Winding Up Notice
Discussion
Just a quick query. We are at present if dispute with a sub contract we used on a construction site with regards to an amount of monies they feel due, however we feel otherwise.
The amount in question is circa 8k, and as per our conditions of order, any such dispute should be referred to Adjudication. They are saying they are now not in receipt of our order, however surely in these instances if would refer then to the Housing Grants, Construction & Regeneration Act 1998, which standard method of resolving is also adjudication ?
I have no issue with adjudication, as I feel we have a good case, however I have today recieved an email from the sub contractors stating he has instructed his solicitor (to whom we have provided copies of everything they required), to present a Winding Up Notice at London High Court.
Can this be done when the debt is in dispute ?
The amount in question is circa 8k, and as per our conditions of order, any such dispute should be referred to Adjudication. They are saying they are now not in receipt of our order, however surely in these instances if would refer then to the Housing Grants, Construction & Regeneration Act 1998, which standard method of resolving is also adjudication ?
I have no issue with adjudication, as I feel we have a good case, however I have today recieved an email from the sub contractors stating he has instructed his solicitor (to whom we have provided copies of everything they required), to present a Winding Up Notice at London High Court.
Can this be done when the debt is in dispute ?
IANAL, but my understanding is that if the debt is in dispute then the Winding Up Petition should be dimissed. Obviously this doesn't stop your subcontractor from wasting his money and your time by going to court and having the case dismissed, but it could land him with a hefty costs order.
UpTheIron said:
IANAL, but my understanding is that if the debt is in dispute then the Winding Up Petition should be dimissed. Obviously this doesn't stop your subcontractor from wasting his money and your time by going to court and having the case dismissed, but it could land him with a hefty costs order.
Yep. A winding up order is only suitable when the company in question is unable to meet it's debts. Usually that's after having a court hearing for those debts to have been confirmed by a court and after the 14 days no payment is made. This is not the case here and I rather think you will have a very good claim indeed for your costs....... I have a case somewhere or other in my notes which may help if you want in respect of this issue for you to put to the other side, the Bankruptcy judge is criticising the abuse of process of those who issue a winding up order/stat dec in order to force payment when there is a dispute...We 'could' make the payment immediately, however the dispute is about some works on site which are not as they should be, and as yet the contractor has not been back to put right.
As its construction industry based, when we hand a project over we have a 12 months 'defects period' during which any issues can be raised to which we have to remedy. Once out of this period, everything is fine.
We are about 10 months into the 12 months defects period and the client has not mentioned the problem, so is either a) not aware, b) not bothered or c) waiting until end of 12 months to issue us a complete list.
To remedy the defective works means other trades having to remove/amend/alter thier works, so if I did release the monies now and then recieved a notice of defect in a couple of months, then having to orgnaise all trades, we ourselves could be out of pocket to the tune of maybe 10k, hence the reason for non payment.
As its construction industry based, when we hand a project over we have a 12 months 'defects period' during which any issues can be raised to which we have to remedy. Once out of this period, everything is fine.
We are about 10 months into the 12 months defects period and the client has not mentioned the problem, so is either a) not aware, b) not bothered or c) waiting until end of 12 months to issue us a complete list.
To remedy the defective works means other trades having to remove/amend/alter thier works, so if I did release the monies now and then recieved a notice of defect in a couple of months, then having to orgnaise all trades, we ourselves could be out of pocket to the tune of maybe 10k, hence the reason for non payment.
You're probably better off picking the phone up and dealing with it before it escalates from £8k to several times that in terms of legal/time/opportunity/reputational costs.
You may need to refer to the contract to see what the retention and defect repair agreement is.
Hope it works out
You may need to refer to the contract to see what the retention and defect repair agreement is.
Hope it works out
Just get a solicitor to write to them explaining stating that as the invoice is in dispute then he will aplly to have the winding up petition put aside at the other parties cost. The other party have to advertise that a winding up petition is served in the London standard? (can't recall exactly which rag).
This should buy you enough time to come to an agreement, which I suggest you do, as no one will win if not.
Top value for a small claims court is £5k generally however the Judge use his discretion for higher amounts.
Document everythingas if it does end up in court, believe me, you will need it.
Come to an agreement between yourselves, have it documented legally, and save your money (small claims rarely award costs) and mostly time. Even small cases can be very time consuming.
This should buy you enough time to come to an agreement, which I suggest you do, as no one will win if not.
Top value for a small claims court is £5k generally however the Judge use his discretion for higher amounts.
Document everythingas if it does end up in court, believe me, you will need it.
Come to an agreement between yourselves, have it documented legally, and save your money (small claims rarely award costs) and mostly time. Even small cases can be very time consuming.
If you have formally placed the invoice in dispute and yet the subcontractor has instructed their solicitor to issue a notice before action for a winding up order, I would advise reminding the solicitor of the history and reason for the dispute.
However, you appear to be claiming set off, and this would not be an advisable route to take as this is a difficult defence to uphold.
If the winding up petition reaches court and is advertised in the London Gazette, you have 28 days to have the notice set aside, and with the full facts a judge should understand the reasons, providing you can provide a clear connection between the poor quality service provided and the potential loss to yourself, should the issues be raised and require rectifying.
However, you appear to be claiming set off, and this would not be an advisable route to take as this is a difficult defence to uphold.
If the winding up petition reaches court and is advertised in the London Gazette, you have 28 days to have the notice set aside, and with the full facts a judge should understand the reasons, providing you can provide a clear connection between the poor quality service provided and the potential loss to yourself, should the issues be raised and require rectifying.
Hobo said:
We 'could' make the payment immediately, however the dispute is about some works on site which are not as they should be, and as yet the contractor has not been back to put right.
As its construction industry based, when we hand a project over we have a 12 months 'defects period' during which any issues can be raised to which we have to remedy. Once out of this period, everything is fine.
We are about 10 months into the 12 months defects period and the client has not mentioned the problem, so is either a) not aware, b) not bothered or c) waiting until end of 12 months to issue us a complete list.
To remedy the defective works means other trades having to remove/amend/alter thier works, so if I did release the monies now and then recieved a notice of defect in a couple of months, then having to orgnaise all trades, we ourselves could be out of pocket to the tune of maybe 10k, hence the reason for non payment.
Timing and notices are key here. Is the £8k their whole or part of the second part of the retention monies or have you have you not released any knowing that the defect has existed for a while? If you haven't released any did you issue a notice to withhold in the correct manner and timescale? If it is part of, or the whole of, the second part of the retention monies have you informed them of the potential defect which may require remedy before a certificate of making good would be issued and thus their retention sum would depend on this. (all this assumes you have a back to back contract with your subcontractor that you have with your client). As its construction industry based, when we hand a project over we have a 12 months 'defects period' during which any issues can be raised to which we have to remedy. Once out of this period, everything is fine.
We are about 10 months into the 12 months defects period and the client has not mentioned the problem, so is either a) not aware, b) not bothered or c) waiting until end of 12 months to issue us a complete list.
To remedy the defective works means other trades having to remove/amend/alter thier works, so if I did release the monies now and then recieved a notice of defect in a couple of months, then having to orgnaise all trades, we ourselves could be out of pocket to the tune of maybe 10k, hence the reason for non payment.
The issue of adjudication would be the manner i would expect all construction disputes to be handled but this would be if a dispute had crystalized between you and the subcontractor. This would need to be in writing and clear between the parties.
If you want to pm me with some details i'll do my best to give you some more accurate answers but am happy if you want to keep it open forum so others can chip in.
- Just read again some of the other posts and i assumed that the subcontractor submitted applications for payment which you adjusted or not and issued notices and payments against and not invoices. If they submitted invoices and these were not disputed they may be able to abuse the construction adjudication process a little claiming they had no order, etc. as it sounds like they may be doing.
Edited by sal 965 on Friday 26th February 16:08
UpTheIron said:
IANAL, but my understanding is that if the debt is in dispute then the Winding Up Petition should be dismissed.
Yup! As i understand it, this is bang-on. Check your email trail and make sure that at no point you have accepted the full amount if the debt as fact (since the dispute arose). Be ready t present a case for why the debt is in dispute (faulty workmanship, disagreement over work completed etc) and as soon as a Judge sees it is in dispute he will throw out the Winding Up order.Your creditor is using a sledgehammer to crack a walnut but sometimes it works to scare a debtor into paying. As I understand it, as long as there is a dispute, the Winding up order will get short shrift. Check with a solicitor though.
TDIPLC said:
You're probably better off picking the phone up and dealing with it before it escalates from £8k to several times that in terms of legal/time/opportunity/reputational costs.
This man is correct. Speaking from bitter experience having not done this previously, I suggest a frank face to face conversation with the subbie.Don't start writing letters if you can do it face to face instead
Sent a letter stating debt was disputed, and that a letter from thier solicitor confirmed this as said the dispute had crystalised. As such should issue said notice we would apply for this to be set off as an abuse of court, all costs incurred would be at thier liability.
Not heard anything since, so either gone away, or its the calm before the storm !!!
Not heard anything since, so either gone away, or its the calm before the storm !!!
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