This article was written by Greg Standing, partner in Wragge & Co LLP's finance, insolvency, recoveries and sales team and published in the July issue of Motor Finance.

When a claimant discontinues its claim, the usual position is that it has to pay the defendant's reasonable legal costs. This is the general presumption under the Civil Procedure Rules and applies unless there is good reason for it not to.

It wasn't so long ago that retention of title (RoT) clauses took somewhat of a backseat. Afterall, deciding who owned what on a construction site given the number of parties involved in any one project was not an easy task. However, given current market conditions and the increase of buyer insolvency, many suppliers are turning their attention back to the clause in an attempt to claw back their goods.

Armed with an adjudicator’s decision and a TCC enforcement judgment, can a party issue a statutory demand for payment, even if the other party has a genuine and substantial cross claim against the sum awarded? No, said Judge Stephen Davies in Shaw v MFP. Neither the Construction Act nor the Scheme was intended to displace the position under the Insolvency Rules, which give the court discretion to set aside a statutory demand if the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the debt in the statutory demand.

An adjudicator can only deal with one dispute under one contract. In Enterprise v McFadden the adjudicator could not therefore deal with a claim to a net balance arising out of mutual dealings on four separate subcontracts (one of which was not even a construction contract) under Rule 4.90 of the Insolvency Rules 1986. Tripartite adjudication is not possible so the adjudication could not cope with a cross claim which would have involved joining assignors.

In June 2007 we reported on the decision in Prudential Assurance Company Ltd v PRG Powerhouse Limited. Although the case has given rise to a great deal of debate, until now there has been no subsequent reported case in which the court has had to consider whether and how a company voluntary arrangement (CVA) might fairly effect a compromise of a landlord's claim against a guarantor of its tenant.

Last week the High Court of England and Wales revoked a company voluntary arrangement (CVA) promoted by retailer Miss Sixty in a damning judgment that called into question the conduct of the practitioners involved. The case of Mourant & Co Trustees Limited v Sixty UK Limited (in administration) [2010] could end so-called guarantee stripping – where the CVA purports to discharge guarantees given by a third party – and provide powerful ammunition to landlords seeking to negotiate future CVAs with tenant companies.

R (on the application of Global Knafaim Leasing Ltd and another) v. Civil Aviation Authority and another

Financial guarantees often contain non-competition clauses. This is mainly to:  

• increase the financier’s recoveries from its principal debtor, by stopping the guarantor from draining money from the principal debtor; and  
• prevent the guarantor from obstructing a restructuring of the principal debtor’s liabilities.  

A recent case suggests these clauses should expressly exclude the “rule in Cherry v. Boultbee”. Zoë Thirlwell and Alexander Hewitt explain.

Counter-indemnity rights  

In Harms Offshore AHT ‘Taurus’ GmbH & Co KG v Bloom [2009] EWCA Civ 632, the English Court of Appeal had to decide whether it would grant an order to vacate an attachment on the property of a company in administration, even though the attachment was obtained by a creditor in a foreign court.

In Pick v Sumpter and another, the first defendant's trustee in bankruptcy applied for an order for possession of the defendants' matrimonial home. At the hearing in May 2006, the evidence showed that the sum outstanding as at November 2005 was £25,571 but did not take into account legal costs. That sum was an estimate and did not take into account statutory interest on the bankrupt's debts beyond the date of the hearing, solicitor's costs of the possession hearing or any increase or decrease in the trustee's remuneration.