Malin Industrial Concrete Floors Limited (in administration) v Volkerfitzpatrick Limited
[2024] EWHC 2890 (TCC)
Henry Construction Projects Limited v Promep Limited
16 July 2024
[2024] EWHC 1825 (TCC)
High Court
Two companies had a big fight and one went into a financial rescue plan (CVA). The other company tried to stop the first company from getting money from a judge's decision because of the rescue plan. The judge looked at the plan's details and said the plan didn't stop the first company from getting the money. The judge sided with the first company and let them get the money.
Key Facts
- •ProMEP Limited (ProMep) and Henry Construction Projects Limited (Henry) had a sub-contractor relationship involving multiple projects totaling around £68 million.
- •Their relationship deteriorated, leading to mutual claims of contract repudiation.
- •ProMep entered a Company Voluntary Arrangement (CVA).
- •ProMep initiated an adjudication against Henry, which Henry challenged, arguing the CVA settled all claims between them.
- •Henry brought a Part 8 claim seeking declarations that the CVA settled all claims, and ProMep brought Part 7 proceedings to enforce the adjudicator's decision.
Legal Principles
A CVA is a contract binding all creditors regardless of participation or agreement, interpreted using normal contractual principles.
Insolvency Act 1986, section 4A, 5(2); Johnson v Davies [1999] Ch 117; IR Commissioners v Adam & Partners Ltd. [2000] BCC 513; Arnold v Britton [2015] AC 1619.
Insolvency set-off applies mandatorily in liquidation but not automatically in a CVA; it may be provided for in the CVA terms.
Insolvency Rules 2016, Part 14; John Doyle Construction Ltd. v Erith Contractors Ltd. [2021] EWCA Civ 1452; Bresco Electrical Services v Michael J Lonsdale (Electrical) Ltd. [2020] UKSC 25.
Court enforcement of an adjudicator's decision is subject to limited exceptions, including fraud.
PBS Energo v Bester Generacion [2020] EWCA Civ 404; SG South Ltd. v Kingshead Cirencester LLP [2009] EWHC 2645 (TCC).
A flawed statement of law by a party in an adjudication doesn't render the decision unenforceable.
None explicitly stated, but inferred from the court's reasoning regarding counsel's advice.
In construing a CVA, the court focuses on the intention of the parties, using the natural and ordinary meaning of the clause within its documentary, factual, and commercial context.
Arnold v Britton [2015] AC 1619
Creditors must be treated equally in CVAs, requiring sufficient disclosure for informed decision-making.
Lazari Properties 2 Ltd. v New Look Retailers Ltd [2012] EWHC 1209 (Ch); In re Indah Kiat International Finance Co BV [2016] BCC 418.
Outcomes
The court refused Henry's declarations that the CVA settled all claims between the parties.
The court preferred ProMep's construction of clause 8.3 of the CVA, finding that it excluded assets from the arrangement's scope but not from the effect of the CVA. The court rejected Henry's argument that insolvency set-off applied mandatorily, finding the adjudicator correctly determined it didn't apply under the CVA.
Summary judgment was granted to enforce the adjudicator's decision in favor of ProMep.
Henry lacked a valid defense to enforcement. The court found no arguable fraud in ProMep's representation of counsel's advice, and the adjudicator's decision was within his jurisdiction.