Mohammed v Bowles

The adjudicator's decision in favour of the builder was a debt sufficient to form the basis of a statutory demand and his statutory demand should not be set aside on the basis that the debt was not disputed on substantial grounds and that there was no other ground to set aside
 
MOHAMMED v BOWLES

Bankruptcy Court
Mr Registrar Derren
1 December 2002
 

The builder obtained an adjudication decision against the homeowner awarding the builder a specified sum. The builder served a statutory demand to enforce the decision. The homeowner applied to the court to have the demand set aside. Rule 6.5(4) of the Insolvency Rules 1986 provided that the court could grant an application to set aside a statutory demand if the debt was disputed on grounds which appeared to be substantial or the court was satisfied on other grounds that the demand ought to be set aside.

 

Mr Registrar Derren held that the statutory demand should not be set aside. The decision was a debt sufficient to form the basis of a statutory demand in that the debt was a binding contractual obligation on the homeowner’s part to pay the sum awarded by the decision unless and until that decision was varied by court or arbitration proceedings.

 

As to the homeowner’s contention that the Construction Act 1996 did not apply to construction contracts with a residential occupier and that the original contract (containing an adjudication clause) was superseded by a later contract (which did not contain such a clause), the evidence indicated that the parties entered into a contract for residential construction works which included a form of dispute resolution procedure contained in the Act. It was not necessary to decide whether a new contract which replaced the existing contractual arrangements had come about insofar as the adjudicator determined that he did have jurisdiction and it was not for the Bankruptcy Court to look behind the decision. If the homeowner was unhappy with the adjudicator’s determination of his jurisdiction, it was for him to have applied to the court to have that decision set aside and/or to seek a declaration on the question of jurisdiction (which the homeowner failed to do). It was not the case that the builder had first to obtain a summary judgment before serving a statutory demand.

 

Advice Note

A statutory demand is a valid means of enforcing an adjudication decision. If the debtor is unhappy about the validity of the decision, it is for him to be proactive and apply to the court before any demand is served.
 

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