The case was a claim for enforcement of an adjudication decision by way of summary judgment. John Doyle Construction Limited(“JDC”) were in liquidation and had been since 2013. In August 2016, the liquidators for JDC contacted Henderson & Jones Limited (“Henderson Jones”) whose primary business was described by one of its directors as “…to purchase legal claims from insolvent companies…”. The liquidators and Henderson Jones entered into a Deed of Assignment on 8 December 2016 with the intention that JDC’s claims under an agreement with Erith Contractors Limited (“Erith”) would be assigned to Henderson Jones. JDC’s claim in the adjudication related to its Final Account for hard landscaping works performed prior to the Olympic Games in 2012. The adjudication was commenced on 22 January 2018, which led to an award in JDC’s favour of approximately £1.2 million.   

Mr Justice Fraser set out the principles to be applied when considering an application for summary judgment on an adjudication decision in favour of a company in liquidation. These were:

1. Whether the dispute in respect of which the adjudicator has issued a decision is one in respect of the whole of the parties’ financial dealings under the construction contract in question, or simply one element of it.
2. Whether there are mutual dealings between the parties that are outside the construction contract under which the adjudicator has resolved the particular dispute.
3. Whether there are other defences available to the defendant that were not deployed in the adjudication.
4. Whether the liquidator is prepared to offer appropriate undertakings, such as ring-fencing the enforcement proceeds, and/or where there is other security available.
5. Whether there is a real risk that the summary enforcement of an adjudication decision will deprive the paying party of security for its cross-claim. 

The key issue in this case related to the final point. JDC sought to rely on two security mechanisms as demonstrating that this issue should be resolved in its favour. This was (1) what was said to be a draft letter of credit from Henderson Jones’ bankers and (2) an After The Event (“ATE”) insurance policy. 

Mr Justice Fraser did not consider that a letter of credit was available. Instead, a letter of intent from Henderson Jones’ bankers had been provided, which essentially promised that a letter of credit would be provided once Erith had paid the sums owed to JDC. In addition, the Judge held that the payment arrangement with regards to obtaining the letter of credit was contrary to the terms of the ATE policy. The Judge did not consider that the security arrangements offered by JDC were sufficient; they did not place Erith in a similar position to the one which it would be in were JDC solvent. Mr Justice Fraser held that there was a real risk that summary enforcement would deprive Erith of its right to have recourse to the company’s claim as security for its cross-claim and the application for summary judgment was refused. Following the Judge’s conclusion, JDC’s argument for a stay of execution was dismissed. 

The Judge emphasised that his conclusion did not mean that no company in liquidation could ever achieve enforcement of an adjudicator’s decision. If adequate undertakings had been provided, they would be powerful points in a claimant’s favour on such an application. 

The case is significant as it highlights the issues which need to be considered by insolvent companies when seeking to enforce adjudication decisions. The case underlines the importance of procuring adequate security mechanisms when making such an application.