By Kate Sabin & Mark Roach
|Published 28 March 2024
Case Summary: Melton Town Football Club Ltd v Hunts Contractors Ltd [2023] EWHC 3133 (TCC)
Melton Town Football Club ("MTFC") appointed the Hunts Contractors ("Hunts") to design and construct a new football pitch with a synthetic surface that would enable the team to play in wet weather.
It was alleged that the pitch installed by Hunt had numerous defects and would need to be completely replaced. MTFC therefore issued an adjudication for the costs of doing so, together with consequential loss such as loss of revenue.
The adjudicator determined that the pitch was defective and that a sum was due to MTFC of £785,477.50 plus VAT.
MTFC subsequently issued adjudication enforcement proceedings in the TCC, and Hunts thereafter filed an application for security for costs on the grounds that the accounts for MTFC showed a negative balance sheet. A director of MTFC also suggested that unless the damage was remediated the club would not be able to continue.
Hunts' defence to the enforcement proceedings was that the adjudicator allegedly lacked jurisdiction because the notice was sent to its solicitors, rather than its registered office.
O'Farrell gave standard directions for the enforcement proceedings, and asked the listing office to list the security of costs application after the enforcement hearing.
Hunts therefore made an application for the security for costs application be heard on the next available date and that the enforcement proceedings be stayed in the meantime.
MTFC strongly resisted the security for costs application on the basis that it would increase cost and cause delay to the enforcement procedure, which is designed to ensure speedy and just resolution. It went so far to say that application was a cynical attempt to make it more difficult for MTFC to pursue enforcement of the adjudicator's decision.
HH Judge Kramer acknowledged that there was a clear tension between the security for costs application and the enforcement proceedings because the security for costs application could postpone payment of sums owed as a result of the adjudication. This would undermine the principles underpinning the adjudication process, namely that it is an intentionally swift summary process.
On the other hand, he recognised the ethos of a security of costs application. A defendant who has been forced into litigation by the issue and service of the claim would suffer an injustice if they were required to litigate against a claimant who was not able to pay their costs. He noted that Hunts may well be litigating against a claimant who has no money, so that the defendant will not recover their costs of the summary judgment hearing, even if successful.
He concluded that there was no inconsistency between the ethos of the two regimes if the security for costs application could be dealt with without derailing the summary judgment application.
The CPR allows for a security for costs application to be made at any time unless there is some good reason not to allow it. An example of this would be to prevent the progress of a summary judgment application, which the judge said would happen if he were to agree to stay the enforcement proceedings pending the security for costs application.
In this case, the Court could hear the security for costs application before the summary judgment hearing. Consequently, whilst there is a tension between the two regimes, in this case there was no good reason why Hunts should nott have an opportunity to show that MTFC could not meet a costs award if it lost it was unsuccessful in the enforcement proceedings.
He therefore listed the security for costs application on 7 July 2023, before the summary judgment hearing on 14 August 2023
The case highlights the difficulties the Court may have in dealing with interim applications that might interfere with a summary judgment application. Whilst the Court was able to resolve the issue in this case because of the particular timings, it does address the tension between the two regimes and the competing concerns of the parties.
If parties intend to seek security for costs, any application should be made as soon as possible, in accordance the CPR, to avoid derailing the enforcement proceedings. If the timings of the proceedings clash, or the Court's diary does not allow the security for costs application to be heard in advance, this may be a good reason for refusing the application.
