This summer’s landmark Supreme Court decision in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (in Liquidation) [2020] UKSC 25 (“Bresco”) would have doubtless been interesting news for Insolvency Practitioners (“IPs”) engaged in the construction sector.

It is an unfortunate reality that the number of insolvencies in the construction sector seems certain to rise in coming months as the economic impact of COVID-19 takes effect. In this context, the recent Supreme Court decision in Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 is particularly relevant.

This case concerned important questions regarding the compatibility of two statutory regimes:

Introduction

The recent Supreme Court decision in Bilta (UK) Ltd (in liquidation) and others v Nazir and others has provided office holders with greater (but not final) clarity on the operation of the ‘illegality defence’.

Many readers will be familiar with the concept of the illegality defence, otherwise referred to by the maxim “ex turpi causa non oritur actio”.  It is a rule of law which provides that a claimant cannot rely on its own wrongdoing to found a claim against another party.