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Tue June 15 2021

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Another client forced to pay contractor in administration

29 Sep 20 Despite no longer trading, collapsed fit-out specialist Styles & Wood has won a significant legal victory in a payment dispute.

Styles & Wood v GECIF is the first adjudication enforcement decision for a company in administration based on the recent Bresco ruling.

In June the Supreme Court ruled in favour of the liquidators of Bresco Electrical Services Ltd in its case against Michael J Lonsdale (Electrical) Ltd. [See our previous report here.]

Myerson Solicitors represented Styles & Wood (in administration) using the principles laid down in Bresco.

Styles & Wood (S&W) entered into a building contract with GE CIF Trustees (GECIF) acting through DTZ Investors for an office to residential conversion project at St Ann’s Square in Manchester. Following completion of the works, a dispute occurred regarding the final account of the multi-million-pound account.

Having started an adjudication process, S&W went into administration in February 2020, but the proceedings continued and S&W was awarded a substantial sum by the adjudicator. However, GECIF refused to comply with the adjudicator’s decision on the grounds of futility. In response, S&W brought enforcement proceedings before the courts.

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Using the Supreme Court’s judgement on Bresco as the basis for the case, Myerson argued that the insolvency set-off rules do not trump a construction contract party’s right to adjudicate. S&W proposed to fulfil the conditions of enforcement (as set out in Meadowside Building Developments v 12-18 Hill Street Management) by ringfencing the awarded sums for three months and taking out an after-the-event (ATE) insurance policy to cover any potential adverse costs in subsequent proceedings.

The court accepted these arguments and, on 4th September 2020, decided in favour of Styles & Wood.

The Myerson Solicitors team was led by Neil Armstrong and Jack Duncanson with Riaz Hussain QC of Atkin Chambers as Counsel.

Having represented Styles & Wood in both the adjudication and enforcement proceedings, Neil Armstrong, said: “It’s always exciting to test new precedents in court and this decision will be of significant interest to parties involved in adjudication and the insolvency of construction companies.”

The full judgment can be viewed here

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