Bresco, an electrical contractor in liquidation, claimed it was owed money by Lonsdale. Lonsdale said Bresco had abandoned the works and owed damages. Bresco's liquidator referred the payment dispute to adjudication.
Selected cases
UK Supreme Court · [2020] UKSC 25
Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd
The UK Supreme Court considered whether an insolvent construction company could use adjudication.
UK Supreme Court17 June 2020
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Quick read
- Construction payment disputes do not disappear because one party becomes insolvent.
- The UK Supreme Court considered whether an insolvent construction company could use adjudication.
Use this to check
- Keep construction payment records ready for adjudication
- Do not assume insolvency ends payment dispute tactics
- Assess enforcement and set-off risk before spending on a fight
Decision snapshot
What happened
- Bresco, an electrical contractor in liquidation, claimed it was owed money by Lonsdale.
- Lonsdale said Bresco had abandoned the works and owed damages.
- Bresco's liquidator referred the payment dispute to adjudication.
What the court had to decide
- The issue was whether adjudication was available when one party was insolvent and mutual claims would ultimately be dealt with through insolvency set-off.
What the court decided
- The Supreme Court held that adjudication was not automatically unavailable.
- The adjudicator had jurisdiction, although enforcement of any award would require careful court control.
Practical impact
Practical read
- Construction payment disputes do not disappear because one party becomes insolvent.
- Contractors and principals should keep payment notices, variations and evidence organised because adjudication may still be used as a fast dispute tool.
Useful next steps
- Keep construction payment records ready for adjudication
- Do not assume insolvency ends payment dispute tactics
- Assess enforcement and set-off risk before spending on a fight
How businesses should read it
Construction payment disputes do not disappear because one party becomes insolvent. Contractors and principals should keep payment notices, variations and evidence organised because adjudication may still be used as a fast dispute tool.
Key takeaways
- Keep construction payment records ready for adjudication
- Do not assume insolvency ends payment dispute tactics
- Assess enforcement and set-off risk before spending on a fight