Mentmore Towers Ltd & Ors v Packman Lucas Ltd.

The court has jurisdiction under section 37 of the Senior Courts Act 1981 to restrain the pursuit of an adjudication. The same principles apply as when considering a stay of court proceedings on grounds of unreasonable and oppressive conduct, although their application may produce a different result because adjudication and litigation have different characteristics. A party’s statutory right to adjudicate at any time does not prevent that jurisdiction being exercised. Pursuing a claim to determine the final account while refusing to pay an existing adjudication award may be unreasonable and oppressive, particularly where it circumvents the pay now, argue later policy of the Housing Grants, Construction and Regeneration 1996. Payment into court or reliance on charging orders is not equivalent to paying the adjudicator’s award in cash.

The defendant engineering company had obtained adjudication awards against three claimant companies for outstanding fees. The awards were enforced by judgments, but remained unpaid. The claimants then brought proceedings seeking declarations and repayment of alleged overpayments. Those proceedings were stayed by Akenhead J for unreasonable and oppressive conduct, including failure to honour the adjudication awards and enforcement judgments.

The claimants subsequently commenced three adjudications concerning the same underlying accounts. The defendant applied for an injunction restraining further steps. The issues were whether the court had jurisdiction, whether the same criteria applied as on an application to stay litigation, and whether the claimants’ revised, less exaggerated claims altered the position.

1. Jurisdiction. The court had jurisdiction under section 37 of the Senior Courts Act 1981 to restrain a party from pursuing a referral to adjudication. The jurisdiction had to be exercised sparingly.
2. Applicable principles. There was no difference in principle between staying litigation and restraining further pursuit of an identical claim by adjudication on grounds of unreasonable and oppressive behaviour. The fact that adjudication is quicker, cheaper, statutory and temporarily rather than finally binding may affect the application of the principles, but does not produce an automatic result. The statutory right to adjudicate at any time did not prevent restraint.
3. Effect of the revised claim. The earlier finding of unreasonable and oppressive conduct did not depend on deliberate or reckless exaggeration of the alleged overpayment. Any exaggeration was an aggravating factor. The central concern was the attempt to obtain a final determination without first honouring the adjudicator’s awards, thereby undermining the legislative policy of the Housing Grants, Construction and Regeneration 1996.
4. Application. The new adjudications were another attempt to circumvent the statutory machinery and its pay now, argue later policy. It was oppressive to subject the defendant to further proceedings while the awards and judgments remained unsatisfied. Offers to pay money into court and charging orders were not substitutes for payment in cash. The defendant was entitled to receive the adjudicated sums before the claimants pursued the underlying dispute.
5. The claimants were restrained from taking any substantive step in, or enforcing or implementing any decision arising from, the adjudications until they complied with the specified orders for payment of costs, security for costs, the judgment debt and accrued interest. The stay was lifted only to determine the injunction application. Costs were reserved for further submissions.

The judgment was a first-instance decision on the defendant’s injunction application. The underlying proceedings had previously been stayed by Akenhead J in [2009] EWHC 3212 (TCC) for unreasonable and oppressive conduct and failure to honour adjudication awards and court judgments.