Urvasco entered into a contract with Knight for concrete works. Disputes arose between the parties, which were referred to adjudication. The adjudicator awarded Knight £322,133.67. Urvasco did not pay but accepted before the court that it would not take any jurisdictional points and therefore Knight was entitled to recover that sum. Accordingly the Judge gave summary judgement for the full amount. Urvasco did, however, apply to stay the execution of the enforcement, on three grounds:

1. The financial situation of Knight and their ability to repay amounts should they subsequently become due to Urvasco;
2. Alleged threats made by a director of Knight that Knight would be put into liquidation to avoid repaying any sums which may become due to Urvasco; and
3. Urvasco had started a further adjudication prior to the enforcement hearing and submitted that following the conclusion they would have a valid cross claim that would surmount Knight’s current claim.

In deciding the first point, the Judge made reference to the strong evidence provided by Knight that its financial stability was sound, stating that:

“I find it quite impossible to come to a conclusion that the claimant would be unable, or probably unable, to repay the £330,000 now or on the relevant date in the future. [Knight] has a strong current financial position in terms of assets, in terms of work-in-progress and also in the way n which the claimant runs its business … ”

In deciding issue 2, after considering the witness evidence, the Judge concluded that in all probability Knight’s director had made those, or similar, threats to Urvasco. However, he found that these were most likely said for effect rather than with any substance. This was due to the size of Knight, the fact the director in question only had a 50% share holding, and that in the unlikely event that liquidation took place, it would be probable that there would be sufficient assets to pay back any relevant sums. Further, Knight had provided a performance bond in favour of Urvasco which would cover the amount of this award.

The Judge also decided against Urvasco on issue 3. With reference to Mr Justice Jackson’s decision in Interserve v Cleveland Bridge, the Judge held there were no grounds for allowing a set-off of any sum that might become due in the further adjudication. In order to allow a set-off, there would have to be an undisputable debt owing to Urvasco whereas the Judge decided that the further adjudication was for a properly disputable sum. Therefore there were no grounds for allowing a set-off of any sums which may become due in the third adjudication against sums awarded by way of summary judgement in respect of the 1st adjudication.

The judge accordingly refused to award Urvasco a stay.

(Many thanks to Peter Aeberli for passing a copy of this judgment to the Adjudication Society)