(1) Mentmore Towers Ltd (2) Good Start Ltd (3) Anglo Swiss Holdings Ltd v Packman Lucas Ltd [2010] EWHC 457 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes


Where a referral to adjudication is unreasonable or oppressive, the Court will be willing to grant an injunction to prevent any further steps in the adjudication.  The principles that the Court will apply when deciding whether or not a referral is oppressive will be the principles that apply to litigation, having due regard to all the facts of the case. 

Technology and Construction Court, Mr Justice Edwards-Stuart


The three defendants (collectively “Mentmore”) were Jersey-registered companies, owned by one family trust, formed to redevelop three upmarket properties: two properties in Piccadilly, including the former Naval and Military Club (the “In and Out”), and a stately home in Buckinghamshire.  The defendant structural designer (“Packman”) was employed in relation to the three projects pursuant to contracts entered into in 2005 and 2006.  At the end of 2007 work on the projects was suspended due to planning difficulties.  In April 2009 Packman commenced adjudication proceedings against Mentmore claiming outstanding fees (there were three adjudications, one against each of the claimant companies).  The adjudicator (it was the same person in each case) awarded Packman £420k in all.  Mentmore failed to pay the sums awarded and Packman brought proceedings to enforce the awards.  Judgment was entered for Packman but Mentmore still refused to pay.  Packman accordingly applied for interim charging orders over Mentmore’s properties, which were made final on 16 October 2009.  However, the day before, 15 October 2009, Mentmore issued proceedings against Packman seeking a declaration of the amount due to Packman, which Mentmore asserted was less than the sums paid on account, and repayment of any sums paid in excess.  Packman subsequently sought a stay of those proceedings on the ground, among other things, that Mentmore had not complied with the default judgements against them in respect of the adjudicator’s awards.  A stay of proceedings was granted on the basis that Mentmore had acted oppressively and unreasonably by pursuing the claims without first honouring the adjudicator’s decisions and the court judgments enforcing them: see Anglo Swiss Holdings Ltd & Ors v Packman Lucas Ltd [2009] EWHC 3212 (TCC).  The Court in that case had held that there were some elements of bad faith involved in Mentmore’s position, in that Mentmore was deliberately or recklessly exaggerating the payments made to Packman.  Following the Court’s decision Mentmore revised down its estimate of the payments made to Packman. 

Mentmore then issued Notices of Adjudication under all three contracts in which it sought declarations of the amounts due to Packman and repayment of the (now reduced) sums allegedly paid in excess.  Packman applied for an injunction to prevent Mentmore taking any further steps in these adjudications.  


The Court addressed the following issues:

  • Is there a difference in principle between the criteria for granting an injunction to restrain the pursuit of a referral and the criteria for ordering a stay of the same claim if brought in the courts?
  • Assuming Mentmore was no longer exaggerating the extent of the alleged overpayment to Packman, did that affect the reasoning in the previous application before the Court, and if that had been the position in the previous application, would it have affected the outcome?
  • Should Mentmore be restrained from pursuing the referrals to adjudication on the basis of the evidence before the Court?     


The Court held:

  • A referral to adjudication that is unreasonable or oppressive should be stayed on the application of the same principles that would apply if the same claim were made by way of litigation.
  • It is a question of fact in every case whether or not a referral to adjudication is unreasonable or oppressive. 
  • The right under the Housing Grants Construction and Regeneration Act 1996 (the “Act”) to bring a claim by way of adjudication “at any time” did not extend to those adjudications that would be oppressive and unreasonable.  
  • The decision of the court in the previous application would have been no different if Mentmore had not exaggerated the extent of the alleged overpayment, because the finding of bad faith only constituted a (small) part of the judge’s reasoning in that application.
  • On the facts of this case an injunction would be granted restraining Mentmore from proceeding with the adjudications.  There was no purpose served by pursuing the claims in adjudication, as the finding of the adjudicator could not affect the unsatisfied judgement for the amount found due under the adjudicator’s first decision.
  • Given the behaviour of Mentmore, it was clear that the current referrals were simply an attempt to circumvent the machinery and policy of the Act.  It was not enough for Mentmore to make offers of payment into court nor would the charging orders be a satisfactory substitute.  Packman was entitled to have a cash award paid in cash.
  • Accordingly an injunction would be granted to prevent Mentmore taking any substantive steps in the recently commenced adjudication proceedings or seeking to enforce or implement any decision made by the adjudicator until Mentmore had satisfied the Court’s orders in the current and previous application proceedings.   

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes


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