Jamil Mohammed v Dr Michael Bowles [2002] 394 SD 2002

This summary was provided by CMS Cameron McKenna LLP.

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The Court allowed the successful party in an adjudication to serve a statutory demand against the losing party. Although the contract was in respect of residential premises, the parties had agreed to resolve disputes by adjudication. The losing party's complaints about jurisdiction were insufficient to show that the debt was disputed on substantial grounds.

Registrar Derrens [unknown court]

Unknown date, reported on Building website 14 March 2003

M entered into a contract with B to carry out works at B's house. Although the contract was with a residential occupier, the contract provided for adjudication of disputes. B commenced adjudication, claiming that the works had not been completed satisfactorily. M disputed the adjudicator's jurisdiction.

The adjudicator awarded a sum to B, but M did not pay. B served a statutory demand on M. Under the Insolvency Act 1986, M was entitled to apply to have the statutory demand set aside. M claimed that the statutory demand should be set aside because the debt was disputed on substantial grounds, pursuant to Rule 6.5(4) of the Insolvency Rules 1986.

Before the Court, M claimed that the adjudicator had determined his own jurisdiction, which he could not do. Further, HGCRA did not apply to contracts with a residential occupier, under section 106. M also claimed that the contract had been superseded by an exchange of letters which did not refer to an adjudication clause. Finally, M submitted that the use of a statutory demand was an abuse of process, as the appropriate way to enforce an adjudicator's decision was by court proceedings, so B should have done that before serving a statutory demand.

The Registrar noted that the parties had agreed in their contract to resolves disputes by adjudication. The Bankruptcy Court should not look behind the adjudicator's decision on jurisdiction. The Registrar noted that M could have applied to the Court to set aside the adjudicator's decision or for a declaration that the decision was reached without jurisdiction. However, M had not done so. The Registrar decided that the adjudicator's decision constituted a debt that was sufficient to form the basis of a statutory demand, and the demand should not be set aside. M had not raised substantial grounds to say that the debt was disputed and there was no other reason why the Court should set the demand aside. B was therefore allowed to make a petition for M's bankruptcy.

The Court allowed the successful party in an adjudication to serve a statutory demand against the losing party. Although the contract was in respect of residential premises, the parties had agreed to resolve disputes by adjudication. The losing party's complaints about jurisdiction were insufficient to show that the debt was disputed on substantial grounds.

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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