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TCC dismisses application for injunction to prevent an adjudication from proceeding because of Covid-19

Posted: 23/04/2020

There is little doubt that the Technology and Construction Court is preparing for a string of cases all with one common theme – Covid-19. The first judgment is that of Millchris Developments Ltd v Waters [2020] 4 WLUK 45 whereby Nerys Jefford J has dismissed an interim injunction brought by the respondent contractor, seeking to rely on the consequences of the Covid-19 lockdown to prevent an adjudication from proceeding.

The case

The respondent contractor sought to prevent the adjudication proceeding on the basis that, if it went ahead, it would be conducted in breach of the rules of natural justice. The reasons provided included: that its solicitor had been forced to self-isolate at home, which in turn made it difficult to obtain evidence from those with knowledge of the dispute; there was insufficient time to appoint an independent surveyor; and it was unfair to proceed with a site visit (proposed by the adjudicator) where none of its representatives were able to attend.

The contractor’s application was rejected. The court found that there had been no explanation as to why papers could not be transported or scanned over to the solicitor or anyone else instructed with the matter; extensions to the adjudication timetable were sufficient to alleviate the difficulties in obtaining evidence; and the adjudicator could attend the site visit on his own, the parties had no right to be there.

In arriving at its decision, the court applied the case of Lonsdale v Bresco [2018] EWHC 2043 (TCC), whereby it was made clear that an injunction would only be granted “very rarely and in very clear cut cases” when dealing with an ongoing adjudication. It also applied the case of American Cyanamid Co v Ethicon Ltd [1975] A.C. 396, whereby it was said that in determining whether injunctive relief should be granted, 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.

Points to consider

Such is the uniqueness of the current situation, both adjudicators and the court are inherently going to have to deal with untested circumstances when considering whether there has, or could be a breach of natural justice. They will undoubtedly have in mind the fact that a key feature of adjudications is to facilitate cash-flow within the construction industry. By depriving a claiming party of the ability to adjudicate, they could potentially be depriving those in the industry of cash, at a time when many need it the most. Clearly it will not be enough for a party simply to cite Covid-19 and expect to be relieved from its legal obligations.

Parties to construction contracts should therefore expect adjudications to continue throughout the period of any lock-down and beyond. Indeed, the need to preserve cash flow is likely to encourage parties to adjudicate and in particular, to encourage so called ‘smash and grab’ adjudications even if any resulting overpayment may have to be repaid in due course. Click here for a summary of the latest case law on ‘smash and grab’ adjudication and the ability of a paying party to launch a rival ‘true value’ adjudication.

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