Bresco v Lonsdale [2020] UKSC 25 [case comment]

• Published date: 01 December 2023
• Author: Asad Khan
• Date: 01 December 2023
• DOI: http://doi.org/10.1002/iir.1508

RESEARCH ARTICLE

Bresco v Lonsdale [2020] UKSC 25

[case comment]

Asad Khan

University of Nottingham, Nottingham, UK

Correspondence

Asad Khan, University of Nottingham, Nottingham, UK.

Email: mohammed.khan1@nottingham.ac.uk

1|INTRODUCTION

The Supreme Court in Bresco Electrical Services Ltd (in Liquidation) v Michael J Lonsdale

(Electrical) Ltd [2020]

1

gave its judgement in a case that clarified the relationship between adju-

dication and insolvency set-off. Shortly afterwards, the Court of Appeal in John Doyle v Erith

2

doubted the Supreme Court's reasoning on the main issues. The central issue in Bresco was

whether or not an insolvent company could seek adjudication in relation to cross-claims, which

would fall subject to the mandatory rules regarding insolvency set-off. The case raised impor-

tant questions about the compatibility of the statutory adjudication regime for construction dis-

putes with the mandatory operation of insolvency set-off.

The Supreme Court's judgement appeared to support the principles of party autonomy and

freedom of contract in holding that insolvent companies do enjoy the right to pursue adjudica-

tion, even against respondents with a cross-claim. This decision challenged the construction

industry's conventional understanding of the matter where, upon bankruptcy, the insolvency

rules took precedence over the adjudication regime and hence one could not adjudicate with an

insolvent company.

3

In Bresco, the court noted that adjudication could provide key practical

benefits, which may help liquidators dispose of assets, and hence adjudication was seen as a

valid exercise of rights for insolvent companies and not merely a futile exercise.

However, in John Doyle v Erith, the Court of Appeal made it more difficult for an insolvent

party to successfully adjudicate and appeared to diverge from the Supreme Court's understand-

ing of the link between adjudication and insolvency. The Court of Appeal seemed to dispute

1

Bresco Electrical Services Ltd (in Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 (‘Bresco v Lonsdale’

or ‘Bresco’).

2

John Doyle Construction Ltd (in liquidation) v Erith Contractors Ltd [2021] EWCA Civ 1452 (‘John Doyle v Erith’).

3

See, Marion Smith QC, David Sawtell and Philippe Kuhn, ‘Bresco v Lonsdale in the Supreme Court: Initial Reflections’

(Essex Chambers, 18 June 2020), available at: <https://www.39essex.com/bresco-v-lonsdale-in-the-supreme-court-initial-

reflections/>.

Received: 31 January 2023 Accepted: 2 August 2023

DOI: 10.1002/iir.1508

© 2023 INSOL International and John Wiley & Sons Ltd.

562 Int Insolv Rev. 2023;32:562–574.

wileyonlinelibrary.com/journal/iir