Can A Company In Liquidation Refer A Dispute To Adjudication?

The Technology and Construction Court (TCC) has delivered a significant judgment in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (in liquidation) [2018] EWHC 2043 (TCC) where the company seeking to refer a dispute to adjudication was in liquidation. The substance of the dispute related to the contractor's claim for payment allegedly due for work completed, and damages for loss of profits.

The contract and the facts

Bresco Electrical Services Ltd (the "Referring Party" or "Bresco") was engaged by Michael J Lonsdale (Electrical) Ltd (the "Responding Party" or "Lonsdale") under a sub-subcontract for electrical installation works on an office refurbishment project in London dated 21 August 2014 (the "Contract"). The form of Contract was the JCT Construction Management Trade Contract, 2011 Edition (CM/TC 2011) with bespoke amendments. The Contract was a "construction contract" governed by the Housing Grants, Construction and Regeneration Act 1996 (as amended) (the "Construction Act") meaning that the parties had a right to refer a dispute under the Contract to adjudication at any time. Bresco left the project in controversial circumstances, with each of the parties alleging wrongful termination of the other. After leaving the project, Bresco went into voluntary liquidation, with a liquidator appointed on 12 March 2015. Bresco then commenced an adjudication against Lonsdale alleging repudiatory breach and seeking a decision from the adjudicator that sums were due from Lonsdale, by way of payment for works completed prior to leaving the site and/or damages for loss of profits. Lonsdale invited Bresco to discontinue the adjudication and the adjudicator to resign on the basis that the adjudicator had no jurisdiction owing to the mandatory set off rule applicable where a company is in liquidation. The adjudicator refused to resign and issued a "non-binding decision" explaining why he rejected Lonsdale's arguments and declared that he did have jurisdiction to decide the dispute. These proceedings

Lonsdale subsequently commenced proceedings under Part 8 of the Civil Procedure Rules (Part 8) seeking declarations and an injunction to prevent Bresco from bringing a claim to adjudication on the basis that the liquidation operated to extinguish the claim(s) relied upon by Bresco in that adjudication. The adjudication was stayed until the Part 8 claim was determined.

The parties were unable to agree how the Part 8 claim should be...