Reference: [2020] EWHC 2694 (TCC)Date: 4 September 2020
Judge: HHJ Parfitt (Central London County Court)
Link: http://34q0e91swoip1judh33cqx6b-wpengine.netdna-ssl.com/wp content/uploads/2020/10/Styles-Wood-Ltd-v-GE-CIF-Trustees-Approved-Judgment-04.09.2020-V1.pdf
Keywords: Enforcement; Insolvency; Bresco; Security; ATE Insurance; JCT; Final Account. Case Note
Building contractor Styles & Wood (“the Claimant”) sought to enforce an adjudicator’s award of £700,000 against its Employer GE CIF Trustees Limited (“the Defendant.”). The Claimant brought proceedings based on the Defendant’s refusal to comply with the adjudicator’s decision. The Defendant sought to justify its non-compliance on the ground of futility and wished to bring proceedings against the Claimant regarding the final account. Importantly, the Claimant went into administration on 28 February 2020. The parties entered into a JCT Intermediate Building Contract with Contractor’s Design (2011) to design and build a project in Manchester. The Claimant valued its final account at approximately £9,000,000, whereas Defendant valued it at £5,000,000. The parties also disagreed about the Claimant’s entitlement to an extension of time, loss and expense; and disparity in the valuation of numerous variations. In February 2020, the Claimant referred the dispute to adjudication under the contract. On day fourteen of the adjudication, the Claimant went into administration. Proceedings continued unaffected, and the adjudicator decided that the Claimant was entitled to a substantial award of £700,000 (plus VAT and interest.)
Following Bresco Electrical Services Ltd (in liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, it is established that an insolvent party who wishes to enforce an adjudicator’s decision must offer adequate security to do so. The Claimant sought to fulfil this requirement by offering an ATE insurance policy (£200,000) and undertook to ring-fence any awarded enforcement
sums until the conclusion of any further proceedings for the final determination of the dispute. The Claimant argued that these measures provided sufficient protection to the Defendant. The level of ATE cover was adequate given, inter alia, the amount of work already completed, including expert evidence, and the relatively simple nature of the issues in dispute. The most evidential ground had already been covered, so these costs would not need to be incurred twice.
The Defendant argued that the security provided was neither sufficient nor adequate to provide the level of protection required. Particularly, it was submitted that the ATE policy of £200,000 would only cover 25% of the potential costs award after the arbitration.
The Defendant put forward a figure of £800,000 as a more appropriate level of cover. It also criticised the wording of the policy and the detail of the undertaking offered. Finding in favour of the Claimant, the court enforced the adjudicator’s award on the basis that the security provided in this case was adequate and protected the Defendant. The court ordered that the ATE policy and requisite undertaking, namely that the sums were to be ring-fenced, must remain in force until the resolution of any appeals process arising out of arbitration on the dispute.
