ADJUDICATION, ADMINISTRATIVE RECEIVERSHIP AND STAY OF EXECUTION

Rainford House Ltd v Cadogan Ltd [2001] BLR 416

In Rainford House Ltd v Cadogan Ltd [2001] BLR 416 Judge Richard Seymour QC held that the claimants, who were in administrative receivership and whose solvency was a matter of considerable doubt, were entitled to summary judgment of an adjudicator’s decision in their favour but, crucially, he granted a stay of execution pending trial of the defendant’s counterclaim provided that the defendant paid into court, within a short period of time, the amount of money the adjudicator had ordered it to pay. The decision whether or not to grant a stay is one which, ultimately, depends on the facts of the case but, in order to persuade a judge to grant a stay, the defendant must, at a minimum, provide credible material which, unless contradicted, demonstrates that the claimant is insolvent. The aim of the judgment of Judge Seymour is clearly to strike a balance between the need to uphold and give effect to the purpose behind the Housing Grants, Construction and Regeneration Act 1996 (namely to introduce a swift mechanism for the resolution of disputes on a provisional basis) and the desire not to sanction the transfer, as between the parties to construction contracts, of the risk of insolvency of one of the parties. The balance struck appears to be a careful one but it is likely to be tested in future litigation.