A. Straume (UK) Limited -v- Bradlor Developments Limited

Adjudication constituted quasi legal proceedings within the meaning of section 11(3)(d) of the Insolvency Act 1986 and the employer should not have leave under section 11(3)(d) to start an adjudication against the contractor against which an administration order had been made where the contractor had already started an adjudication against it
An administration order was made against the contractor. Its administrator began an adjudication against the employer. The employer served a notice of adjudication in which it advanced various claims against the contractor. Section 11(3)(d) of the Insolvency Act 1986 provided that during the period for which an administrative order was in force, no other proceedings could be commenced or continued against the company or its property except with the administrator's consent or the court's leave. The employer argued that the adjudication proceedings did not constitute ?other proceedings? under section 11(3)(d) and that even if they did, the court should grant leave for the employer to commence its proposed adjudication proceedings under section 11(3)(d). Judge Behrens held that adjudication under the Construction Act 1996 constituted quasi legal proceedings such as arbitration largely as a matter of impression. The fact that an adjudicator's decision needed to be enforced by means of a further application did not prevent an adjudication being an arbitration insofar as it was the precursor to an enforceable award by the court. The judge also held that the employer should not be given leave under section 11(3)(d) to commence an adjudication against the contractor. It was not necessary to determine whether the employer had a valid set-off in the form of its claims in relation to the contractor's claims insofar as if it did have a valid set-off, that issue would be decided in the adjudication commenced by the contractor. Also it was undesirable that there should be two sets of adjudication proceedings raising the same set-off point. If the employer did not have a valid set-off the employer at best had a cross-claim or counterclaim against an insolvent company which had a claim against it and this was the consequence of the contract terms under which the parties had expressly excluded a valid set-off. Advice Note Adjudications pursuant to the Construction Act are ?quasi legal? proceedings for the purposes of the Insolvency Act 1986. This means that the court have to decide whether to give leave for an adjudication to be begun against a company in administration.