5) Strike out or stay – RHP Merchants v Treforest Property Company – (TCC) unreported – Roger Stewart QC – judgment 22 October 2021 The Claimant contractor RHP lost a first adjudication over its final account and was ordered to pay its employer Treforest £260,000. When RHP refused to pay, Treforest took enforcement proceedings and the court ordered RHP to pay the sum awarded. RHP commenced a second adjudication about its liability for defects and this time they were successful and the adjudicator awarded them £220,000. RHP commenced part 7 proceedings for a final determination of the sum due on its final account and Treforest met that claim with an application that the proceedings be stayed until RHP paid the full amount due under the first award. RHP offered to pay a minimum sum of £36,000 on account of the difference between the two awards if the stay application were withdrawn but that offer was rejected. At the hearing Treforest relied on the maxim “pay now argue later” and argued that justice required that the action be stayed [20] where the claimant had shown bad faith, or acted oppressively or unreasonably. The court said that the application highlighted the tension between two important principles: the right of a party to have access to the courts and the ‘pay now argue later’ policy which was the ‘core essence’ of construction adjudication under the Act. The matters to be considered in resolving that tension were as follows:
The pay now argue later policy should be applied evenly to the first and second adjudication decisions. The second, the validity of which had not been challenged, had significant effect on the parties’ overall position. There was however a balance due and no good reason why RHP should not have paid it as indeed they had offered to do. There was no lack of good faith or ‘obvious bad conduct’, RHP having held a determined view throughout supported by valid arguments that it was entitled to a payment from Treforest. Nevertheless, the court held the proceedings must be stayed until the balance due was paid by RHP. A time limit had to be imposed. Thus the court ordered that unless payment was made within 28 days the proceedings would be struck out.
Comment
In resolving the tension the court felt it was only right to give effect to the net position following the two awards. This seems a given. The court will take into account the conduct of the defaulting party and whether it has acted in bad faith, or unreasonably or oppressively. The fact that the claimant has strong even justified beliefs for resisting payment will not excuse it and the pay now argue later principle will prevail. It would have been open to Treforest to seek an injunction to restrain the RHP from commencing or pursuing its adjudication, pending payment of the first award, following the court of appeal decision in S&T v Grove[21]. The same outcome was achieved in similar circumstances in the Scottish case of Greater Glasgow Health Board v Multiplex Construction Europe Ltd and others[22].
Made with FlippingBook - Online catalogs