Success for James Malam in Technology and Construction Court

November 7, 2024

In the recent case of Complete Ceiling and Partitioning Systems Ltd v DE1 Ltd [2024] EWHC 2800 (TCC), James Malam, instructed by Jagtar Rooprai of Petherbridge Bassra, persuaded the court that a defendant to a successful adjudication enforcement action should not bear the costs of that action.

Faced with an adjudicator’s award against it and the Claimant’s demand for payment, the Defendant asked the Claimant for evidence to show that it would be able to repay the award if the money was subsequently found not to be due. The Claimant refused to provide any substantive information, relying on the judgment of Ramsey J. in Farrelly (M & E) Building Services Ltd v Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC) that “…there is no general obligation on a party when seeking enforcement to disclose to the other party confidential information of its financial and business position so that the other party can consider whether there are grounds for applying for a stay of any judgment”. The Claimant then issued proceedings; the Defendant conceded liability but sought a stay of enforcement; and in response the Claimant provided information which satisfied the Defendant that the Claimant would be able to repay the Award sum. The Defendant having accepted it was not entitled to a stay, the Claimant sought its costs of enforcement on the indemnity basis and the Defendant argued there should be no order for costs.

In making no order for costs the court provided (paragraph 42 and onwards) an important clarification of the Farrelly judgment, to the effect that a claimant is not entitled pre-action (without costs risk) to refuse to give information as to its financial and business position where the then available evidence demonstrates insolvency or that it will be unable to repay the award if ordered to do so. This decision will be a significant assistance to defendants concerned about repayment of adjudicators’ awards but faced with an intransigent claimant who refuses to provide information.

The court also clarified (paragraphs 23-24) that if issuing proceedings to challenge the adjudicator’s award, so as to support the argument of a probability award will need to be repaid, it is appropriate to issue a claim for a declaration to that effect rather than to issue a claim for repayment of the award (which by this point will necessarily not have been paid to the successful party in the adjudication).