Was there a compelling reason to refuse summary judgment? Cannon relied on Bouygues where it was said that Dahl- Jensen’s insolvency “was a compelling reason to refuse summary judgment.” They argued there was no distinction between insolvent liquidation and a CVA. They also relied on Westshield . HHJ Waksman had distinguished Westshield on the facts and concluded that summary judgment in favour of Primus would not have interfered with the CVA process as had been the case there. Further, if the existence of a counterclaim was relevant, the adjudicator had considered both the claim and the counterclaim in the adjudication. The Court of Appeal agreed. The Court of Appeal then went on to say this: “In addition, it seems to me that the general proposition relating to a CVA may, depending on the facts, be very different to a situation where the claimant company is in insolvent liquidation. In the latter case, claims being make by the company are part of what might be called a damage limitation exercise, whereby the liquidators endeavour as best they can to pay dividends to creditors. A CVA is, or can be, conceptually different. It is designed to try and allow the company to trade its way out of trouble. The quick and cost-neutral mechanism of adjudication may be an extremely useful tool to permit the CVA to work on. One view is that that is what adjudication is there for: to provide a quick and cheap method of improving cash-flow.” Stay of execution The Court held that on the facts the stay was almost inevitable. Having resolved the issue of the CVA at summary judgment it could not arise again on a stay, or if it could the same answer was appropriate. The stay would have run the risk of preventing the successful conclusion of the CVA. The Court would exercise its discretion against a stay where the party seeking it was responsible wholly or in substantial part, for the claimant’s financial difficulties. Outcome The parties had reached a settlement and by consent the monies paid into Court were paid out to Primus’ solicitors.
Comment It is now clear that in the ordinary case of a company in insolvent liquidation (and even where there is across claim) the adjudicator will have jurisdiction to determine the dispute. But that is only the starting point. If the adjudication would be ‘futile’ an injunction can be granted to restrain the adjudication, and this will be usual outcome where an adjudication is by a claimant in insolvent liquidation and a cross claim exists. Examples of the “exceptional circumstances” where the adjudication would be allowed to continue were not given and are difficult to envisage. We suggest it will not be for the adjudicator to decline to hear the dispute for the reason that it might not lead to “a meaningful result” rather the responding party would be obliged to seek an injunction to restrain the adjudication. As we have seen above this is the occasion when the Court can consider if the adjudication is likely to serve a useful purpose such that it would be just and convenient to allow it to proceed. Thus the saving in Court time and cost envisaged by the Court of Appeal may be offset to some degree on contested injunction applications. In the case of a CVA (or presumably IVA), it will depend on the facts and whether summary judgment is likely to support the IVA process or interfere with it. The comments on waiver emphasis the limited utility of general reservations; they are not redundant in the case of events arising after the making of the reservation but will not cover specific jurisdictional objection one they arise and are known or ought to have been known. And once specific reservations are made earlier general reservation may be taken to have been waived unless renewed. Second, if it needs repeating, reservation must be clear and relevant to be effective.
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