Enforcing interim payments—winding-up or TCC? (Wilson & Sharp Investments v Harbour View Developments)

Enforcing interim payments—winding-up or TCC? (Wilson & Sharp Investments v Harbour View Developments)

What is the best way to enforce interim payments? Krista Lee, barrister at Keating Chambers, examines Wilson & Sharp Investments Ltd v Harbour View Developments Ltd.

Original news

Wilson & Sharp Investments Ltd v Harbour View Developments Ltd [2015] EWCA Civ 1030

What was the background to the appeal?

Wilson & Sharp was the developer of two blocks of student accommodation. The project was running late and over-budget. Without any explanation as to the cause of the delays or increased costs, from either the contractor (Harbour View) or the contract administrator, Wilson & Sharp refused to pay two interim certificates amounting to about £1m pounds. Wilson & Sharp however failed to serve pay less notices, as they were not properly advised. Accordingly, the sums certified were due and payable.

Rather than commencing adjudication to recover the sums certified, Harbour View threatened to present a winding-up petition against Wilson & Sharp based on the sums due. Wilson & Sharp sought an injunction restraining the presentation of a petition on the grounds that the interim certificates had grossly overvalued Harbour View’s works. Alternatively, Wilson & Sharp relied upon the fact that Harbour View was insolvent and likely to enter liquidation imminently. In such circumstances the interim payment obligations should not be enforced and/or under the terms of the JCT contract, Wilson & Sharp were no longer required to make any further payments. It should be noted that the construction contract had been terminated three months prior to the injunction proceedings.

What issues did the Court of Appeal examine?

Should a winding up petition be presented where:

  • the debtor accepted that in the absence of any pay less notices, the interim certificates had become due and payable
  • the debtor maintained, with the support of a quantity surveyor’s report, that on a proper valuation of Harbour View’s works, no sums were due
  • the

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.