Harlow & Milner Ltd v Teasdale No3 [2006] EWHC 1708 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

This case illustrates the clear but sometimes harsh consequences of the system of construction adjudication in the context of a private property owner defaulting on interim payments due to a contractor.  Following non-compliance by the property owner with various court orders enforcing the original adjudication order to pay the monies owed to the contractor, the court ordered the sale of the investment properties concerned to satisfy the judgment sum.

Judge Peter Coulson QC – Queen’s Bench Division, Technology and Construction Court

The Defendant had bought three properties as an investment.  The properties were affected by asbestos contamination.  The Defendant intended to refurbish them with the help of a grant from Leeds City Council.  The Claimant was appointed to carry out the refurbishment works.  The amount paid by the Council fell far below the claims for interim payments made by the Claimant and the Defendant was unable to keep up with the payments.  The Claimant suspended work and commenced an adjudication for the monies owed.

The Claimant was successful in the adjudication, but the Defendant was unable to pay the monies ordered, so the Claimant applied (successfully) to the court first for an interim charging order, then a final charging order.  The Defendant appealed against the final charging order unsuccessfully.  As a result of the Defendant’s on-going refusal or inability to meet the judgment sum, the Claimant applied for an order for sale of the properties.

Judge Coulson QC noted that:

1. The fact that there was an ongoing arbitration between the parties did not constitute a valid ground for avoiding payments ordered by an adjudicator;

2. This was not an application for an order for the sale of a matrimonial home, but of three investment properties;

3. The Defendant was in contumelious default because she had refused to pay the judgment sum for reasons that did not, in law, justify such non-payment;

4. The financial reality was that the judgment debt would not be repaid without a sale.

For these reasons, the Court held that it should exercise its discretion to order the sale of the properties. 

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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