Canary Riverside Development v Timtec International [2000] R.Ct of Justice 69/2000

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

 

Where a party seeks leave to bring adjudication proceedings but litigation has already been commenced against that party then leave may be refused where the subject matter of an adjudication is capable of being resolved by way of a defence and counterclaim to the litigation. Each case will depend on its own facts.

Deputy Judge: Mr DKR Oliver QC, Royal Courts of Justice

9 November 2000

CRD engaged TI under a trade contract to carry out works on a riverside development. The procurement was by way of construction management. TI made 2 applications for payment under the Trade Contract for a sum totalling £285,300.44. CRD prepared and signed a cheque for that amount. CRD subsequently discovered that TI had gone into administration 2 days prior to the cheque being signed and immediately stopped the cheque. Some days later TI abandoned site and CRD gave a notice of termination and issued a notice of withholding under the contract. CRD arranged for the work to be completed by a third party which involved the payment of £97,000.

Nearly 3 months later CRD issued an application for leave to commence adjudication proceedings. Leave was required because under Section 11 of the Insolvency Act, during the period for which a company is in administration no legal proceedings can generally be commenced. The hearing was adjourned and was due to come before Registrar Buckley on 4 May 2000. On 3 May solicitors acting on behalf of TI served proceedings on CRD for the payment of the £285,300.44. (i.e. the amount of the invoices and cancelled cheque). At the hearing the Registrar refused CRD leave to bring an adjudication. He held that as TI had already commenced proceedings then CRD could deal with their claim by way of a defence and counterclaim to these proceedings. He went on to say that it would not be productive to have a non-binding adjudication at the same time as legal proceedings. This decision was subsequently appealed by CRD and heard by Mr Oliver QC.

The Judge dismissed the appeal. He found that the decision of the Registrar was reached following an assertion by all the parties at the hearing that the withholding notices were invalid as they were given outside the 30 day period required by section 111 of the Housing Grants Construction & Regeneration Act 1996. By the time of the appeal it appeared that the parties had agreed that the time of the commencement of the 30 day period had been wrong and the withholding notices were not therefore given out of time. The Judge found that the Registrar's decision was reached upon a version of facts which was materially different from the version of facts that were before him at the appeal. He went on however to hold that he should not allow the appeal as the Registrar had nevertheless exercised his discretion upon correct principles. Adjudication under s108 of the Housing Grants Act was a proceeding within the meaning of section 11 of the Insolvency Act so leave was required to commence it. The Judge concluded by endorsing the decision given by the Registrar.

Where a party seeks leave to bring adjudication proceedings but litigation has already been commenced against that party then leave may be refused where the subject matter of an adjudication is capable of being resolved by way of a defence and counterclaim to the litigation. Each case will depend on its own facts.

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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