It is very rare for the Courts not to enforce a smash and grab Adjudication Award but that is exactly what happened in the recent case between JRT Developments and TW Dixon (Developments) which was heard in the Birmingham Justice Centre by Her Honour Judge Sarah Wilson.
There were some unusual facts in this case that had a significant impact on the Court when it came to exercising its discretion to allow summary judgment enforcing the Adjudicator’s Award or not. JRT was a building company owned by a Mr. Woodcock and TWD was an SPV that was established to carry out a development of 14 houses in Shropshire.
The development site had been owned by a Mr and Mrs Dixon and they transferred their ownership to TWD. Mr and Mrs Dixon were elderly and did not seek separate advice other than from Mr. Woodcock.
Mrs. Dixon was the Auntie of Mr. Woodcock whose father was Mrs. Dixon’s brother.
JRT undertook works at the Site under a JCT Minor Works Contract which was in the sum of £1.911M. There was an argument as to whether or not the Contract was fixed price or cost plus.
JRT issued a Payment Application for a total of £3.006M giving a credit of £2.054M for sums paid. Its payment application was not met by a Payment or Payless Notice and in due course (after arguments within the family) it sought payment of the ‘default valuation’ by way of a smash and grab valuation which it won.
TWD did not pay and JRT then sought to enforce the Adjudicator’s Award in the High Court. The Court allowed judgement to be entered into but ordered a stay of execution pending the trial of the substantive issues as to the true value of the Works.
The Judge relied upon the manifestly unfair arguments that succeeded in the Galliford Try v Estura case in 2015 and did not enforce the Award for the following reasons: -
- On a true valuation basis there had been significant overpayments, either on a lump sum or cost-plus basis; and
- The default valuation included sums of money that JRT was not entitled to be paid; and
- The relationship between Mr. Woodcock and Mr and Mrs Dixon had not been at arm’s length. It was an informal agreement between family members; and
- There was clear evidence that JRT would be unable to repay the Award if the trial went against it; and
- JRT had been managing the Project; and
- TWD had not understood the need to serve Payment and Payless Notices as the Minor Works Contract required and JRT had not advised them of this; and
- Payment of the Award would force TWD into liquidation and prevent it from establishing its true value claim.
A common sense solution to a very common problem; that was ultimately decided upon some unusual facts.