“Fast and Furious”- No stopping the action says TCC in first COVID-19 adjudication judgment
The Technology and Construction Court (TCC) has provided the first word on the impact of the current COVID-19 crisis on the running of adjudications.
Its decision in the case of MillChris Developments Ltd v Waters  4 WLUK 45, handed down on 2 April 2020, sent a very clear message. Suitable workarounds exist to keep swift adjudication timetables and subsequent enforcement proceedings running during the Crisis. Only in very exceptional circumstances will the court step in to grant an injunction to stop them.
In September 2017 MillChris Developments Ltd (MillChris) started works to a residential property owned by Ms Waters. By November 2019 it had ceased trading.
What happened in the meantime is unclear, but on 23 March 2020, coinciding with the start of the Crisis ‘lockdown’, Ms Waters commenced an adjudication claiming recovery of an alleged £45,000 overpayment and citing defects in the works.
The adjudicator’s timetable followed the usual swift pace, with completion of evidence submissions by 3 April and a site visit scheduled for 14 April.
On 26 March, MillChris contacted the adjudicator arguing it was impossible to meet the imposed deadlines due to the Crisis. It requested postponement of the adjudication until the lockdown was over. The adjudicator dismissed postponement, but offered a two week extension to the timetable. Refusing the extension, MillChris applied to the TCC for an injunction to halt the adjudication.
In support of an injunction, MillChris argued that it would be in breach of the rules of natural justice for the adjudication to continue as:
- it had insufficient time to prepare because of the Crisis and was no longer trading;
- its solicitor had been forced to self-isolate at home which made obtaining the necessary evidence difficult; and
- proceeding with a site visit, in circumstances where its representatives could not attend and there was no time to appoint an independent surveyor, would be unfair.
Injunctions are draconian measures. Whilst Mrs Justice Jefford acknowledged the TCC’s jurisdiction to grant injunctions in respect of on-going adjudications, the necessarily high threshold in this case had not been met.
The injunction was refused for the following reasons:
- The court would only grant injunctive relief very rarely and in very clear cut cases: Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation)  EWHC 2043;
- In this case, the question was whether proceeding with the adjudication would result in a breach of natural justice so as to render any adjudication decision unenforceable. The test in American Cyanamid Co v Ethicon Ltd  A.C. 396 applied and had not been met.
- Adjudication inevitably brings with it short time scales.
MillChris’ submissions regarding the impact of the Crisis were rejected for the following reasons:
- It had failed to explain why papers could not be transported or scanned over to its solicitor;
- The real reason for not being able to obtain evidence appeared to be the failure of MillChris to contact its former Managing Director and Project Manager rather than due to the Crisis itself;
- The adjudicator’s offer of a two week extension to the adjudication timetable was reasonable and would have improved MillChris’ ability to obtain evidence; and
- Parties to an adjudication have no right to attend a site visit and an adjudicator is at liberty to carry it out alone. In this case, arrangements could have been made for the site visit to have been recorded for MillChris or for it to provide in advance a list of matters to be considered.
The TCC’s first word on the impact of the Crisis to adjudication and enforcement is unsurprising and surely won’t be the last.
Adjudication was designed to be and remains a “fast and furious” process. Whilst the Crisis and current ongoing Government restrictions will inevitably create challenges to this, sensible workarounds and pragmatic approaches from parties and adjudicators should help to ensure the process remains on track. Only in exceptional circumstances will the court interfere.
The Construction Act entitles parties to refer a dispute to adjudication “at any time”. Whilst we find ourselves in unprecedented times, the Crisis so far does nothing to change that.
News & Insights
IPSX – Real Estate’s new stock exchange
The IPSX is an FCA Regulated market and the first stock exchange for real estate in the world.
Focus Antitrust - 28 October 2020
The latest edition of our regular Focus Antitrust update.