Last month, the court summarily enforced an adjudicator’s decision in favour of an insolvent company despite there being an existing claim against the company and the performance security given by the insolvent company in respect of that claim being inadequate, as it was given by a non-trading parent company.
An adjudication between contractors Alun Griffiths Limited and Carmarthenshire County Council regarding unpaid sums for works carried out was decided in favour of Griffiths, who was balance sheet insolvent at the time.
The Council did not accept that the adjudication decision reflected the true state of the parties’ account and intended to dispute the true value of the works carried out by Griffiths in a subsequent cross-claim.
While the Council accepted that Griffiths was entitled to summary enforcement of the adjudicator’s decision by the courts, it sought a stay of execution of that enforcement pending the outcome of the true value dispute on the grounds that:
(i) Griffiths was insolvent; and
(ii) The guarantee offered by its parent company for the disputed sum was inadequate to safeguard the Council’s position because the parent company was not trading.