William Hare Ltd v Shepherd Construction Ltd
Citation: EWCA Civ 283;  BLR 358,  12 EG 96, 130 Con LR 1,  CILL 2825,  22 EG 108
Nature of case:
This case concerned a pay-when-paid clause, which sought to enable Shepherd to withhold payment from its subcontractors in the event of insolvency of the Employer, Trinity Wakefield. Insolvency was defined by reference to the insolvency procedures in the Insolvency Act 1986, but failed to take account of the amendments to the administration regime (introduced by the Enterprise Act 2002), which enables a company to enter insolvency otherwise than by a Court Order. The Employer entered administration by the filing of the requisite forms at Court i.e. without a Court Order. Shepherd sought to argue that the Employer’s administration triggered the pay-when-paid clause. The Court of Appeal found that the pay-when-paid clause was ineffective as its reference to “the making of an administration order” did not cover an out of court administration.