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Published 21 December 2021
This Court of Appeal case follows the much reported Bresco, Meadowside and the first instance John Doyle cases. This case clarifies security requirements for insolvent claimants and puts a lid on any insolvent company’s belief in entitlement to enforcement of an adjudication award by way of summary judgement.
John Doyle Construction Limited (In Liquidation) (“JDC”), assigned its final account claim to Henderson Jones (“HJ”). JDC was granted an adjudication award (the “Award”) against Erith Contractors Limited (“Erith”) and JDC sought to enforce the Award by way of summary judgement. The first instance judgment concluded that the Award could not be enforced because JDC had not provided adequate security for Erith’s costs should Erith makes a successful claim for repayment based on its counterclaim (the “Decision”).
JDC appealed the Decision on the following three grounds:
The Court of Appeal Judgement
Lord Coulson considered the first instance judgment and dismissed all three grounds of JDC’s appeal as follows:
Can an insolvent claimant be awarded summary judgment out of an adjudicator’s’ decision, without regard to the paying party’s set-off and counterclaim.
Lord Coulson continued by addressing a more fundamental question of whether or not “the insolvent company is entitled to summary judgment to enforce the decision of an adjudicator, regardless of the absence of a final determination of the other side's set-off and cross-claim.”
On this point, the court determined that where the insolvency set-off claim between the insolvent company and the other party has not been finally determined either by agreeing that an adjudicator can do so or otherwise, the insolvent claimant is not entitled to summary judgement.
The Decision demonstrates that for a court to be willing to grant summary judgment to an insolvent company in order to enforce an adjudication award, there must be thought-through, clear and unequivocal security for costs arrangements in place.
However and more importantly, it is now clear that an insolvent company is not entitled to summary judgment to enforce an adjudication award, unless the insolvency set off claim has been finally determined, by agreement or otherwise. It remains to be seen whether this latest edition to the cases concerning insolvent parties, will open or close the flood gates to more claims on behalf of insolvent parties.
 Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd  UKSC 25
 Meadowside Building Developments Ltd v 12-18 Hill Street Management Company Ltd  EWHC 2651 (TCC)
 John Doyle Construction Ltd v Erith Contractors Ltd (Rev 1)  EWHC 2451 (TCC)
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