Court entered default judgment against company in administration

The claimant was a national provider of insurance and warranty cover for new build and newly refurbed residential properties. The defendant’s wholly owned subsidiary was registered as a builder with the claimant. The claimant provided insurance cover for two blocks of flats built by the defendant’s wholly owned subsidiary.

Defects were discovered in these flats and the claimant paid out circa £700,000 for remedial works. The defendant had agreed to indemnity the claimant for any default by the defendant’s subsidiary by way of a deed of indemnity.

The claimant issued its claim against the defendant in February 2022 and those proceedings were stayed whilst the parties complied with the relevant pre-action protocol. The claim form was not served before the stay was entered into.

In May 2022, the defendant’s subsidiary entered into a CVA which purported to compromise the ability of creditors to call upon guarantees from the defendant. The claim was served on the defendant in September 2022 and the defendant applied for summary judgment arguing the claim has no prospects of success because it had been compromised by the CVA. The CVA was set aside in January 2023. The defendant’s subsidiary thereafter went into administration.

The defendant failed to serve a defence and the claimant applied for default judgment. The defendant then went into administration before the hearing of the default judgment application so the proceedings could not be continued without permission of the court.

The court gave permission for the continuation of the proceedings and granted default judgment in circumstances where the proceedings had been on-going for some time, the defendant had not put forward a defence to the claim, and the judgment would not be to the detriment of the defendant or its creditors.

National House Building Council v Mizen Properties Ltd [2023 WL 04479754]

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