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UK court rejects bid to stop adjudication on coronavirus grounds

Out-Law News | 09 Apr 2020 | 3:28 pm | 2 min. read

A contractor's attempt to halt an adjudication due to difficulties caused by the coronavirus lockdown has been rejected by the High Court in England.

Mrs Justice Jefford ruled that contractor Millchris Developments Ltd had not been able to show that, by going ahead, the adjudication would be conducted in breach of natural justice with the inevitable consequence that it would be unenforceble, according to a Lawtel summary of the case.

Construction disputes expert James Ladner of Pinsent Masons, the law firm behind Out-Law, said that, on the facts of this case, Millchris had not been able to meet the high threshold required for an injunction to be granted.

"The case involved a relatively modest housebuilding dispute," he said.

"In other cases, such as a final account adjudication for many millions of pounds on a large commercial development, or one involving complex extension of time arguments, the court may find differently if access to evidence is severely hampered, particularly if the adjudicator and referring party are not prepared to significantly extend the 28 day statutory timetable," he said.

Ladner James

James Ladner

Legal Director

In other cases, such as a final account adjudication for many millions of pounds on a large commercial development, or one involving complex extension of time arguments, the court may find differently if access to evidence is severely hampered.

Millchris had contracted with Waters, a homeowner, to carry out works at her property, which began in September 2017. Millchris ceased trading in November 2019. On 23 March 2020, Waters began an adjudication, alleging that she had been overcharged by £45,000 and that there had been defects in the works. The adjudicator, once appointed, set a 3 April deadline for submission of evidence and scheduled a site visit for 14 April.

On 26 March, Millchris wrote to the adjudicator stating that it was unable to comply with the deadline because of the Covid-19 pandemic and requested that the adjudication be postponed until UK-wide 'lockdown' measures were lifted. The adjudicator decided that the adjudication should proceed, but proposed a two-week extension to the timetable. Millchris did not agree to the extension, instead seeking a court injunction to prevent the adjudication from going ahead on the grounds that it would be a breach of natural justice.

Before the court, Millchris argued that it had been given insufficient time to prepare for the adjudication given the lockdown measures and the fact that it had ceased trading. It said that its solicitor was in self-isolation at home, making it difficult to obtain evidence from those with knowledge of the dispute. In addition, it would not be able to attend the site visit because of the lockdown measures while Waters would be able to, as the site was her home.

Mrs Justice Jefford disagreed that there would be a breach of natural justice here, denying the injunction sought. While she acknowledged the jurisdiction of the courts to restrain an adjudication from proceeding, she said that this was a power that would only ever be used in exceptional circumstances: where "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". This was simply not the case here.

The judge noted that the nature of adjudication was that issues had to be addressed within a short timescale, and Millchris' argument that this had been further exacerbated by the coronavirus pandemic was rejected. The contractor had been unable to justify why the papers could not be sent to a replacement solicitor or scanned and sent to the self-isolating solicitor. No attempt had been made by Millchris to contact its former project manager, and the adjudicator had proposed an additional two weeks for the company to get in touch with its former managing director for evidence.

The judge also said that parties to an adjudication had no right to be present for a site visit. While Waters was likely to be present, arrangements could be made for the visit to be recorded or for Millcross to list specific matters for the adjudicator's attention ahead of the visit, she said.