COUNTY-based law firm, Blaser Mills Law LLP, has been successful in a landmark Supreme Court appeal, which will change the face of the law in the construction sector.
Jackie Ray, commercial litigation partner at the firm in Silverstone, (pictured, below), and lawyer Nina Bhatti were successful in their Appeal to the Supreme Court on behalf of Bresco Electrical Services Ltd, (in liquidation), against Michael J Lonsdale (Electrical) Ltd.
The decision by the Supreme Court overturns the Court of Appeal decision and has been the subject of many webinars and commentaries, including The Times’ legal commentary.
It has also been described as “this year’s landmark case” by Practical Law.
The judgement has been welcomed by those involved in construction claims and by insolvency professionals, as adjudication is a quicker route to determine the value of claims and realise greater value for creditors.
In 2014 Bresco and Lonsdale entered into a contract whereby Bresco agreed to perform sub-contract electrical work for Lonsdale.
However, in December 2014, Bresco left site without completing the work, with both companies claiming the other had wrongfully terminated the contract.
In 2015 Bresco went into liquidation.
Then in October 2017, Lonsdale made a claim against Bresco for wrongful termination of the contract and claimed the costs of completing the works.
However, Bresco maintained that it was Lonsdale which had actually terminated the contract and therefore Lonsdale owed it money.
Bresco referred its claim to adjudication seeking payment for work done and damages for breach of contract.
However, Lonsdale sought an Injunction to prevent the Adjudicator rendering its decision, stating the Adjudicator had no jurisdiction as Bresco was insolvent.
Bresco appealed the Order granting an Injunction to the Court of Appeal seeking to enable the Adjudication to proceed.
The Court of Appeal stated that the only claim which could be enforced was a claim for the net balance arising out of an insolvency set-off.
The set-off occurred automatically when Bresco entered Liquidation and the Adjudicator did not have jurisdiction over the matter.
On appeal from the Court of Appeal, the Supreme Court confirmed that there was no absolute jurisdictional bar preventing an insolvent party commencing and pursuing an adjudication.
Therefore, the cross appeal by Lonsdale on jurisdiction failed and was dismissed.
Commercial litigation partner at Blaser Mills Law Jackie Ray said: “This is an excellent result for our client and clarifies the statutory and contractual right to adjudication despite the insolvent state of the referring party.
“This case has been of great interest to the legal world and, having progressed through a first instance decision to the Court of Appeal and finally to the Supreme Court, it’s a once in a lifetime case and the right decision.
“With the severe impact Covid-19 has had on the construction industry, the judgement is well timed for those facing insolvency because of the pandemic.
“They will no longer have to ignore a potentially good adjudication claim and have the reassurance that it can be pursued even after they enter an insolvency process.”
More information can be found at https://supremecourt.uk decided-cases/index.html