John Doyle Construction Ltd v Erith Contractors Ltd (Rev 1)

A company in insolvent liquidation may adjudicate and may, in principle, obtain summary enforcement of an adjudicator’s decision. Enforcement depends on whether the adjudication resolved the parties’ overall financial dispute, whether other mutual dealings or defences remain, and whether adequate security protects the responding party’s ability to recover money or costs after final determination.

Where there is a real risk that enforcement would deprive the responding party of security for a cross-claim, summary judgment should be refused. If judgment is granted, insolvency will ordinarily justify a stay of execution unless exceptional circumstances or adequate safeguards displace that outcome.

John Doyle Construction Ltd, a company in insolvent liquidation, sought summary judgment enforcing an adjudicator’s award of approximately £1.2 million concerning the final account for Olympic Park landscaping works performed for Erith Contractors Ltd.

Erith relied on insolvency set-off, possible cross-claims, the absence of adequate security, the nature of arrangements with Henderson Jones, and the inadequacy of proposed banking and after-the-event insurance arrangements. The court considered whether JDC could obtain summary judgment and, alternatively, whether execution should be stayed.

1. Applicable framework. The adjudicator’s decision was valid. The court applied Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd [2020] UKSC 25, including the guidance that enforcement difficulties should be addressed at the enforcement stage, and the analysis in Bouygues (UK) Ltd v Dahl Jensen (UK) Ltd [2000] EWCA Civ 1041.
2. Summary judgment may potentially be available where the adjudication resolves, or takes into account, all elements of the parties’ overall financial dispute under the construction contract. The court must also consider mutual dealings outside that contract, other defences not deployed in the adjudication, available undertakings or security, and whether enforcement creates a real risk of depriving the paying party of security for its cross-claim.
3. The adjudication concerned JDC’s final account and had taken account of Erith’s Tooley Street claim. The existence of a cross-claim alone was therefore insufficient to defeat enforcement.
4. However, the proposed letter of intent was not a letter of credit and supplied no security unless and until Erith paid the judgment sum to Henderson Jones. It was a circular and contingent arrangement. The ATE policy also contained material exclusions and avoidance provisions and did not provide sufficient protection against adverse costs.
5. There was accordingly a real risk that enforcement would deprive Erith of security for its cross-claim. Summary judgment was refused. In the alternative, applying Wimbledon Construction Company 2000 Ltd v Derek Vago [2005] EWHC 1086 (TCC), a stay would ordinarily have been granted because JDC was in insolvent liquidation and no exceptional safeguards displaced that result.
6. The application for summary judgment failed. The court made no determination on the correctness of the adjudicator’s decision or the disputed legal characterisation of the Henderson Jones arrangements.