Wilson and Sharp Investments Ltd v Harbour View Developments Ltd

Wilson and Sharp Investments Ltd v Harbour View Developments Ltd

The Court of Appeal held that, on the true construction of the contracts, the appellant was entitled to withhold payment of sums certified in the interim certificates after the respondent entered creditors' voluntary liquidation, pursuant to clauses 8.5.3 and 8.7.3, regardless of whether the contract had already been terminated. The appellant had a bona fide dispute on substantial grounds as to the debt, and also had serious and genuine cross-claims. The judge below erred in his construction of the contract and in his assessment of the cross-claims. Accordingly, the injunction restraining presentation of a winding up petition should be granted.

Parties
Appellant: Wilson and Sharp Investments Ltd; Respondent: Harbour View Developments Ltd
Jurisdiction
England and Wales
Judgment Date
13 October 2015
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal allowed
Legal Topics
Winding Up Petition, Interim Payment Certificates, Insolvency of Contractor, Cross Claims and Set Off, Interpretation of Construction Contracts
Insolvency Law Construction Law Contract Law Winding Up Petition Interim Payment Certificates Insolvency of Contractor Cross Claims and Set Off Interpretation of Construction Contracts

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Parties

Wilson and Sharp Investments Ltd

Appellant

Harbour View Developments Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether the proposed petition debt is disputed on substantial grounds under the construction contract and insolvency law
  2. 2 Whether the established practice of the Technology and Construction Court precludes enforcement of interim payment obligations in favour of insolvent contractors by way of winding up petition
  3. 3 Whether the appellant has serious and genuine cross-claims exceeding the sums alleged to be outstanding under the interim payment certificates

Ratio Decidendi

The Court of Appeal held that, on the true construction of the contracts, the appellant was entitled to withhold payment of sums certified in the interim certificates after the respondent entered creditors' voluntary liquidation, pursuant to clauses 8.5.3 and 8.7.3, regardless of whether the contract had already been terminated. The appellant had a bona fide dispute on substantial grounds as to the debt, and also had serious and genuine cross-claims. The judge below erred in his construction of the contract and in his assessment of the cross-claims. Accordingly, the injunction restraining presentation of a winding up petition should be granted.

Court Disposition

Appeal allowed

Orders

  • Permanent injunction restraining presentation of a winding up petition against the appellant based on the interim certificates
  • Costs order set aside