Straw Realisations (No 1) Ltd V Shaftsbury House (Developments) Ltd

Propositions of law as to enforceability of an adjudicator's decision by an insolvent corporate party
 

 

STRAW REALISATIONS (NO 1) LTD V SHAFTSBURY HOUSE (DEVELOPMENTS) LTD
Technology and Construction Court
Edwards-Stuart J
20 October 2010
 
A contractual provision purporting to supersede the obligation to comply with an adjudicator's decision could not prevail over an obligation to comply with the decision (see Ferson v Levolux and William Verry v Camden LB). A decision would not be enforced by way of summary judgment if at the time of the enforcement hearing the successful party was (i) in liquidation (see Bouygues v Dahl Jensen and Melville Dundas v George Wimpey (2007)) (ii) the subject of the appointment of administrative receivers (see Melville Dundas) (iii) in administration when a notice of distribution had been given or (iv) in administration when no notice of distribution had been given and the decision had not become final (see Melville Dundas and Integrated Building Services v PIHL). A decision might be enforced by way of summary judgment (subject to the imposition of a stay) if at the time of the enforcement hearing the successful party was in administration when no notice of distribution had been given and the decision had become final by the parties’ agreement or operation of the contract because Lord Hoffmann placed emphasis on the provisional nature of the interim payment that was the subject of the dispute in Melville Dundas but his reasoning could not be applied where the obligation in question was final and binding. As to the operation of bankruptcy set off (i) There was no rule of English law that the fact that a party was on the verge of insolvency ("vergens ad inopiam") triggered its operation (see Lord Hope in Melville Dundas) but (ii) The law in Scotland appeared to be different (perhaps because the Scottish courts did not enjoy the power to grant a stay in such circumstances). The court might grant summary judgment but stay the enforcement of that judgment if (i) the successful party was insolvent in a real sense; or (ii) its financial circumstances were such that the paying party would be unlikely to recover all or at least a substantial part of its money if it paid the sum awarded by the adjudicator but an order for repayment were to be made.
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