First Known Case To Order Enforcement Of An Adjudicator's Decision In Favour Of A Company In Administration

Following the case of John Doyle v Erith Contractors  decision, which refused to grant a stay of execution of an Adjudicator's award due to John Doyle's administration, we now have what is possibly the first judgment post the Supreme Court's judgment in Bresco where an Adjudicator's award was enforced in favour of a company in administration - Styles & Wood (in administration) v GE CIF Trustees.

This case was distinct from John Doyle, in that the administrators of Styles & Wood had not sold or assigned the claim to a third-party litigation funder and that the administrators had offered to ring-fence the sums awarded by the Adjudicator (approx. £700,000).

The main battleground was whether the £200,000 contribution to an adverse costs order under an ATE policy was sufficient in the event the defendant was successful in overturning the adjudicator's decision in arbitration proceedings.

The Defendant's claimed that their costs of the arbitration would be somewhere between £800,000 and £1 million and on that basis the protection afforded by the ATE policy was insufficient.

In giving judgment, HHJ Parfitt analysed the facts of the particular case noting:

• GECIF had already spent c£280,000 on the Adjudication and whilst the evidential arbitral process would go further, a lot of the work product already incurred and paid for could be built upon by GECIF in the arbitration. That work product was substantial (it included expert delay and quantum evidence) and could be utilised and built upon for the purposes of any arbitration.
• The £800,000 to £1 million costs estimate was "broad brush"; there was no analysis of the build up to these figures; and it was unpersuasive in the context of what is now expected of costs' breakdowns.

HHJ Parfitt concluded that the £800,000 to £1 million cost estimate was not realistic and that the £200,000 offered under the ATE policy was a figure "within the ballpark" of what might be appropriate. HHJ Parfitt also noted that it was open to GECIF to return to court to seek apply to the court for an incremental increase to the security of costs required should it transpire that greater security was required.

Based on this judgment it is clear that following the Supreme Court's decision in Bresco, Courts are willing to order the enforcement of Adjudicator's decisions in favour of insolvent companies, but this is subject to the right pre-conditions being met.

It is also clear that a party seeking to challenge enforcement in favour of a company in administration on the grounds that the level of costs protection being offered is insufficient, will need to demonstrate its anticipated costs and be able to explain clearly and accurately the basis on which those costs have been calculated.  It will not be enough simply to argue that your expected costs will be higher.

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