Modern Building Construction In LiverpoolThe court has stopped the payment of an adjudication award after allegations of corruption.  The judge thought the firm might dispose of the cash, so it could not be repaid if necessary when the dispute was finally settled.

Sub-contractor Gosvenor London was hired by Aygun Aluminium to undertake cladding work on a hotel development in Southampton.  There was a dispute over payment and Gosvenor took Aygun to adjudication, winning an award of over £550k.

The money went unpaid, so Gosvenor launched enforcement proceedings in the Technology and Construction Court.  Aygun defended itself by alleging that Gosvenor had issued fraudulent invoices.  It claimed that it had received bills for up to five times the value of the work completed.

At the same time there were claims of threats and intimidation by Gosvenor’s staff against Aygun, allegedly culminating in a director of Gosvenor threatening to “immediately wind up the company” so that Aygun “would never get a penny out of him”.

In court, the judge rejected Aygun’s fraud defence because it had not been raised in the earlier adjudication, granting summary judgement to Gosvenor.  However, he ordered a stay of execution of the award because there was a risk that Gosvenor would dissipate the money, so that it was not available for later repayment if the dispute was settled differently in court.  He said Gosvenor’s explanations for its affairs ‘stretched credulity’.

This created a new ground for parties to resist payment of an adjudicator’s award, if there was a risk that the claimant would organise its financial affairs to dispose of the cash so that it would not be available to be repaid.

There’s always a risk that a dishonest business could try to dispose of an adjudication payment,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “This gives construction firms another means to hang on to their cash if they think they are dealing with a corrupt business.”

Reports on the case have been published by CMS Law-Now, Fenwick Elliott, RPC and Thomson Reuters Practical Law Construction Blog,

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