turn finally to the allegation that the adjudicator's decision should not be enforced because it is tainted by the fraud of Speymill. I reject that allegation. The allegation of theft was raised directly before the adjudicator and taken into account in the course of his decision. This is not a case of fraud coming to light after the adjudicator's decision. Applying the principles set out SG South, I hold that the allegation of theft forms no basis for refusing to enforce the adjudicator's decision.''

6. This approach was also followed by Ramsey J in GPS Marine Contractors Ltd v Ringway Infrastructure Services Ltd [2010] EWHC 283 (TCC); [2010] BLR 377. Until the present case, these have been the three principal authorities as to the treatment of fraud in adjudication and adjudication enforcement.

2.3 Stay of Execution

7. CPR 83.7(4) provides:

``(4) If the court is satisfied that--

(a) there are special circumstances which render it inexpedient to enforce the judgment or order; or

(b) the applicant is unable from any reason to pay the money,

then, notwithstanding anything in paragraph (5) or (6), the court may by order stay the execution of the judgment or order, either absolutely or for such period and subject to such conditions as the court thinks fit.''

8. The question of whether a stay should be granted in any particular case is always a matter for the court's discretion. In the context of adjudication enforcement, some general guidance as to the proper approach can be found in Wimbledon Construction Co 2000 Ltd v Derek Vago [2005] EWHC 1086 (TCC); [2005] BLR 374 where, at paragraph 26, I said:

``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:

  1. 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.

  2. 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.

  3. 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...

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