Bresco v Lonsdale: unanswered questions

Bresco v Lonsdale: unanswered questions

Last week’s Supreme Court ruling in Bresco v Lonsdale [2020] UKSC 25 has already been widely reported and discussed. It has been heralded by a number of commentators as a welcome decision for insolvency professionals, who will now look to utilise adjudication as a quick and convenient route to determine claims in the liquidation of construction companies. 

The decision does, however, raise a number of important questions. Emma Healiss, barrister at Keating Chambers, considers what the answers to some of those questions might be.

What will the test be on enforcement?

As explained in News Analysis: Supreme Court—construction adjudication not incompatible with insolvency set-off (Bresco v Lonsdale), the Supreme Court concluded both (1) that an adjudicator to whom a dispute is referred by a party in liquidation does have jurisdiction to determine the dispute, and (2) that such an adjudication is not futile because, whether or not the decision will ultimately be enforceable, adjudication is a valid and useful form of ADR in its own right.

The notable point here is that the Supreme Court expressly acknowledged that some adjudication decisions commenced by companies in liquidation would not be enforced. Indeed, at paragraph 67 of the judgment, Lord Briggs stated:

“The proper answer to all these issues about enforcement is that they can be dealt with, as Chadwick LJ suggested, at the enforcement stage, if there is one. In many cases the liquidator will not seek to enforce the adjudicator’s decision summarily. In others the liquidator may offer appropriate undertakings, such as to ring-fence any enforcement proceeds: see the discussion of undertakings in the Meadowside case. Where there remains a real risk that the summary enforcement of an adjudication decision will deprive the respondent of its right to have recourse to the company’s claim as security (pro tanto) for its cross-claim, then the court will be astute to refuse summary judgment.”

The question then arises – what will be the test applied by the TCC on an application to enforce an adjudicator’s decision by way of summary judgment? Whilst this was not expressly spelt out in the Supreme Court’s judgment, it is clear from the final two sentences of paragraph 67 that Lord Briggs endorsed the reasoning in
Meadowside Building Developments Limited (In Liquidation) v 12-18 Hill Street Management Company Ltd

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About the author:
Emma is a barrister at Keating Chambers, specialising in construction, engineering and energy disputes arising both internationally and domestically. Emma has substantial TCC advocacy experience and is regularly instructed as junior counsel on large-scale international arbitration disputes. Emma is also developing a busy public procurement practice and regularly acts for bidders and buyers.