TCC considers interplay between adjudication enforcement and insolvency

South Coast Construction v Iverson Road [2017] EWHC 61 (TCC)

This is believed to be the first reported decision to consider the interplay between the adjudication regime under the Housing Grants, Construction and Regeneration Act 1996 and the insolvency regime in relation to administration under Schedule B1 to the Insolvency Act 1986.

Having considered the authorities on whether to permit proceedings to continue notwithstanding the automatic moratorium that applies in the event that a company serves a notice of intention to appoint an administrator, Coulson J quoted the well-known dicta of Chadwick LJ in Carillion Construction v Devonport Royal Dockyard [2005] EWCA Civ 1358 in relation to the "pay now, argue later" nature of adjudication decisions and said:

"Proceedings issued to enforce the decision of a construction adjudicator therefore differ in significant respects from other kinds of commercial proceedings or monetary claims. I venture to suggest that the regime described by Chadwick LJ is unique, without any real parallel in other parts of the High Court. Adjudication enforcement proceedings such as these presuppose that there has already been a decision, on the merits, by an adjudicator, that there is a sum of money which, prima facie, is due and owing under the contract or pursuant to statute. Indeed, such enforcement proceedings presuppose that the defendant is in breach of contract or in breach of statute for not paying the sum found due by the adjudicator. ... I consider that a party such as the claimant, who has a decision in its favour from an adjudicator, is in a much better position than most to argue that the court should exercise its discretion to continue to an enforcement hearing. … "

This decision reinforces the proactive stance of the TCC in relation to adjudication enforcement and the reluctance to allow the insolvency of parties against whom adjudication decisions have been made to act as a bar to immediate enforcement.

Crispin Winser appeared for Iverson Road, instructed by Fladgate LLP.

Clear here to see Crispin's PLC blog on the decision.

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