Gosvenor London Ltd v Aygun Aluminium UK LTD  EWCA Civ 2695
The appellant company appealed against a stay of execution of a judgment based on an adjudicator's decision.
The appellant had carried out cladding works on a large building project for the respondent. Delays occurred and a dispute arose over the sums due to the appellant. The respondent asserted that the appellant's invoices were exaggerated. An adjudicator found that the respondent should pay over £553,000 to the appellant. The appellant sought to enforce its award, but the respondent raised allegations of fraud and asserted that the appellant had stolen work records, intimidated the respondent's staff and would do all it could to avoid having to repay the adjudication sum. It also relied on discrepancies in the appellant's company accounts as showing a real risk of dissipation. The judge concluded that the fraud allegations could have been made during the adjudication, and he therefore awarded the appellant summary judgment.
He did, though, stay execution of the judgment because he found that there was a disparity in the value of the work done and the appellant's invoices, the appellant was not financially viable, and there was a likelihood of dissipation if the sum was paid to the appellant. He concluded that if there was a real risk that any judgment would be unsatisfied because the appellant would organise its financial affairs in order to dissipate the adjudication sum, that would justify the grant of a stay.
The Appeal was dismissed due to the following:
Correct principles when determining an application to stay a judgment based on an adjudicator's decision:
If the court concluded that there was a real risk of dissipation, it could grant the stay regardless of what happened in the adjudication. The court had to consider all the relevant evidence, regardless of whether it was or could have been raised in the adjudication. However, if part of the evidence relevant to dissipation had been rejected by the adjudicator, the adjudicator's rejection might be a material consideration in the exercise of the court's discretion, but it would not necessarily be decisive. The same had to apply to evidence not even raised in the adjudication, even if it could have been.
There was a difference between, first, an issue that could have been decided in the adjudication and was raised for the first time in enforcement and, second, an application for a stay of execution on the ground that there was a real risk of dissipation, with the latter requiring a more nuanced approach.
Accordingly, the judge had been correct to say that if the evidence demonstrated a real risk that any judgment would go unsatisfied by reason of dissipation, that would justify the grant of a stay.
Had the judge applied the principles correctly?
The judge was right to draw an analogy between a stay on the basis of dissipation and the grant of a freezing order. He had concluded that the respondent had raised material from which a real risk of dissipation could be inferred. The principal reason for the judge's conclusion was the evidence about the appellant's accounts, the belated changes to them, and the untrue explanation given for the radically altered figures. His exercise of discretion could not be said to have been unreasonable or unenforceable.
This case emphasises that it is for the judge in each case to assess the extent to which there is material overlap between the evidence that could have been deployed in the adjudication, and the evidence deployed in support of the stay, and to determine the consequences of that overlap. Moreover, the judgment confirms that judges are entitled to grant a stay of proceedings where there is a real risk that assets will be dissipated before the substantive elements of the dispute are to be determined. That being said, the evidence required to stay enforcement of adjudication under principle (g) is a high hurdle to pass, being equivalent to that of granting a freezing injunction and one which requires solid evidence of a real risk of dissipation.
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