South Coast Construction Ltd v Iverson Road Ltd

A court may permit proceedings to continue during an insolvency moratorium where the applicant shows that the statutory purpose will not be prejudiced, the proceedings are sufficiently advanced, and the parties’ conduct supports permission. An adjudication-enforcement claim is an exceptional monetary claim because the adjudicator’s decision is binding unless successfully challenged and ordinarily must be honoured. Jurisdiction is determined pragmatically from the notice of adjudication, the factual background and the parties’ conduct. A dispute about the amount due may necessarily include delay, extensions of time, liquidated damages and prolongation costs. A responding party may also enlarge the adjudicator’s jurisdiction by advancing a cross-claim. The adjudicator’s decision, rather than the reasoning adopted to reach it, is binding.

The claimant sought summary judgment to enforce an adjudicator’s decision awarding South Coast Construction Ltd £868,728.47 against Iverson Road Ltd under a construction contract. The defendant resisted enforcement, alleging that the adjudicator had exceeded his jurisdiction by deciding issues concerning delay, extensions of time and prolongation costs.

The defendant also issued successive notices of intention to appoint an administrator. The claimant therefore sought permission under Schedule B1 of the Insolvency Act 1986 to continue the enforcement proceedings. By judgment, the moratorium had expired and the defendant had entered liquidation, but the court considered the permission application because the issue affected costs and had wider significance.

1. Permission to continue. The court would have granted permission to continue with the enforcement hearing. Applying In Re Atlantic Computer Systems PLC [1992] CH 505, the balance favoured determination of the jurisdiction issue. The decision would assist any insolvency office-holder, would not enhance the claimant’s status beyond that of an unsecured creditor, and would avoid wasted costs. The defendant’s repeated undisclosed notices and failure to appoint an administrator were conduct which should not be rewarded.
2. Adjudication enforcement. Enforcement of an adjudicator’s decision occupied an exceptional position among monetary claims. The adjudication regime required the decision to be honoured, even though it was temporarily binding and could later be revisited. The court therefore gave substantial weight to the fact that only an enforcement hearing remained and that the adjudicator had already determined the merits.
3. Jurisdiction. The notice of adjudication referred broadly to the additional monies due. Determining that sum necessarily required consideration of delay and the defendant’s liquidated-damages deduction. The court adopted the pragmatic approach in Cantillion v Urvesco Ltd [2008] EWHC 282 (TCC), rather than an overly legalistic reading. The prolongation claims were likewise inseparable from extension-of-time issues, as explained in Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC).
4. The defendant’s detailed response also advanced liquidated damages as a cross-claim. That conduct independently brought the issue within the adjudicator’s jurisdiction, consistently with Pilon Ltd v Breyer Group Ltd [2010] EWHC 837 (TCC) and the authorities concerning jurisdiction enlarged by the parties’ conduct. The defendant could not argue that the adjudicator had jurisdiction only to decide the issue on the defendant’s preferred basis.
5. The objection was therefore hopeless. The adjudicator had jurisdiction to decide delay, extensions of time, liquidated damages and prolongation costs. Judgment was entered for the claimant in the sums awarded by the adjudicator.