In WRB (NI) Ltd v Henry Construction Projects Ltd [2023] EWHC 278, the TCC refused to grant a main contractor a stay of execution to establish its alleged cross-claims against a dormant company.

The Background to the Case

Henry Construction placed a sub-contract with WRB, a dormant company, to undertake the design, supply and installation of mechanical and electrical public health systems at a development in London.

Following a payment dispute between the parties, WRB commenced adjudication proceedings in relation to the value of its interim application for payment number 15. Henry Construction contested the adjudication, claiming WRB had been overpaid.

Within the adjudication it was determined that the identity of the sub-contractor was WRB (for reasons which are unclear, it was in fact Henry Construction that had resisted a suggestion that the true sub-contractor was another entity, WRB Energy Limited). The Adjudicator awarded WRB a net payment of c.£120k plus interest, and directed Henry Construction to pay his fees and expenses.

When Henry Construction failed to comply with the adjudicator’s decision, WRB applied to the TCC for summary judgment. Henry Construction did not resist judgment but applied for a stay of execution to establish its alleged cross-claims.  In light of WRB’s parlous financial position, Henry Construction argued that any money paid to WRB now would not be available to repay later, were the cross-claims to succeed.

What did the Court Decide?

Applying the principles summarised in the well-known case of Wimbledon Construction Company 2000 Ltd v Vago, the Court did not consider that there were special circumstances rendering it inexpedient to enforce the judgment in WRB’s favour.

Henry Construction had been aware that WRB was dormant, and the risk it now complained of was an ‘inevitable consequence’ of entering into a contract with that dormant company.

The Court also noted that within the adjudication, it had been Henry which had, for its own reasons, resisted WRB’s contention that the true sub-contractor was another entity. Having made its bed, Henry Construction was thus obliged to lie in it.

The Conclusion to the Case

The case serves as a useful reminder of the approach the Court is likely to take when considering any application for a stay of execution, including the financial position existing at the time the contract was entered into.

As such, it demonstrates the importance of checking the identity and status of the proposed parties to an intended contract, and the risks inherent in contracting with a dormant company.

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David Spires

Partner

E-mail: DSpires@hklegal.co.uk