Kerry Underwood

COMPANY IN LIQUIDATION CANNOT COMMENCE ADJUDICATION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

The Court of Appeal heard two appeals together concerning the interplay between construction adjudication and the insolvency regimes.

In

Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd [2018] EWHC 2043 (TCC)

the High Court had granted an injunction preventing an adjudication from proceeding because the referring party was in liquidation.

In

Primus Build Ltd v Cannon Corporate Ltd [2018] EWHC 2143 (TCC)

the High Court had enforced an adjudicator’s decision and, despite the referring party’s Company Voluntary Arrangement, declined to grant a stay of execution.

Both first instance decisions were upheld.

The Court of Appeal noted that the “unspoken suggestion” in the appeal was that, since the judgments gave rise to markedly different outcomes, one of them must be wrong.

This was not the case. Just because a company was in a Company Voluntary Arrangement did not mean that summary judgment should be refused or a stay of execution should be granted.

Each case would turn on its own facts.

Conversely, if a company was in insolvent liquidation, to allow an adjudication to continue would be “an exercise in futility”.

While an adjudicator had theoretical jurisdiction to deal with the adjudication, it was of no practical use if the court would inevitably grant an injunction to prevent the adjudication from continuing.

This indicated a general incompatibility between the adjudication and insolvency regimes.

Given the facts in Primus v Cannon, the judgment also deals with the applicable principles on waiver and the nature of general and specific reservations to challenge the adjudicator’s jurisdiction.

Unsurprisingly, the judge concluded that while a general reservation may be undesirable, it may be effective, but not if, as here, it was “so vague… as to be ineffective”.

A party cannot word it in such a way “simply to try and ensure that all options (including ones not yet even thought of), could be kept open”.

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Written by kerryunderwood

February 19, 2019 at 6:59 am

Posted in Uncategorized

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