COVID-19 will not put off adjudication

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COVID-19 will not put off adjudication

Published 30 abril 2020

In Millchris Developments Ltd v Waters [2020] 4 WLUK 45 the TCC has refused to grant an injunction prohibiting a home owner from proceeding with an adjudication.  The Court did not accept that the COVID-19 health crisis and the fact that the contractor was no longer trading prevent would it from preparing for the adjudication.

The background to the dispute

The dispute related to works carried out at the Referring Party’s (the employer) property in September 2017.  The Responding Party (the contractor) stopped trading in November 2019.

On 23 March 2020, the day that the UK went into the current COVID-19 ‘lockdown’, the employer commenced an adjudication claiming that they had been overcharged by £45,000 and that there were defects in the works. An adjudicator was appointed who timetabled that evidence in response be submitted by 3 April 2020 with a site visit on 14 April 2020.

On 26 March 2020 the contractor wrote to the adjudicator claiming that it was not possible for them to comply with the deadline because of the COVID-19 crisis and that the adjudication should be postponed until lockdown measures had been lifted.

The adjudicator proposed a two extension, but the contractor did not agree to it.

The application

The contractor applied for an injunction restraining the employer from proceeding with the adjudication on the basis that to do so would breach the rules of natural justice.  The contractor told the Court that they did not have time to properly prepare for the adjudication because of the ramifications of COVID 19 and that it had ceased trading. In particular, the contractor claimed that its representative had been forced to self-isolate making it difficult for them to obtain evidence from those involved with knowledge of the dispute.  It would also be unfair to proceed with a site visit when none of the contractor’s representatives could attend and there was not sufficient time to appoint a third party surveyor.

Decision

The application was refused. The Court found that the threshold for an injunction had not been met. 

In particular, the Court relied on the well-established principles in American Cyanamid Co v Ethicon Ltd [1975] A.C. 396 as to (i) whether there was a serious issue to be tried; (ii) whether damages would be an adequate remedy; and (iii) where balance of convenience lay.

The Court was also referred to the decision in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation) [2018] EWHC 2043 (TCC) where it was found that an injunction to restrain an on-going adjudication would only be granted “very rarely and in very clear cut cases”.

It was also noted that Adjudication is mostly commonly carried out within in a short time-scale and with time constraints.  The contractor had not explained why the relevant papers could not be sent electronically to its representative or anyone else involved.  There was no right for the parties to an adjudication to be present at a site visit, the adjudicator could attend on his own. 

In addition, the real reason that the contractor had not been able to obtain evidence had little to do with COVID-19 and more that he had not been able to contact his managing director in the short time available.

As a result, the injunction was refused and the adjudication could proceed; there was no case for breach of natural justice in these circumstances.

The court did comment that there may be circumstances in which an injunction could be granted due COVID-19 but, in general terms, disputes relating to natural justice on the basis of COVID-19 were unlikely to succeed. 

Authors

Harriet Hawkins

Harriet Hawkins

London - Walbrook

020 7894 6106

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