Coronavirus (COVID-19)—court refuses to injunct adjudication proceedings (Millchris Developments v Waters)

Coronavirus (COVID-19)—court refuses to injunct adjudication proceedings (Millchris Developments v Waters)

In Millchris Developments Ltd v Waters [2020] EWHC 1320 (TCC), the Technology and Construction Court refused to grant an interim injunction to prohibit the defendant from continuing or commencing adjudication proceedings, rejecting the claimant’s submission that the coronavirus (COVID-19) pandemic gave rise to exceptional circumstances in which an injunction should be granted.

What are the practical implications of this case?

The case confirms that it will only be in exceptional circumstances that the court will grant an injunction to restrain adjudication proceedings where the basis put forward is that the adjudication will necessarily be conducted in breach of natural justice. An example of such a scenario, suggested by the court, was where the adjudicator had made it plain that they only intended to hear from one party.

In relation to the impact of the coronavirus pandemic on adjudication proceedings, the ruling makes it clear that the court will expect the parties to give thought to appropriate workarounds, such as remote conferences and site visits, in order to enable proceedings to continue. Where a party remains concerned that it is unable to comply with an adjudication timetable, the best solution may be to seek to agree an extension with the other party or adjudicator (as appropriate), rather than attempt to restrain the proceedings entirely.

What was the background?

Ms Waters appointed Millchris to carry out works at her home in Margate under a JCT Home Owner Contract. Although the contract was not subject to the Housing Grants, Construction and Regeneration Act 1996, it provided an express right for disputes to be referred to adjudication.

On 23 March 2020, Waters commenced an adjudication against Millchris in relation to alleged overcharging on the final account and defects. An adjudicator was appointed and the timetable provided for Waters to serve her submission by 30 March and for Millchris to respond by 3 April. On 26 March, Millchris wrote to the adjudicator saying that it would be unable to comply with the timetable due to the coronavirus crisis (it also claimed that the underlying dispute was too complex for resolution by adjudication, although this point was not pursued). The adjudicator decided that he should proceed with the adjudication, but proposed a two-week extension for the time for his decision. Waters agreed to this, but Millchris did not.

Millchris sought an interim injunction from the court to prohibit Waters from continuing with the adjudication or commencing any further adjudication under the contract, and requiring her to withdraw the ongoing reference. Millchris claimed that the adjudication could not be conducted fairly and in accordance with the rules of natural justice. Specifically, Millchris noted the following difficulties:

  • its solicitor was self-isolating, meaning he could not obtain the necessary paperwork from his office or take a proof of evidence from the managing director
  • its solicitor was also very busy working for other clients remotely

  • a comprehensive file of papers produced by the project manager could not be obtained—it was at the home of one of the directors

  • the adjudicator intended to visit the site, and social distancing rules precluded Millchris from sending its own surveyor to accompany him

What did the court decide?

While the court had jurisdiction to grant an injunction to restrain an adjudication, it should only do so in exceptional circumstances (per Lonsdale v Bresco [2018] EWHC 2043 (TCC), 179 ConLR 190 at first instance).

Millchris had argued, with reference to the American Cyanamid principles on the granting of interim injunctions, that there were serious issues to be tried in relation to the underlying dispute. However, those matters fell to be determined by the adjudicator—the court was concerned not with the underlying dispute but with whether there was a serious issue to be tried as to whether the adjudication will necessarily be conducted in breach of natural justice. In the view of the court, it would be wholly exceptional and unprecedented for an injunction to be granted on such a basis.

On the facts, the court concluded that there was no serious issue to be tried or, to put it another way, no exceptional circumstances that meant that the injunction ought to be granted. In relation to the specific difficulties identified by Millchris, it was noted that:

  • there was no explanation as to why the relevant papers could not have been transported or scanned to Millchris’s solicitor, or why they could not have been discussed in a remote conference

  • its solicitor had been unable to take a proof of evidence due to the managing director being uncontactable, but being unable to get hold of a witness was a common issue in adjudication proceedings, due to the short timetables involved, and it did not have anything to do with the coronavirus pandemic

  • it was not unusual for a solicitor to be busy working for other clients while also dealing with an adjudication, and there had been no explanation as to why a colleague or counsel could not have been engaged to help

  • some of the above difficulties could have been ameliorated by accepting the two week extension proposed by the adjudicator and agreed to by Waters

  • there was no right for the parties or other surveyors to be present at the site visit. While Waters would inevitably be there, as it was her home, the parties could list the matters they wished the adjudicator to see and he could then observe them alone. The visit could be recorded or there could even be some form of remote attendance by video

Case details

  • Court: High Court of Justice, Business and Property Courts, Technology and Construction Court (QBD)

  • Judge: Mrs Justice Jefford

  • Date of judgment: 2 April 2020 (published July 2020)

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About the author:
Jon Gilbert

Jon is Head of the Built Environment Group at Lexis®PSL.

Jon trained at Hogan Lovells and qualified into the firm's construction disputes team. Jon has experience of acting for various parties in relation to disputes arising out of construction and engineering projects in various jurisdictions. Jon has acted for clients in TCC litigation, arbitration, adjudication and mediation as well as providing advice on various aspects of construction and engineering projects.