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Adjudication and liquidation – the final word?

03 August 2018

It is generally the case (though not always!) that courts are reluctant to enforce monetary award adjudication decisions in favour of companies in liquidation (CILs). This is because of the uncertainty surrounding the CIL’s ability to repay those sums should it later transpire it was not entitled to the award.

That, however, has not prevented CILs and those advising them from commencing adjudications, which, at best, result in wasted time and costs for the unfortunate responding party (as well as potential liability for adjudicator's costs due to the joint and several liability that the parties have).

 

Tuesday's decision in the TCC case of Michael J. Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (in Liquidation) [2018] EWHC 2043 (TCC) (Lonsdale) has (potentially…) provided the final word on adjudications brought by CILs. 

 

In Lonsdale, the head of the TCC, Fraser J considered whether "a company in liquidation can refer a dispute to adjudication when that dispute includes (whether in whole or in part) determination of a claim for further sums said to be due to the referring party from the responding party?"

 

Lonsdale

 

Michael J Lonsdale (MJL) and Bresco Electrical Services (Bresco) entered into a contract in 2014 whereby Bresco agreed to perform electrical installation works for MJL. Various disputes arose between the parties and Bresco ultimately left site. The parties were in dispute as to the circumstances of the termination but in 2015 Bresco went into liquidation and as a result, its dealings are governed by the Insolvency Rules 1986 (the 1986 Rules).

 

In June 2018, Bresco commenced adjudication proceedings against MJL seeking declarations on a number of different issues, including that payment of monies was due from MJL to Bresco. Separat