'It’s a once in a lifetime case': South Northamptonshire lawyers achieve landmark Supreme Court ruling

A south Northamptonshire law firm has been at the forefront of a landmark Supreme Court appeal described as a gamechanger for the construction industry.

Blaser Mills Law LLP successfully settled a six-year-long legal dispute between two electrical companies in a ruling which has been welcomed by professionals.

The Silverstone-based firm's client, Bresco Electrical Services Ltd, was found to be owed money by Michael J Lonsdale (Electrical) Ltd after a complicated legal battle that has captivated the law world.

Commercial litigation partner Jackie Ray, who spearheaded the case with lawyer Nina Bhatti, said the decision was an excellent result for their client.

“This case has been of great interest to the legal world and, having progressed through a first instance decision to the Court of Appeal and finally to the Supreme Court, it’s a once in a lifetime case and the right decision," she said.

In 2014, the two companies entered into a contract whereby Bresco agreed to perform sub-contract electrical work for Lonsdale.

However, in December 2014, Bresco, based in Sidcup, Kent, left site without completing the work, with both firms claiming the other had wrongfully terminated the contract.

Bresco went into liquidation in 2015 but two years later, Lonsdale, which is based in Langley, Berkshire, made a claim against Bresco for wrongful termination of the contract and claimed the costs of completing the works.

However, Bresco maintained that it was Lonsdale that had actually terminated the contract and therefore Lonsdale owed it money.

Bresco referred its claim to adjudication seeking payment for work done and damages for breach of contract.

Lonsdale sought an injunction to prevent the adjudicator rendering its decision, stating that it had no jurisdiction as Bresco was insolvent.

Bresco appealed the injunction at the Court of Appeal, which stated that the only claim that could be enforced was a claim for the net balance arising out of an insolvency set-off.

The set-off occurred automatically when Bresco entered Liquidation and the adjudicator did not have jurisdiction over the matter.

On appeal from the Court of Appeal, the Supreme Court confirmed that there was no absolute jurisdictional bar preventing an insolvent party commencing and pursuing an adjudication.

Therefore, the cross appeal by Lonsdale on jurisdiction failed and was dismissed on June 17, 2020, meaning Bresco won.

“With the severe impact Covid-19 has had on the construction industry, the judgement is well timed for those facing insolvency because of the pandemic.

"They will no longer have to ignore a potentially good adjudication claim and have the reassurance that it can be pursued even after they enter an insolvency process.”

The case has been the subject of many webinars and commentaries, including The Times’ legal commentary, while legal guidance website Practical Law described it as ;this year’s landmark case'.

The judgement has been welcomed by those involved in construction claims and by insolvency professionals, as adjudication is a quicker route to determine the value of claims and realise greater value for creditors.

More information can be found at supremecourt.uk/cases/uksc-2019-0036.html.