Anglo Swiss Holdings Ltd & Ors v Packman Lucas Ltd

The court may stay proceedings where a claimant pursues a claim without honouring an adjudicator’s decision and judgment concerning the same underlying dispute. That power derives from the court’s case-management jurisdiction and must be exercised sparingly, having regard to access to justice. Exceptional circumstances include bad faith or particularly oppressive or unreasonable conduct. In construction disputes, the Housing Grants, Construction and Regeneration Act 1996 establishes a “pay now, argue later” regime: an adjudicator’s decision remains binding until final determination. A claimant’s attempt to pursue the underlying dispute while withholding payment may undermine that statutory policy. Security for costs may also be ordered where the claimant is outside the jurisdiction and there is reason to believe that it cannot meet an adverse costs order, provided the order is just and does not improperly stifle the claim.

The claimants brought three related claims against an engineering-services provider, alleging that they had overpaid fees on property-development projects. Earlier adjudications had ordered the claimants to pay substantial sums to the defendant because the contractual and statutory notices required for withholding payment had not been served. The adjudication decisions were enforced by judgments and charging orders, but remained unpaid.

The defendant applied to consolidate the claims, stay them for non-compliance with the TCC Pre-Action Protocol and unpaid adjudication decisions and judgments, and obtain security for costs. The central issues were whether the claims should be stayed pending payment and whether the claimants’ financial position justified security for costs.

1. Pre-Action Protocol. The claims concerned substantially the same issues as the recent adjudications. They therefore fell within paragraph 1.2 of the TCC Pre-Action Protocol. A further stay would also have been disproportionate because the parties had already exchanged evidence and arguments on the alleged overpayments.
2. Power to stay. CPR Part 3.1 gave the court jurisdiction to stay proceedings where justice required. The power had to be exercised sparingly, with particular regard to access to justice. Unreasonable or oppressive conduct could justify a stay even without proof of dishonesty, applying the approach in Reed v Oury and Ali v Hudson.
3. Adjudication decisions. Sections 108 to 111 of the Housing Grants, Construction and Regeneration Act 1996 created a “pay now, argue later” regime. The claimants’ refusal to honour the adjudication decisions and the judgments enforcing them, combined with the weakness and apparent exaggeration of their claims, was oppressive and involved elements of bad faith. Allowing the claims to proceed would undermine the statutory regime and give the claimants an impermissible commercial advantage.
4. Security for costs. The conditions in CPR Part 25.13(2)(a) and (c) were satisfied. The claimants were Jersey companies outside the relevant jurisdictions, and there was reason to believe that they could not meet an adverse costs order. Security of £140,000 was appropriate, staged as £50,000 immediately and £90,000 on completion of witness-statement exchange.
5. The consolidated claims were stayed until the adjudication sums were paid and until £50,000 security for costs was provided. The defendant’s application succeeded subject to the stated costs directions.