Expert Witness Journal Dec 24 - Journal - Page 87
Liquidation of VPL
Following the second adjudication, SGL petitioned for
the winding up of VPL, who subsequently went into
liquidation before enforcement of the second adjudicator’s decision could be brought. SGL was granted
permission to bring the enforcement claim (under section 130 of the Insolvency Act 1986) to prove the debt
owed to it in the liquidation.
Key takeaways:
l Had VPL chosen to novate to Grainger (and novated successfully), then SGL would not have been
able to bring its claim as it would be directly liable for
the costs incurred by the replacement contractor in
completing the works under the contract. However,
Grainger would understandably have been reticent to
agree to this as an assignment effectively protected
them from any potential claims being brought by SGL.
Accordingly, this is likely to be one of the reasons there
wasn’t a novation.
The judgment - part 8 proceedings
Despite VPL being insolvent, the administrators of
SGL decided to pursue a part 8 claim. This was permitted by the courts because the liquidators for VPL
were not opposing the application for permission, nor
entering any defence on the part of VPL, who was unrepresented at court. The judge, Mr Justice Kerr, noticeably mentioned that he relied upon VPL’s defence
as set out in the second adjudication.
l Conditions surrounding assignment must be
followed or else parties risk the assignment being
void. The giving of notices is sometimes overlooked
due to being thought of as a courtesy rather than an
obligation.
l Novation and assignment are very different in their
effect and implementation. Parties should seek advice
if unsure of the distinction between the two.
Interestingly, SGL was not seeking a straightforward
enforcement of the second adjudicator’s decision, but
a declaratory relief that the second adjudicator had
reached the wrong conclusions, notwithstanding that
the decision was in SGL’s favour.
l In construction contracts it is quite common for
obligations to survive and continue to have effect posttermination. Therefore, parties should ensure that
they correctly follow these even if they were not the
cause of termination, so as to avoid any unintended
consequences.
SGL submitted the second adjudicator had erred in
his interpretation of the contract and that the value of
the works had been significantly higher. Indeed, were
this submission to succeed the amount owed to SGL
would jump from £356,008 to nearer £11m (which
VPL had described as a windfall).
References
[1] Paragraph 22 of the judgment.
[2] Paragraph 24 of the judgment.
[3] Ibid.
[4] Ibid.
[5] Paragraph 82 of the judgment.
[6] Snell's Equity 34th edition at 3-028
In the judgment, Mr Justice Kerr found:
l The second adjudicator had misinterpreted the
contract in determining the amount payable by reference to the value of the work done. This is not what
the Contract stipulated as the relevant sum for the
purpose of calculating sums due.
Mr Timothy Gillow
l VPL had not sought SGL’s consent to the assignment as was required by the contract.
Consultant Ophthalmologist
l VPL could not pass the burden of the contract (to
prepare the statement of account and make payment)
through an assignment.
MA(Cantab), MBBS(Lond), MRCP(UK), FRCophth
Mr Timothy Gillow is a Consultant Ophthalmic Surgeon, at the University Hospital of
North Midlands 2000-2024. He undertook ophthalmology posts in London, Liverpool
and Birmingham. West Midlands Ophthalmology Higher Surgical Training Rotation.
l However, whilst the assignment was invalid, the
assignee, Grainger, “should be treated as “the Employer” for limited accounting purposes to avoid injustice.”[5] For this reason, the party that had actually
incurred costs should be brought into the account.
Consequently, SGL was not entitled to its £11m “windfall” on the equitable principle that "where it is a
condition of enjoying the benefit that a burden is assumed, the assignee cannot enjoy the benefit without
discharging the burden".[6]
He has a Broad clinical experience.
With special interest in diabetic eye, medical retina, small incision cataract surgery,
glaucoma, retinovascular disease, and age related macular degeneration.
Areas of expertise include;
Cataract surgery
Lens cataract surgery
Multifocal lens cataract surgery
Extended depth of focus
External eye and eyelid disease
Dry eye and corneal disease
Cataract surgery
Neuro ophthalmology
Glaucoma
Medical retina
l SGL had submitted a case containing a logical
fallacy. It had sought to deny the effectiveness of the
assignment to transfer VPL's rights and obligations to
the assignee, while simultaneously relying on the assignment to deny the incurring of expenses and the
suffering of losses by VPL. It could not have it both
ways.
Mr Timothy Gillow has over 24 year history of medicolegal work.
Undertaking personal injury for claimant, defendant and joint, medical negligence and
major cases for technical, pharmaceutical and patents.
Contact
Donna Davies, tel: 01782 614 174 - Mobile: 07580 078 437
Email: tim.gillow@bramptonmedical.co.uk
Alternate Email: practicemanager@bramptonmedical.co.uk
Website: www.bramptonmedical.co.uk
Address: Brampton Medical, 36 Hanover Street, Newcastle-under-Lyme
Staffordshire, ST5 1AU
l For these reasons, the judge held that declaratory
relief was dismissed, and SGL was not entitled to claim
the £11m difference.
EXPERT WITNESS JOURNAL
85
DECEMBER 2024
