Harwood Construction Ltd v Lantrode Ltd
Summary judgement to enforce the adjudicator's decision should not be refused on the grounds that the claimant might be insolvent but execution on the judgement should be stayed until the hearing of the winding-up petition against the claimant
24 November, 2000
The claimant began court proceedings and applied to enforce the adjudicator's decision in its favour by way of summary judgement. One of the grounds on which the defendant opposed the application was that the claimant might (or might not) be insolvent and that if it were found to be insolvent it was not appropriate to permit enforcement by summary judgement by reason of the provisions of the Insolvency Act 1986 and its regulations amounting to a code for the determination of the rights of insolvent parties and their debtors and creditors on the authority of the Court of Appeal's decision in Bouygues v Dahl-Jensen (2000). Whilst the claimant was not insolvent at the time of the summary judgement application, a winding-up petition had been presented to the court and was due to be heard in two weeks time. Judge Seymour rejected this contention but did order that execution of the judgement should be stayed until the hearing of the winding-up petition against the claimant (with permission to either party to apply in relation to the stay after the date when the petition was due to be heard). The effect of section 29 of the Insolvency Act was that if a winding-up order were to be made, the liquidation would be deemed to have started at the date of presentation of the hearing, ie before the hearing of the summary judgment application. Whilst the claimant's submission that it would be wrong to prevent the enforcement of decisions on the ground of a claimant's insolvency (merely) by reason of a defendant presenting a winding-up petition might have been robbed of any force it might otherwise have had if the defendant had presented the petition a third party had presented the petition and the third party had been paid and the petition was not dismissed only by reason of the defendant giving support to it. In addition the evidence was insufficient to predict the outcome of the petition. Advice Note The courts may be prepared to order a stay of execution on any judgment enforcing an adjudicator's decision where a winding-up petition has been presented at the instigation of a third party and on the evidence it cannot be said that the petition will not succeed.