Construction contract — Award of interim payments to claimant contractor — Charging order to enforce award — Application for order for sale — Whether required to make application in Chancery Division — Whether existence of ongoing arbitration justifying refusal of order for sale — Claim allowed
The defendant purchased three properties that were affected by asbestos contamination. She proposed to refurbish these properties with the assistance of grants from the local city council. The defendant entered into a contract with the claimant to carry out the works. The grant moneys promised by the council covered the majority of the contract price, although the contract did not refer to the arrangement with the council. The claimant made claims for interim payments. The council paid only a part of these; the rest remained outstanding. The defendant was unable to make any substantial payments herself.
As a result of the non-payment, the claimant suspended work and referred its claim for the interim payments to adjudication pursuant to the Housing Grants, Construction and Regeneration Act 1996. The adjudicator awarded most of the sums claimed, and the claimant made an unopposed application to the Technology and Construction Court to enforce the adjudicator’s decision. When the defendant failed to pay the judgment sum, the claimant obtained an interim charging order over the three properties. A final charging order was then awarded in the same court at a hearing that the defendant did not attend, although her solicitor had written to the court setting out her position. The defendant was refused permission to appeal the order.
The claimant then sought an order for sale under CPR 73.10 to enforce the charging order. The defendant argued that: (i) under para 4.2 of the relevant practice direction, a claim for an order for sale had to be started in the Chancery Division, which alone had jurisdiction to make the order; and (ii) the court ought to exercise its discretion to refuse an order for sale in circumstances where arbitration was ongoing between the parties.
Held: The claim was allowed.
(1) There appeared to be a conflict between the practice direction and CPR 73.10, since the latter made it clear that the court that had made the charging order had jurisdiction to make an order for sale. To the extent that such a conflict arose, CPR 73.10 applied, since the practice directions were merely aids to the interpretation of the rules themselves and had to yield in cases of a conflict: Godwin v Swindon Borough Council [2001] EWCA Civ 1478; [2001] 4 All ER 641 and R (on the application of Mount Cook Land Ltd) v Westminster City Council [2003] EWCA Civ 1346; [2004] 1 PLR 29 applied.
(2) The existence of an ongoing arbitration had been an insufficient ground upon which to oppose the application for a final charging order, and the same applied to the present application for an order for sale. A party who was ordered to make a payment, pursuant to an adjudicator’s decision, could not avoid making that payment by setting off other claims that it had or might have. It could not set off, against an adjudication decision that it had lost, its actual or anticipated recovery in another: Interserve Industrial Services Ltd v Cleveland Bridge UK Ltd [2006] EWHC 741 (TCC) and Hillview Industrial Developments UK Ltd v Botes Building Ltd [2006] EWHC 1365 (TCC) applied. The terms of the order for sale would not, in the circumstances of the case, cause any irredeemable injustice to the defendant in respect of the preservation of evidence for the arbitration. No stay of the order for sale should be given in the instant case; such a stay would frustrate the whole point of the adjudication and enforcement process.
Elizabeth Repper (instructed by Cobbetts) appeared for the claimant; Colin Teasdale appeared for the defendant as her litigation friend.
Sally Dobson, barrister
