Kew Holdings Ltd v Donald Insall Associates Ltd

[2020] EWHC 1862 (TCC)

DIA was retained to provide architectural services to Kew. In February 2019, DIA obtained a court order against Kew summarily enforcing the decision of an Adjudicator in the sum of £210k. Kew did not pay, but in March 2020 commenced a TCC claim for damages of approximately £2 million. DIA issued an application seeking that the claim be either struck out unless KEW pay DIA the sums ordered by the court until the £210k was paid or stayed. 

In the case of Anglo-Swiss v Packman Lucas (see Issue 115) Mr Justice Akenhead had had to consider whether an established refusal to honour or satisfy a previous adjudication decision and court judgment would justify the stay of separate legal proceedings concerning the same subject matter, pending payment. He said:

“(i) The Court undoubtedly has the power and discretion to stay any proceedings if justice requires it. 

(ii) In exercising that power and discretion, the Court must very much have in mind a party’s right to access to justice and to issue and pursue proceedings. 

(iii) The power is one that is to be used sparingly and in exceptional circumstances. 

(iv) Those circumstances include bad faith and where the claimant has acted or is acting particularly oppressively or unreasonably.”

Unsurprisingly therefore, Kew did not oppose the application to stay proceedings pending payment of the sums ordered in February 2019. The strike out application was opposed. Mrs Justice O’Farrell noted that: 

“There is nothing in the HGCRA or in the above authorities that would render the current proceedings unlawful or an abuse of process as submitted by the Defendant. The HGCRA provides that an adjudication award is binding only until the dispute is finally determined by legal proceedings, arbitration or by agreement. Therefore, it expressly contemplates the commencement of legal proceedings to establish the parties’ rights and obligations by way of a final binding determination. Unlike the adjudication provisions, which are subordinate to the payment provisions in the HGCRA, the right to bring legal proceedings to determine rights and obligations and seek remedies is more fundamental.”

Kew said that there was no reason why it should not be entitled to pursue its claim once payment of sums due under the February Order had been paid. DIA was relying on the “pay now, argue later” regime of the HGCRA to justify the application for a stay. However, to strike out the claim would be contrary to that regime since it would deprive Kew of the ability to “argue later”. The Judge found in favour of Kew:

“I am satisfied that the Claimant is in deliberate and persistent breach of the Order dated 5 February 2019. The Claimant’s repeated promises to pay the outstanding sum indicate that it could satisfy the judgment but has chosen not to do so. The commencement of these proceedings without honouring the adjudication award and the judgment, in flagrant disregard of the “pay now, argue later” regime of the HGCRA, amounts to unreasonable and oppressive behaviour. However, I accept the submissions by Mr Smith that striking out the claim at this stage would be too draconian; the Defendant is entitled to the protection afforded by a stay of proceedings unless and until the judgment has been satisfied but the Claimant should be allowed to pursue its claims once it has paid the outstanding judgment sum.”

Kew was also ordered to provide substantial security for DIA’s costs. 

Back to the previous page

Click to download PDF