Disclosure of financial position in enforcement
The recent case of Complete Ceiling and Partitioning Systems Ltd v DE1 Ltd [2024] EWHC 2800 (TCC), concerns a parties obligation to disclose its financial position in adjudication enforcement.
The background is that CCP had succeeded in an adjudication against DE1 for £94k due to DE1 failing to issue a pay less notice.
DE1 failed to pay, so CCP took the matter to enforcement.
At enforcement, DE1 did not dispute the enforceability of the adjudicator’s award, but raised concerns regarding CCP’s financial position and its ability to repay the sum if required as a resutl of a later adjudication.
DE1 requested evidence of CCP’s current financial standing. In response to which CCP said it was solvent but failed to provide any substantive evidence of this.
It is important to note that the publically available information on CCP (via Companies House), showed that it appeared that CCP was insolvent.
CCP subsequently provided satisfactory proof of its financial position and DE1 dropped its application for a stay to enforcement.
However, CCP was criticisd by the Judge, who stated that it was appropriate for DE1 to ask for financial information to avoid wasted costs and court time and accordingly awarded costs against CCP.
So, I guess that the take-away is that if public records show you are not in a sound financial position, it is reasonable for an opposing party to request your financial details. And you shoudl provide these to avoid any punative costs orders from the Court.
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