Defects Claim fails to prevent Order for Sale being made

Date Added 19.11.13

The Court has discretion when considering any application for an Order for Sale of property belonging to a Judgment Creditor.  The Court will have regard among other matters to the following:-

a) Details of other creditors with a prior charge over the property.

b) The value of the property.

c) Details of individuals, who are residing in the property and have an interest in it.

d) The interests of any other creditors.

In more recent cases regard is also being had to Article 8 of the Human Rights Act which provides a right to respectful private and family life.

We were instructed on a matter to seek an Order for Sale in respect of a residential property following the granting of a Final Charging Order.  The Charging Order was based on a Judgment enforcing an adjudication award.  The adjudication award stemmed from non payment for building works.

The application for the Order for Sale was opposed mainly on two grounds;  firstly that there was a genuine defects claim which extinguished the sums secured by the charge  and secondly that there was insufficient equity in the property as a result of the sums secured to creditors with prior charges over the property.

There is clear authority since 2006 that where a Judgment is based on an adjudicator’s award and an application has been made then the Order for Sale should be granted.

In this case the opposing party had failed to bring any separate proceedings in respect of the defects claim.  Even if proceedings had been brought they would not have prevented the Order for Sale being granted.  The outcome of the case affirms the established principle that adjudication awards are binding and designed to ensure prompt payment of sums owed.

The adjudication process has effectively resulted in the creation of a “pay now argue later” system.  To allow alleged defect claims to prevent an Order for Sale would undermine the whole adjudication process.  Defect claims will not in themselves prevent an Order for Sale being made.

Should you require any assistance with regards to applications for an Order for Sale pursuant to a Final Charging Order please contact Tristan Benson – tristan.benson@tollers.co.uk

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