The Mayor and Burgess of the London Borough of Camden v Makers UK Limited [2009] EWHC 605

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Courts have a discretion to impose conditions when setting aside a default judgment, but will rarely – if ever – exercise that discretion so as to prevent parties from pursuing their statutory right under the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”) to adjudicate “at any time”.

Technology and Construction Court, Mr Justice Akenhead


The London Borough of Camden (“Camden”) engaged Makers UK Ltd (“Makers”) to carry out refurbishment works to the value of £4.3m.  Disputes arose concerning variations and delays.  Camden alleged that Makers were in default of their contractual obligation to proceed regularly and diligently and purported to determine Makers’ employment under the contract.  Makers referred to adjudication the question whether this was a wrongful termination amounting to repudiation by Camden.  The Adjudicator decided that it was.  No monetary award was sought or made in those proceedings, save that Camden was required to pay the Adjudicator’s fees.  Camden sought unsuccessfully to avoid enforcement of this decision in July 2008. 

Camden believed the Adjudicator’s decision was incorrect.  It feared that Makers or its parent company would use the win to initiate a second adjudication seeking a substantial sum, which Makers – due to the deterioration of its financial position since the contract was made – would be unable to repay if it were ultimately found that Camden had rightfully terminated the contract. 

Accordingly, Camden issued proceedings in November 2008 seeking to establish that it had lawfully terminated Makers’ employment under the contract and claiming £1m as a result.  Makers did not file a Defence by the date required by the Rules of the Court and Camden subsequently requested and was granted judgment in default.  4 days later, Makers purported to serve its Defence and Counterclaim for £4m (most of which related to unpaid and uncertified work and not to the repudiation).  The parties discussed the possible setting aside of the default judgment with Camden seeking agreement that this should be on the condition that Makers not commence a second adjudication without the Court’s permission or until the Court had finally resolved the liability issue.  When these negotiations were unsuccessful, Makers brought an application to set aside the default judgment.

The Court examined Makers’ financial records and concluded that it had been profitable when the contract was made but was now insolvent (though not yet in liquidation).


Camden argued that the Court should only exercise its discretion to set aside the default judgment on the condition, inter alia, that Makers would not institute any further adjudications covering the issues in the Court proceedings. 


The Court noted that it had a discretion, but not an obligation, to order the setting aside of a regularly obtained default judgment (like the present) if the defendant had a real prospect of successfully defending the claim, or if there was any other good reason to do so.   Further, in the exercise of that discretion, it could attach any conditions it thought appropriate to such an order, bearing in mind the Court’s overriding objective to deal with cases justly (and not to punish the defaulting defendant). 

The Court set aside the judgment on the ground that Makers (as accepted by Camden) had a real prospect of successfully defending the claim.  However, on balance, it declined to impose on Makers the condition sought by Camden for the following reasons:

  • The failure to serve a Defence within the permitted time, without securing an extension of time was an oversight on the part of Makers or its solicitors.  But for that, the Court would have had no power to prevent Makers from pursuing an adjudication concurrently with Court proceedings; 
  • It will at best be an exceptional course for the Court on setting aside a judgment to prevent a party from pursuing a statutory right to adjudicate at any time.
  • This was not an exceptional case. Although the current evidence showed that Makers was insolvent and would be in no position to pay back any money paid out by Camden pursuant to any future adjudication, it was at least possible that other information and circumstances may be applicable at that later stage.
  • By introducing the statutory right to adjudicate at any time in the Construction Act, Parliament had altered the commercial balance as between employers and contractors.
  • The Court should generally not interfere in the commercial relationship between the parties, who should be permitted to pursue such courses as are open to them.

This summary was provided by CMS Cameron McKenna LLP.

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