Principle of “manifest injustice” broadened

The TCC takes a dim view of parties seeking to take advantage of the statutory payment machinery. Foot Anstey recently acted for the successful defendant in JRT Developments Ltd v TW Dixon (Developments) Ltd [HT-2020-BHM-00010]. TWD achieved a stay of enforcement of a substantial "smash and grab" style adjudication award obtained by JRT on the basis of two "special circumstances", as follows:

1. The Claimant's probable inability to repay the judgment sum at the end of the substantive trial under the test established in Wimbledon v Vago. This judgment highlights the extent of the evidence required by the Defendant in order to demonstrate impecuniosity on behalf of the Claimant.

2. The principle of "Manifest Injustice"  under Galliford Try v Estura, which the Court has now widened to include "all the circumstances of the case" including overall fairness,  the over-inflation of the payment application, the nature in which it was deployed (clearly tactical) and the injustice in depriving a true assessment of the account if it were to be enforced.

The case also provided some welcome procedural clarification. The previous position was that the party on the receiving end of a "smash and grab" adjudication could not prosecute a second adjudication on the true value of the account until it had first paid the award in the first adjudication. That obviously doesn’t help a party that cannot pay that award. What was not entirely clear was what that party could actually do. The answer is that it would have to issue proceedings for a determination on true value and it would have to do so expediently pursuant to Broseley London Ltd v Prime Asset management Ltd.

The case clarifies and sets the framework for an avenue that is likely to be more regularly explored as the recession deepens as there will not only be more attempts to "smash and grab" but there will no doubt be an increasing number of solvency concerns.