Kew Holdings Ltd v Donald Insall Associates Ltd

A party’s failure to pay an adjudication award and judgment may justify a stay of later proceedings, particularly where the conduct is deliberate, persistent and oppressive. It does not, without more, make a subsequent claim unlawful or an abuse of process. The statutory “pay now, argue later” regime preserves the right to bring proceedings for a final determination of the parties’ rights.

Security for costs may be ordered where the claimant is unable to meet an adverse costs order within the usual payment period. Long-term equity in property may be inadequate if it cannot be realised promptly. The court must consider all the circumstances, including whether security would stifle the claim, and should order a proportionate sum with a reasonable opportunity for payment.

The claimant, a Cayman Islands company owning a single property, brought a professional negligence and breach of contract claim concerning architectural services. The defendant had previously obtained an adjudication award and summary judgment for unpaid fees. The claimant had not paid, and enforcement proceedings concerning a charging order and sale of the property were continuing.

The defendant applied to strike out the new claim, alternatively to stay it pending payment, and sought security for costs. The central issues were whether non-payment made the claim an abuse of process, whether a stay was appropriate, and whether the claimant should provide security for the defendant’s costs.

1. Stay pending payment. The court accepted that it had power to stay proceedings under CPR 3.1(2)(f), but that the power must be used sparingly and in exceptional circumstances, having regard to access to justice. The claimant’s deliberate and persistent failure to comply with the judgment, despite repeated promises to pay, was unreasonable and oppressive. A stay pending payment was therefore justified.
2. Strike-out refused. The “pay now, argue later” regime under the Housing Grants, Construction and Regeneration Act 1996 prevented the claimant from using a later true-value adjudication as a defence or set-off before paying the earlier award. Those authorities did not, however, make these legal proceedings unlawful or abusive. The Act contemplated final determination of rights by legal proceedings, arbitration or agreement. Striking out would be too draconian because it would remove the claimant’s ability to argue later.
3. Security for costs. The conditions in CPR 25.13(2)(a) and (c) were satisfied. The court considered whether the property provided adequate security, whether the proposed personal guarantee was sufficient, and whether an order would stifle the claim. The relevant question was whether costs could be met when due, ordinarily within 14 to 28 days. Long-term equity in the property was inadequate because it could not meet that timing requirement. The proposed guarantee was also inadequate because the assets were principally outside the jurisdiction and their availability was insufficiently established.
4. The claim was being funded by a person of substantial means, and there was no real risk that security would stifle it. It was just and proportionate to order security of £600,000 rather than the £700,000 sought. The order was not made in unless form, to allow a real opportunity to provide the security.
5. The strike-out application was dismissed. The proceedings were stayed pending payment of the judgment sum and pending payment into court of £600,000 as security for costs.

Not an appeal. The judgment determined interlocutory applications in the High Court proceedings.