The defendant creditor had obtained an adjudicator’s decision against the debtor on its final account claim, but the debtor had little notice of the adjudication. At the application to set aside the statutory demand, Mr Parke had already commenced proceedings in the TCC arguing that the true final account showed a balance payable in his favour, but the District Judge was not made aware of this fact.
Held: This factor of the counterclaim allowed the court to look at the matter afresh. Although the adjudication created a debt which failed to be treated in the same way as a judgement, nonetheless Mr Parke had a valid cross claim. Responding to an argument that to allow Mr Parke to rely on the cross claim would be contrary to the scheme of the 1996 Act, the Judge said: ‘In my judgment it cannot be right that an employer or main contractor can be made bankrupt when it is known that he has proper proceedings on foot which, if successful, will result in a payment to him. I do not accept that the scheme of the 1996 Act is that an adjudication can be pursued to bankruptcy no matter the underlying state of account. The court would be required to close its eyes to the overall position, which in the context of bankruptcy is in my judgment wrong in principle.’ A bankruptcy court should not allow the winning party in a construction arbitration to bring insolvency proceedings against the losing party where there was a genuine cross-claim.
Judges:
HHJ Boggis QC
Citations:
Unreported, 2 August 2000
Statutes:
Housing Grants Construction and Regeneration Act 1996
Jurisdiction:
England and Wales
Cited by:
Cited – Shaw and Another v MFP Foundations and Piling Ltd ChD 6-Jan-2010
The defendants appealed against a refusal to set aside statutory demands adjudicated due under the 1996 Act. They said that the judge had accepted that he was bound by MFO and that it was on all fours, but he had not followed it.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 04 October 2022; Ref: scu.392550
