1) Insolvency set-off enforcement and stay: John Doyle Construction Limited (in Liquidation) v Erith Contractors Limited [2020] EWHC 2451 (TCC) judgment 14 September 2020 Fraser J
Background and chronology
The parties had entered into a construction contract based on a bespoke form of NEC3 contract under which the claimant John Doyle Construction (JDC) was engaged as a subcontractor to Erith Construction Limited (Erith) for landscaping works at the London Olympic Park for the games in 2012. JDC entered administration on 21 June 2012; and then entered creditors voluntary liquidation on 13 June 2013. JDC commenced the adjudication, leading to the decision the subject matter of these proceedings, on 22 January 2018. The claimwas for approximately £4 million, and the adjudicator awarded JDC the sum of £1.2 million approximately, including VAT and interest. In 2020 JDC commenced proceedings in court under part 7 CPR for summary judgment to enforce the decision in its favour. Erith opposed the application and if necessary sought a stay of execution of any judgment granted. The hearing of the contested summary judgment application by JDC was postponed from 17 June 2020 until 2 July 2020 so that the parties and the court could take account of the Supreme Court's decision in Bresco . In that case, Lord Briggs stated that companies in liquidation had the right to adjudicate disputes, and also that the problems caused by liquidation identified by the Court of Appeal both in an earlier case[7], and in the court of appeal in Bresco [8] itself, could all be considered at the enforcement stage. Thus it was that the court found itself faced with distilling or applying the principles that govern a party in liquidation applying to enforce an adjudicator’s decision in its favour.
Comment
This is the first attempt at enforcement of an adjudicator’s decision by an insolvent company since the Supreme Court handed down its judgment in Bresco [6]. In a carefully crafted and lengthy judgment, Fraser J had the task of discerning the rationale of the Supreme Court judgment, distilling the principles and applying them to the convoluted facts of the case. A large part of his judgment was necessarily devoted to the question of the adequacy of the security offered by the claimant for the claim and future costs, which question proved to be determinative of the outcome. The interest to liquidators and practitioners lies in the way the court interpreted and applied Lord Briggs’ judgment, and reconciled it with other relevant cases, in deciding whether or not to grant summary judgment and if so, whether to order a stay of execution.
[6] Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (in liquidation) [2020] UKSC 25 [7] Bouygues (UK) Ltd v Dahl Jensen (UK) Ltd [2000] EWCA Civ 507 [8] [2019] EWCA Civ 27
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