(F)utility:
Jurisdiction
Would allowing the adjudication to proceed be ‘an exercise in futility’ as the Court of Appeal decided? Coulson LJ had said that “... a decision of an adjudicator in favour of a company in liquidation, like Bresco, would not ordinarily be enforced by the court. ... in my view, judgment in favour of a company in insolvent liquidation (and no stay), in circumstances where there is a cross-claim, will only be granted in an exceptional case. …” The Court of Appeal had noted that participation in adjudication would involve the waste of limited financial resources by the liquidator. Secondly, it would expose the respondent to the reference to wasting costs in a futile process, where there would be no basis of recovering them even if successful. Thirdly, the respondent would, if the liquidator obtained summary judgment for an excessive amount, have to spend further costs on court proceedings to rectify the position, with doubtful recovery from the company even if successful. Finally, the pursuit by liquidators of adjudication followed by enforcement would put undue pressure on the TCC, to the detriment of solvent court users.
I n summary, the Supreme Court agreed with the Court of Appeal that the adjudicator had jurisdiction. They held that the right to adjudicate at any time was not in conflict with the set-off requirements of the Insolvency Rules. Even when the set off rule applied, Bresco’s claim and Lonsdale’s cross claims continued each to have separate existence such that a dispute over any of them was a dispute that could be referred to adjudication on its own at any time. As a respondent in adjudication could rely on any defence available to it, this included a defence by way of set of cross claims, which the adjudicator as an expert was well placed to decide. Nor, in the opinion of the Court, did that mean there was more than one dispute. Provided the cross claims arose under the contract and were relied on by way of defence, they formed part of the single dispute to be decided. A further justification for allowing the claim to proceed was that whilst adjudication was introduced to solve the cash flow problems that beset the construction industry, preserving cash flow was not the sole objective. Adjudication was designed to be, and more importantly has proved to be, a mainstream dispute resolution mechanism in its own right, producing (anecdotally) de facto final resolution of most of the disputes which are referred to an adjudicator. It had long been emphasised that section 108 of the Act, “at any time”, meant exactly what it said.
Made with FlippingBook flipbook maker