Westsheild Ltd v Whitehouse

Summary judgment should not be entered to enforce the decision in the contractor's favour and any further steps in the enforcement proceedings should await the outcome of the account under the Company Voluntary Arrangement entered into by the contractor.



Technology and Construction Court
Akenhead J
18th November 2013

The contractor entered into a Company Voluntary Arrangement (“CVA”) under the Insolvency Act and afterwards submitted a claim to the homeowners which it referred to adjudication. The homeowners indicated in the adjudication that they had a counterclaim against the contractor but did not actively pursue it. The adjudicator awarded a specified sum to the contractor without determining the counterclaim. The contractor applied for summary judgment in enforcement proceedings.
Akenhead J declined to order summary judgment and instead ordered that the enforcement proceedings should be stayed until further order and that no further steps in those proceedings should be taken until the outcome of the supervisors' account under the CVA.
The judge stated that the court could not say that the homeowners’ counterclaim was so lacking in support as not to be bona fide despite the lack of hard evidence before the court. If an account was taken of the financial position between the homeowners and the contractor, it could not definitely be said that there would not be some credit to them. The provisions of section 5 of the Insolvency Act 1986 were reflected in the CVA conditions with the result that the homeowners were bound by the CVA despite the facts that the homeowners did not participate or register their claim and that it was unclear if they had notice of the creditor's meeting. The fact that the counterclaim was not raised effectively in the adjudication proceedings did not have significance because it be said to be a facet or consequence of the "mutual dealings" envisaged by the CVA conditions and there was no res judicata or issue estoppel arising out of the adjudication. To borrow from and adapt what Chadwick LJ stated in Bouygues v Dahl-Jensen (i) The effect or "incident" of condition 23(e) of the CVA conditions was that claims and cross-claims merge and are extinguished so that, as between the insolvent and the other party, there is only a single claim represented by the balance of the account between them and (ii) In those circumstances it is difficult to see how a summary judgment can be of any advantage to either party where, as the CVA conditions made clear, the account could be reopened at some stage.