(1) William Oakley (2) David Oakley v (1) Airclear Environmental Limited (2) Airclear TS Limited
Thursday, 4 October 2001
Key terms: Section 108 - Validity of Appointment - Statutory demand -Insolvency Act 1986 - Insolvency Rules 1986 SI 1986/1925
The claimant, Oakley, appealed from the decision of HH Judge Chambers, who refused to set aside a statutory demand. Oakley were the main contractor for works to Bar 38 in Cardiff. Airclear were chosen as a sub-contractor. The employer completed section 1of the NAM/T and sent it to Airclear. A copy was later sent to Oakley. Airclear should have completed section 2 with proposals for timing and insurance etc. No formal agreement was concluded, but Oakley paid Airclear after deducting sums for a discount, contract charges and costs associated with delay. Airclear did not agree with amount of the payments, arguing that there was no contract, or if a contract existed then it was on the NAM/SC terms, clause 35 of which provided that disputes could be referred to adjudication Oakley sought to appoint an adjudicator under the NAM/T, whilst Airclear applied to appoint an adjudicator under the NAM/SC. Despite arguments over the appointment, an adjudicator was appointed. He decided that money should be paid by Oakley to Airclear.
Oakley did not pay. Airclear issued a statutory demand for the amount on the basis that it was a debt due. Airclear sought to set aside the statutory demand. Oakley argued that:1. there was no contract, and therefore the terms of the NAM/T and NAM/SC did not apply, and so the adjudicator did not have any jurisdiction with the result that his decision was a nullity;2. even if there was a contract it was not "in writing" within section 107 of the Act, and so the debt was disputed within rules 6.5(4) of the Insolvency Rules 1986.
HH Judge Chambers QC dismissed Oakley's application to set aside the statutory demand. On appeal, Etherton J held that:1. The judge was entitled to find that Oakley and Airclear shared an assumption that their agreement was governed by the NAM/T and NAM/SC. Oakley could have been estopped from resiling from that assumption. However, there was insufficient evidence to show that it was unconscionable for Oakley to resile, and so; 2 the adjudicator had not been validly appointed and his decision was a nullity; 3 the statutory demand was not based on a debt as the decision was a nullity and so the threat of insolvency for not paying the amount decided by the adjudicator was not a proper way to proceed. The appeal was therefore allowed.
Oakley did not pay. Airclear issued a statutory demand for the amount on the basis that it was a debt due. Airclear sought to set aside the statutory demand. Oakley argued that:1. there was no contract, and therefore the terms of the NAM/T and NAM/SC did not apply, and so the adjudicator did not have any jurisdiction with the result that his decision was a nullity;2. even if there was a contract it was not "in writing" within section 107 of the Act, and so the debt was disputed within rules 6.5(4) of the Insolvency Rules 1986.
HH Judge Chambers QC dismissed Oakley's application to set aside the statutory demand. On appeal, Etherton J held that:1. The judge was entitled to find that Oakley and Airclear shared an assumption that their agreement was governed by the NAM/T and NAM/SC. Oakley could have been estopped from resiling from that assumption. However, there was insufficient evidence to show that it was unconscionable for Oakley to resile, and so; 2 the adjudicator had not been validly appointed and his decision was a nullity; 3 the statutory demand was not based on a debt as the decision was a nullity and so the threat of insolvency for not paying the amount decided by the adjudicator was not a proper way to proceed. The appeal was therefore allowed.