Steven Walker QC was successful in the Court of Appeal on behalf of the defendant Bester Generacion, in an appeal by PBS Energo against the decision of Pepperall, J (“the judge”) in PBS Energo A.S. v Bester Generacion UK Ltd [2019] EWHC 996 (TCC) [2019] BLR 350 which rejected the appellant’s claim for summary judgment made to enforce the decision of an adjudicator in 2018.
The case arose from a disputed termination of a FIDIC contract and the judge had refused to enforce an earlier adjudicator’s decision on grounds that there was an arguable case that the decision had been procured by fraud.
The appellant sought permission to appeal on four grounds.
- Ground 1: The judge erred in concluding that the allegations of fraud were relevant to the adjudicator’s decision
- Ground 2: The allegations of fraud could/should have been raised in the adjudication
- Ground 3: The judge should have found that, because the respondent had not filed a defence alleging fraud, the allegations of fraud were not open to the respondent
- Ground 4: The judge had failed to distinguish between granting summary judgment and enforcing judgment. He ought to have granted summary judgment, even if he had then stayed some or all of that judgment.
Permission to appeal was given in relation to grounds 3 and 4 only.
In rejecting ground 3, the Court of Appeal examined the procedural point raised by the appellant. The CPR provision provides that where there is an application for summary judgment (such as an application envisaged by the TCC Guide), no pleaded defence is necessary. Rule 24.4(2) states that “If a claimant applies for summary judgment before a defendant against whom the application is made has filed a defence, that defendant need not file a defence before the hearing”.
No authorities existed to the contrary nor did it appear that the pleading point had ever arisen previously in adjudication enforcement cases. Lord Justice Coulson therefore concluded that: “although a defendant seeking to resist the summary enforcement of an adjudicator’s decision by raising an allegation of fraud may be well-advised to plead a defence (as happened in Gosvenor1), the pleading and service of such a defence is not a condition precedent which has to be fulfilled before the defendant can rely on such an allegation.”
In dismissing the appeal Lord Justice Coulson also concluded: “Moreover, in a case where substantial allegations of fraud are found to be arguable, the right course will usually be the one taken by the judge, namely to refuse summary judgment. In such a case, no question of a stay of execution then arises. Further and in any event, the final determination of the issues by Cockerill J in favour of the respondent2 provides a separate, stand-alone reason why the adjudicator’s decision cannot now be enforced.”
The case concerned a biomass energy plant to be located near Wrexham. Equitix employed Bester to design, construct and install the plant as the EPC Contractor. Bester employed PBS as sub-contractor.
Steven Walker QC and Tom Owen – instructed by Watson, Farley and Williams LLP (Rebecca Williams, Partner and Co-Head of the London Dispute Resolution Group) – for the Respondent.
To read the full judgment please click here: PBS Energo AS v Bester Generacion UK Ltd [2020] EWCA Civ 404.
19 March 2020
1Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018] EWCA Civ 2695
2See PBS Energo AS v Bester Generacion UK Ltd & Anor [2020] EWHC 223 (TCC).
