This month our experts examine the role of the liquidator in recovering debt and the options available to someone when the contractor has walked off site
The debt collectors
Can a liquidator for a firm force a debtor to go into arbitration to recover outstanding monies?
The liquidator’s role when a company is being wound up is to secure the assets, to realise and then distribute them to creditors and, if there is any surplus, to distribute this to the persons entitled to such surplus. The liquidator becomes an officer of the company and can act as if it were the company and enforce the debts owed.
If there is an arbitration clause in your contract with the contractor then the liquidator can institute arbitration proceedings to recover amounts due to the company in liquidation. However, the contractor may have to give security for costs. The liquidator may become responsible for the costs of the arbitration if he loses the arbitration.
In any such proceedings you will be entitled to raise such defences, counterclaims or set-offs as would have been available to you if the company had not gone into liquidation.
Desperately seeking a contractor
We are a practice of architects and surveyors with a job where the contractor is in dispute with the employer and will not return to site. Can we employ another contractor under the existing contract to finalise the works and claim the costs against the original contractor, or do we have to re-tender the work? The contract is the JCT Minor Works 98 edition.
There are two options open to you. First, the contract provides a procedure for termination. If the contractor is failing to proceed diligently with the works or is wholly or substantially suspending the carrying out of the works before practical completion, the contract administrator may give the contractor notice that specifies the default and requires it to be remedied. If the default is not remedied within seven days of receipt of this notice, you can then give the contractor further notice terminating his employment under the contract. Once the contract is terminated, the contractor will have to leave the site and the employer is not bound to make any further payment to the contractor that may be due under the contract until the works are complete and an account is taken as to the final cost of the uncompleted works. The employer is also able to recover from the contractor the cost of completing the works and any expenses incurred by the employer as a result of the termination, as well as any direct loss or damage the employer has suffered.
There is also the option of repudiation under common law. This is an express or an implied refusal by one party to perform the contract. What is required is conduct showing an intention no longer to be bound by the contract on one side, and an acceptance of that conduct as a repudiation by the opposing party. The employer has the right to accept the contractor’s repudiation as terminating the contract and to recover damages.
If you’re an experienced chartered surveyor, chartered builder or engineer, you might imagine that you could, say, offer building design services in France, submit a planning application in Belgium or value a property in Malta – it’s just a question of mutual recognition of qualifications. This is not the case – unless you also happen to hold the title of architect, that is. All of these functions (and others) are reserved exclusively for them.
The EU’s review of the legislation that governs cross-border recognition of professional qualifications is the biggest in 40 years. As drafted, however, the new rules won’t change a country’s right to reserve particular areas of work to those with a specific title, creating what is effectively a monopoly. It remains to be seen whether the argument that this is anti-competitive and against the principle of free movement holds any sway with MEPs.
In the pipeline
- Energy efficiency: a draft directive to ensure EU states save at least 1% more energy a year and 6% a year by 2012. First voting due in April.
- Cross-border services: a draft directive to cut red tape preventing firms from providing services or expanding business across borders. First voting due in May.
Jill Craig is head of European policy at the RICS’ Brussels office. Email: firstname.lastname@example.org