Henry Construction Projects Limited v Promep Limited

An adjudicator’s decision will ordinarily be enforced if made within jurisdiction, subject to limited exceptions. A party’s inaccurate or partial summary of legal advice will rarely establish fraud sufficient to resist enforcement, because the advice is legal argument rather than evidence of fact and the adjudicator must reach its own decision.

A company voluntary arrangement has contractual effect and is construed by ordinary contractual principles. Insolvency set-off is not automatic in a CVA, although the arrangement may provide for it. Where the CVA expressly excludes assets other than specified funds from the arrangement, claims falling within that exclusion remain outside the CVA and are not subject to insolvency set-off.

ProMep, an M&E subcontractor, obtained an adjudicator’s decision awarding £90,380.49 against Henry following a dispute about termination of a construction contract. ProMep sought summary judgment to enforce the decision in Part 7 proceedings.

Henry brought a corresponding Part 8 claim seeking declarations that ProMep’s claims had been compromised by a company voluntary arrangement. Henry also alleged that the adjudicator’s decision had been procured by fraudulent misrepresentation of counsel’s advice and relied on insolvency set-off.

The central issues were whether the adjudicator’s decision should be enforced and whether the CVA, properly construed, settled ProMep’s claims against Henry.

1. Enforcement. Summary judgment was granted to enforce the adjudicator’s decision. Henry had no arguable defence. A summary or partial account of counsel’s advice constituted legal submissions which the adjudicator had to evaluate independently. It was not evidence on which the adjudicator had relied as an existing fact. Any alleged misrepresentation was neither arguably fraudulent nor material in the circumstances.
2. The distinction in SG South Ltd. v Kingshead Cirencester LLP between conduct that could have been raised in the adjudication and later-emerging conduct was applicable. Henry could have challenged the summary of advice during the adjudication but did not do so. Any such issue had therefore, in substance, been adjudicated.
3. Construction of the CVA. A CVA has contractual effect by statutory hypothesis and is construed according to ordinary contractual principles. Insolvency set-off is not automatic in a CVA. It applies only if incorporated or otherwise provided for by the terms of the arrangement.
4. Clause 8.3 provided that all company assets, apart from the specified HMRC refunds, retentions and adjudication funds, were excluded from the arrangement. The wording was not confined to defining the distribution fund. Claims by ProMep against Henry therefore remained outside the CVA and were not subject to insolvency set-off. The standard terms concerning insolvency rules and set-off did not alter that construction. Any apparent conflict was resolved by the express priority given to the bespoke proposal terms.
5. The mandatory insolvency set-off considered in John Doyle Construction Ltd. v Erith Contractors Ltd. applied to liquidation, not to this CVA. Enforcing the adjudicator’s decision therefore did not disapply mandatory insolvency rules or create incoherence.
6. The alternative arguments based on the Supervisors’ discretion and absence of mutuality failed or did not arise. The declarations sought by Henry were refused. There was no other reason not to enforce the adjudicator’s decision.