Sub-contractor claiming against my new company

Problem: Some few years ago my specialist contracting business had a contract with a large (and well known) construction company, and to assist my business in carrying out the contract, I employed a couple of sub-contractors.

In 2018, the construction company went into administration, and my business was so badly affected it had to cease trading and was placed into liquidation, of which unfortunately, left the sub-contractors that my business had employed also badly affected in terms of payment. 

I subsequently started another contracting company (which is still trading), and shortly after, one of the sub-contractor’s who had been employed by my now liquidated company, sent an invoice to my new company for the work it had done for my now liquidated company.  I rejected this invoice on the basis that the contract was not entered into by my new company. 

I heard nothing more until this week, when I received a Claim Form from the County Court – it had been instigated by the sub-contractor who is claiming just over £23,000 plus interest and court costs and has been directed to my new company.   What do I do?

Response:  From the outline you have provided, your new company is not liable.  The contract was clearly between your previous company (which is no longer trading), and the sub-contractor, and hence the sub-contractor does not have a cause of action against your new company.

I strongly recommend that you instruct a solicitor, who will then draft a defence and make an application to the Court to strike out the claim – you have an absolute defence to the claim.  

Strike out is a court procedure (from the Civil Procedure Rules), which enables a defendant (or sometimes a claimant), to make an application to strike out either part or in total particulars of claim on a number of grounds including where a claim is incoherent, there is an absence of facts indicating what the claim is about or where the claim is ill-founded (as with your matter).

Once the application is filed at the Court, a hearing will follow and if you are successful in your application, the claim will stop there and then, and you will also be able to claim costs.

© Michael Gerard 2023
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background
Michael is a Solicitor, Chartered Builder & Registered Construction Adjudicator, and is a director at Michael Gerard Law Limited, a solicitors practice regulated by the SRA.