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Straume Ltd v Bradlor Dev. Ltd [1999] CILL 1520
This summary was provided by CMS Cameron McKenna LLP.
For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes
Adjudication is a "quasi legal proceeding" under the Insolvency Act 1986.
HHJ Behrens QC, Chancery Division, Leeds District Registry
7 April 1999
A and B entered into a JCT. '80 contract in June 1998, incorporating amendment 18. On 3 March 1998, an administration order was made against B. The administrators believed that substantial sums were due under the contract, and served notices of adjudication. A served its own notices of adjudication against B, for just over the sum claimed by B.
The question arose as to whether A required the leave of the court to bring the adjudication proceedings against B pursuant to Section 11 (3) of the Insolvency Act 1986: "During the period for which an Administration Order is in force, no other proceedings and no execution or other legal process may be commenced or continued and no distress may be levied against the company or its property except with the leave of the consent of the administrator or the leave of the court and subject, where the court gives leave, to such terms as aforesaid."
Previous case law (1990) BCC 130 and (EAT)) indicated that "other proceedings" meant either legal proceedings or quasi legal proceedings such as arbitration. A argued that adjudication was akin to a decision by an expert or valuer giving a certificate, and therefore not legal or other proceedings.
The court found that adjudication was a quasi legal proceeding, and in effect, a form of arbitration. The fact that an adjudicator's decision needs to be enforced by means of a further application did not stop it being a quasi legal proceeding. Therefore leave of the court would be required to bring adjudication proceedings against a company in administration.
In considering whether to grant leave, the court took into account that A's claim of set off or counterclaim could be a factor that the court could take into account in summary enforcement proceedings in relation to the adjudication.
Adjudication is a "quasi legal proceeding" under the Insolvency Act 1986.
This summary was provided by CMS Cameron McKenna LLP.
For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes
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