Kerry Underwood

INSOLVENCY: MEADOWSIDE EXCEPTIONS TO BRESCO RULE APPLIED: ADJUDICATIONS TO PROCEED

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

In

Balfour Beatty Civil Engineering Ltd v Astec Projects Ltd (In Liquidation) [2020] EWHC 796 (TCC)

the High Court considered the Meadowside exceptions to the Bresco rule and held that they applied here and consequently the adjudications were allowed to proceed and Balfour Beatty‘s application for an injunction to restrain them failed.

In

Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2019] EWCA Civ 27

the Court of Appeal held that, if a company was in insolvent liquidation, it was “an exercise in futility” to allow an adjudication to continue.

The matter has been appealed to the Supreme Court and we are currently awaiting the decision of that court.

In

Meadowside Building Developments Ltd (In Liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC),

an Appeal Judge, sitting in the High Court, held that exceptional circumstances could arise, which would allow an adjudication to continue even where a company was in insolvent litigation.

The decision here in the Balfour Beatty case is the first judgment dealing with the Meadowside factors, and permitting an insolvent company – Astec – to proceed with three adjudications, but on conditions.

There were three potential adjudications in relation to three separate contracts here and here the High Court Judge held that a final net position could be reached and there was nothing in the judgments in Bresco or Meadowside that prevented this.

Those adjudications would deal with the entirety of the parties’ mutual dealings and would mirror rule 14.25 of the Insolvency (England and Wales) Rules 2016 (SI 2016/1024).

Because Astec has been in liquidation since October 2014 and is legally funded, along with having legal expenses and after the event insurance, the conditions ordered include:

  • A security for costs payment of £750,000.
  • Astec to issue the remaining two adjudication notices within 21 days, with the same adjudicator appointed to deal with all three adjudications, and those adjudications to be dealt with together, but over an 84-day period to allow 28 days for each one.
  • Alternatively, the parties could agree to confer jurisdiction on an adjudicator to deal with all three contracts in one adjudication.
  • Balfour Beatty has six months from the adjudicator’s decision(s) to issue court proceedings to seek a different result.
  • Astec cannot seek to enforce the adjudicator’s decision(s) during that period or while any litigation proceedings are ongoing.

Astec says it is owed £4 million, Balfour Beatty counterclaims and says it is owed £1 million.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

May 5, 2020 at 7:50 am

Posted in Uncategorized

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