Jacob Austin 00:00:00 Hi there all Jacob Austin here and welcome to episode 153 of the Subcontractors Blueprint, the show where subcontractors learn how to ensure profitability, improve cash flow and grow their business. Today's episode is continuing our disputes mini series and it's all about enforcement. What you do when you've won an adjudication and the other side still won't pay, how the court turns your decision into cash, and just how short the list of excuses is that can actually stop you. So let's dig in. So you did everything right. You've crystallized the dispute. You've built your case, you've then won the adjudication and the money still hasn't landed because a decision on paper is still not cash in the bank. Well, today we're covering how you turn one into the other and why the law makes it very, very hard for that process to be stopped. So here's where we are. Just to recap in the series, you know your options. You know, the gates that you've got to pass through just to raise the dispute in the first place.
Jacob Austin 00:01:25 You know how to run the adjudication machine, how to win the payment fight and how to defend when it's aimed at you. And let's say you've won. The adjudicator has decided in your favour. There's now a number with your name on it, but nothing happens. Because here's a hard fact about winning. A decision is only worth what you can actually collect it on a brilliant adjudication in a landslide victory with a decision notice that sits in a drawer whilst they ignore it is worth exactly nothing. The win isn't the decision. The win is when the cash lands in your bank account. And in between those two things sits enforcement. Now the good news, and it's genuinely good, is that the whole system is built to get you paid. This is where all of that jargon about pay now and argue later stops being just a phrase and starts being the weapon that works for you, that gets you the money. So let me show you how it works and why the other side has got so little that they can now do about it.
Jacob Austin 00:02:34 Start with the idea that makes all of this tick. Temporary finality. An adjudicators decision binds you now immediately, even though it isn't the last word forever. Either side can still go off to arbitration or to court afterwards and still get the thing decided properly once and for all. But in the meantime, that decision stands. And that means it needs to get paid for. And if it is argued, it's argued later. After cash has moved and changed hands. That's the temporary finality that we're talking about. This got nailed down right at the very beginning, in the very first ever enforcement case back in 1999, a case called Macob. This one is one of us. Macob. We're a groundworks subcontractor. They did the work. The main contractor didn't pay. They went to adjudication and they won. And the main contractor then refused to pay and tried every clever argument going about why the decision shouldn't be enforced. And the judge, Mr. Justice Dyson, basically said, no Parliament built this thing to get construction firms paid and quickly, even if it's on a provisional basis with the decision and forced.
Jacob Austin 00:03:55 While any further arguments have to play out later, the decision is exactly that. It's a decision and you pay in line with it, and the way you enforce it is you go to court and ask for a summary judgment. So that's the route should you need to know it. You don't start from scratch and argue everything. You take your decision to the Technology and Construction Court to the TCC, and you apply for summary judgment. Summary judgment just means that you're saying to the judge, hey, there's no real defence to this. The adjudicators already decided on it, so please give me a formal judgment now without dragging it through a full trial. And because it's an adjudicators decision already, the court moves fast on it. They shorten the timetable deliberately. And we're talking weeks, not the year or more, to find a date that a normal court case can take. Now, the other side does get to turn up and argue against enforcement. And this is the bit that I really want you to hold on to, because this is where your confidence comes from.
Jacob Austin 00:05:01 The list of things they're actually allowed to argue is tiny. Remember from last week there are only two real defenses, no jurisdiction or a serious breach of natural justice. And that's it. That's the whole menu. And both sides of those are narrow. And the court comes at them with a heavy dose of skepticism. What they can't do is just turn up and say the adjudicator got it wrong. We went through that as well. Wrong is enforceable. They don't get to re argue the merits either. They can't say it's unfair that they've got to pay before the true value has been sorted out. They generally can't set off some other claim against the decision summer or dream up a fresh withholding to knock it down. Either the decision is a decision and the sum is due. This is where that reservation discipline from last week comes into play. If the losing party has reserved their jurisdiction point properly, specifically in writing and at the time, then they do get to run that here. If they didn't, they just took part and lost.
Jacob Austin 00:06:06 They waived it. They then turn up at the enforcement hearing with absolutely nothing in their hands, no hand to play. The battle to resist enforcement is very often won or lost weeks earlier in whether they reserved properly, which when you're the one doing the enforcing exactly what you want to hear. Most of the time they've got nothing. A couple of practical points whilst we're here. Costs. Unlike the adjudication itself, where you carry your own costs, win or lose, enforcement is court and in court. The court costs generally follow the event. So if they drag you to court to get what you are always owed. Then should they lose, which they usually do. They can end up paying your legal costs on top of their own, and that's a real deterrent to them fighting a hopeless resistance. And it's a real comfort to you. And then what? What if you get your judgment and they still don't pay? Then your decision has become a court judgment. And a judgment has serious teeth. You've got high Court enforcement officers who can go in, you've got charging orders over property.
Jacob Austin 00:07:18 And for a company who's actually got money and is just being difficult. The threat of a winding up petition tends to concentrate their minds very, very quickly. Once it's a judgment debt, you've got that full toolkit at your disposal. Now, I'd be doing you a disservice if I made this sound like some magic button that's going to drop the cash in your lap the same week. So two honest caveats. Firstly, in limited cases, the court can grant what they call a stay of execution, which means yes, you've won, but hold on before you collect. The main reason a court would do that is if there's a real risk that you, as the winner, couldn't pay back the money if a true value adjudication later went the opposite way. So in plain terms, if your own finances look shaky, the other side can try and use that against you at enforcement so your own financial health can actually matter here, and that's worth knowing. The second and the big one will give a whole episode to this at the end of the series, a judgment is only ever as good as the money behind it.
Jacob Austin 00:08:22 If the other side is a shell, or is it genuinely insolvent, you can win the adjudication. You can win enforcement and get your judgment and still collect nothing because there's nothing there to collect. Winning and getting paid are not the same thing, but we'll come to that properly soon. Now, enforcement can go wrong for subcontractors in a few different ways. The first of those is dithering. You win. Then you spend six weeks having some polite phone calls with the contractor, giving them one more chance and another whilst the decision goes cold and they get their affairs in order. If they haven't paid by the deadline in the decision, move on it. Hesitation is going to help them, not you. The second is treating the win as if it's the finish line, which it isn't. The win is halfway. Budget for the enforcement in time and for money. It needs to be part of your plan from the start. Not a nasty surprise later whilst you're struggling for cash flow. And the third which really belongs to them.
Jacob Austin 00:09:27 But you should understand it is that the losing party who threw away their reservation, who didn't reserve properly and now can't resist when you're the one who's enforcing that party, is your best friend. If you're the one who've lost. It's the difference between a real fight and a walkover. Which is exactly why we spent so long on it last week. Now let's go with a worked example. Let's go back to the example of the cladding. Surrey from a couple of weeks ago that they won their adjudication. The main contractor was ordered to pay the balance of 190 grand, and the deadline in the decision comes and goes and nothing is arrived. Just silence. And then eventually some vague email complaining about cash flow. In the old world, the subcontractor would chase this for a couple of months, getting fobbed off and eventually settling for just half of what they're owed to see something in the new World. The subcontractor moves within days of the missed deadline they issue in the TCC and apply for summary judgment. The main contractor turns up to resist that judgment.
Jacob Austin 00:10:34 And here's the thing they never reserved any jurisdiction points during the adjudication. They just fought the money and they lost. So now at enforcement, they've got nothing real to say, but they try it on anyway. The adjudicator was unfair, the decision is wrong and the judge has heard that a thousand times. Wrong is still enforceable and there's no serious natural justice breach in sight. So summary judgment is awarded to the subcontractor in weeks rather than months. And now that it's a judgment and the main contractor, who is perfectly solvent and just chancing it, suddenly finds that the subcontractors solicitor talking about enforcement officers and a winding up position and is rightly scared by it. The 190 grand lands the following week, because you've got a judgment against a company that can actually pay and the game is effectively over. So how do you protect yourself here? First, it's the discipline. Move fast. the moment the payment deadline in the decision is passed, you start enforcement. Don't drift into that endless chasing. Speed is pressure, and pressure is what's going to get you paid.
Jacob Austin 00:11:49 Budget for it. Plan enforcement in as part of the process from the very start. So it's never a shock to your cash flow or to your nerves. Hold your nerve as well on the resistance when they threaten to fight enforcement all the way. Just remember how little they've got that they're allowed to argue on. Most resistance is bluff, and it's designed to make you blink and settle cheap with the contractor. So don't blink. Know that your post judgment tools are their enforcement officers, charging orders and the pressure of a winding up petition. You don't need to be an expert in those, but you need to know that a judgment is not the end of the road if they still won't pay. But it's the start of a much stronger road. Now, before we move on to takeaways, let me just bolt one more thing in there. So the sharp end. I mentioned the recovery tools in passing earlier, the enforcement officers, the charging orders. But knowing they exist and knowing how to actually point them are two different things.
Jacob Austin 00:12:52 So this is recovery getting the money out. And some people will run out of road here. So let me walk you through it properly. The first thing, and this is the step that people can miss when they're acting in anger. So don't before you spend a single penny chasing. Find out if there's anything to chase. You can look there accounts, a file that companies house for anyone to see. You can see whether they own their own premises, whether they're still trading, whether the business has any real meat on the bones because there's no sense at all spending three grand chasing a company that turns out to be just an empty shell. Look before you invest serious money in that process. Now let's say there is money there. Here's your toolkit. Which tool suits which situation? The first and the fastest is High Court enforcement officers because your enforcement went through the High Court. You can send them straight in. These are agents who turn up at the debtor's premises and take control of goods to the value of what you're owed.
Jacob Austin 00:13:56 For a company with real assets on the ground. Vans. Plant. Stock. The kit. This is quick, it's effective. And the visit on its own very often shakes the money loose before it goes any further. The second is a charging order. This is used if the company owns property. You can secure your debt against it. That turns you from just another unpaid creditor into a secured one with your name sitting against their building. And if it comes to it, you can have that property sold or push for it to pay you off. It's slower than the enforcement officers. But against a firm that owns its own premises, it does carry real weight. The third is a third party debt order. So if you know that somebody else owes their money, maybe their bank is an obvious one. The court can order that. That third party pay that to you directly instead of paying the contractor. You're reaching straight past the debtor and grabbing the money from the source. Then there's the pressure play, the one I mentioned earlier.
Jacob Austin 00:14:59 The winding up petition for a solvent company that is being simply difficult. The threat of being wound up over an unpaid judgment debt is about as serious as it gets in business. And most of them will find the money rather than face it. Use that as leverage, not as spite, and never on anything that's genuinely still in dispute. But once it's a clean judgment debt with no argument left about whether it's owed, it's a very sharp tool and you can use it. But speaking honestly, every one of these only works if there's something behind that company, be it assets, property, money coming in. If the company cupboards are genuinely bare, then they've got nothing they're going under, and even the best tools in the world are going to get you nothing. And the moment a debtor starts sliding towards insolvency is the biggest threat and single risk to everything that we've built across this series. So key points to takeaway from today a decision is only worth what you collect. The win is getting the money in your account, not a piece of paper.
Jacob Austin 00:16:07 And enforcement is the bridge between the two. Temporary finality. The decision binds and gets paid now, even though it can be decided later in a court or arbitration. Macob settled this back in 1999. Your enforcement route is by summary judgment in the TCC. The court shortens the timetable so that it's weeks and not years, but a normal court case might take. The grounds to resist are genuinely small, no jurisdiction or a serious breach of natural justice. The adjudicator got it wrong isn't one of them, and they generally can't set off or withhold against the decision either. The discipline about reserving a position decides enforcement. If they've got a jurisdiction point, and they didn't reserve them rights on it early doors, then they've waived it and they are arriving to defend an enforcement case with nothing in the hand. Costs follow the event at enforcement, and a hopeless resistance by the contractor can leave them paying for your legal costs on top of their own. And finally, that judgment has real teeth. The enforcement officers charging orders, winding up petitions.
Jacob Austin 00:17:25 These all become valid tools that you can use to get your hands on your money. But the word of warning they're only ever as good as the money behind it. So check that there's something there before you start to collect. So that's adjudication. From the very first notice all the way through to the cash in the bank. We followed the whole road end to end. But there's a thread that runs beneath every single episode of this series. And next week I'm finally going to stop and pull on that thread properly. And that is what it takes to win, because you win on your records and your evidence, not just on being right. I said it again and again, and next week I'm going to show you exactly what that means in practice the background work, capturing the moments that matter as they happen and, crucially, how to present them and hand them to an adjudicator in a case that they can follow even with their eyes shut. That's the episode that makes everything else we've spoken about work, so don't miss it.
Jacob Austin 00:18:25 I hope that helps. My mission with this podcast is to help the million small contractors working out there in our industry. If you've taken some value away from today's episode, then I really need your help to share the show and pass that value on to somebody else who would benefit from hearing it, so that I can help as many people as possible. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at www.SubcontractorsBlueprint.UK and we're also on all your favourite socials at @SubcontractorsBlueprint. And remember, miss the contract detail and the commercial risk falls on you. Thanks all. I've been Jacob Austin and you've been awesome.
