Sub-contractor wins £1m dispute over payment during Covid19

A construction company was entitled to immediate payment of £1m that it had been awarded by an adjudicator following a contract dispute.

That was the decision of the Technology & Construction Court in a case involving Quadro Services Ltd and FP McCann Ltd

The issue arose after McCann had been engaged to construct buildings for a university and entered into a sub-contract with Quadro worth more than £4 million.

McCann later terminated the contract following a dispute over its terms.                                                 

Quadro issued a claim seeking £1.6 million in damages and served a notice to refer the dispute to adjudication.

The adjudicator decided that McCann was in repudiatory breach of contract and awarded Quadro over £1 million.

McCann issued proceedings to challenge the adjudicator's decision.

Quadro then applied for summary judgment to enforce the adjudicator's decision without having to wait for further legal proceedings take place.

McCann sought a delay and for the judgment sum to be paid into an escrow account or the court pending the outcome of the proceedings. It feared that the financial difficulties caused by the Covid pandemic meant that Quadro (McCann) might not be able to repay the money if the decision was overturned at the full hearing.

The court refused the application and ordered that the sum should be paid immediately.

It held that a delay should only be imposed in exceptional circumstances, such as if there were serious concerns that a company would not be able to repay the money if the award were overturned.

That did not in this case. The financial information did not suggest that it was probable that Quadro would be unable to repay the judgment sum. While it had been impacted by the COVID-19 pandemic and the fact that it had lost a major contract, its accounts showed that it continued as a going concern.

Please contact us if you would like more information about the issues raised in this article or any aspect of contract law.

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