There is no point having a commercial adjudication award in your favour if the assets are not there to enable its enforcement. A High Court case, however, provided a good illustration of how, with the right legal advice, such difficulties can effectively be overcome.
A care homes developer was engaged in a dispute with a building contractor against whom it had obtained an adjudication award in excess of £2.5 million, plus interest. As a precursor to enforcement proceedings, the developer obtained an interim asset freezing injunction against the contractor which forbade it from dissipating its assets in England and Wales up to a value of just over £2.9 million.
In subsequently extending the injunction up to the end of the enforcement proceedings or further order, the Court noted that, as part of a restructuring exercise, the contractor had transferred assets with a total value of almost £6 million to related third-party entities. Although those transfers took place over a year prior to the adjudication award, it must have been clear to the contractor at the time that it was facing a very substantial financial claim from the developer.
It was not necessary for the developer to prove that the contractor intended to deal with its assets in a manner designed to ensure that any judgment against it in the enforcement proceedings would not be met. The developer had done enough to justify extending the injunction by establishing that there was a real risk that any such judgment might not be satisfied due to an unjustified dissipation of the contractor’s assets.