Deacons
  June 18, 2020 - United States of America

English Court Confirms that an Injunction to Restrain Adjudication will Rarely be Granted

In the recent case of MillChris Developments Ltd v Fiona Selski Waters [2020] 4 WLUK 45, before England’s Technology and Construction Court, a party to an adjudication applied for an injunction to prohibit the adjudication continuing on the grounds that due to COVID-19 it had insufficient time to comply with the adjudicator’s directions and would be unable to attend a site visit. The Court declined to make the injunction and ordered that the adjudication proceed. It said that the Court will only very rarely grant an injunction in respect of an ongoing adjudication and only in very clear-cut cases. The Court decided that the threshold for granting an injunction had not been met as the Contractor, MillChris, had not shown that COVID-19 and the fact it was no longer trading prevented it from preparing for the adjudication such that proceeding with it would be in breach of the rules of natural justice. The Court also commented that parties to an adjudication had no right to be present at a site visit and that the adjudicator could therefore conduct the site visit on his own or arrangements could be made for the site visit to be recorded for MillChris or for it to list specific matters for the adjudicator’s attention beforehand.

Background

A home owner (Waters) engaged a contractor (MillChris) to carry out works at her property under a standard form JCT Homeowner Contract, which included a provision for adjudication. The works commenced in September 2017 and in November 2019 MillChris ceased trading. On 23 March 2020 Waters commenced an adjudication, alleging defective works and also that she had been overcharged by ?45,000.

Adjudication

An adjudicator was appointed who directed that a response be served by 3 April 2020 and a site visit take place on 14 April 2020. On 26 March, MillChris’s solicitor wrote to the adjudicator stating that it was not possible to comply with the deadline due to the COVID-19 situation and that the adjudication proceedings should be postponed until the COVID-19 lockdown was lifted. Although the adjudicator recognised the difficulties posed by COVID-19, he decided that the adjudication should proceed and proposed a two-week extension to the timetable. MillChris did not agree to that extension, asserting that it could take several months to get the COVID-19 situation under control. MillChris submitted that if the adjudication went ahead, it would be conducted in breach of the rules of natural justice because it had insufficient time to prepare for it as a result of COVID-19 and the fact that it was no longer trading. MillChris said that its solicitor had been forced to self-isolate at home, which had made it difficult to obtain evidence from those with knowledge of the dispute, and that it would be unfair to proceed with the site visit where none of its representatives were able to attend and there was insufficient time to appoint an independent surveyor to be present.

Injunction Application

MillChris applied for a prohibitory injunction prohibiting Waters from continuing with the adjudication. It also sought a mandatory injunction that Waters withdraw the reference to adjudication. It was accepted that the Court had jurisdiction to grant an injunction which would inhibit or stop the progress of an adjudication.

Court’s Ruling

The Court declined to grant the injunction and ordered that the adjudication should proceed. It held:

  • The Court will only very rarely grant an injunction in respect of an ongoing adjudication and only in very clear-cut cases.
  • In determining whether an injunction should be granted in the instant case, the question was whether there was a serious issue to be tried in that the adjudication would necessarily be conducted in breach of natural justice with the inevitable consequence that it would be unenforceable.
  • The threshold for granting the injunction had not been met.
  • In any adjudication, issues had to be addressed within a short time scale. MillChris had given no explanation as to why papers could not be transported or scanned over to its solicitor or anyone else instructed in the matter. Furthermore, the reason for not having been able to obtain evidence had little to do with COVID-19 but rather with the fact that MillChris had been unable to contact its former managing director within the short time available.
  • Nor had MillChris attempted to contact its former project manager for the purposes of the adjudication.
  • In any event, MillChris could have accepted the adjudicator's offer of a two-week extension, which could have ameliorated any issues it encountered in terms of contacting witnesses and obtaining evidence.
  • The parties to an adjudication had no right to be present at a site visit. The adjudicator could therefore conduct the site visit on his own. It was clear that Waters was likely to be present, as it was her property, but arrangements could be made for the visit to be recorded or for MillChris to list specific matters for the adjudicator's attention beforehand.

Comments

This is the first case brought to our attention arising out of Covid-19. Whilst adjudication is not common in Hong Kong, similar objections may be raised in arbitration during the lockdown and how the Hong Kong Court will deal with such has yet to be seen.



Read full article at: https://www.deacons.com/news-and-insights/publications/english-court-confirms-that-an-injunction-to-restrain-adjudication-will-rarely-be-granted.html