This judgment confirms that the standard practice of awarding extensions of time by extending the date for practical completion is the correct approach to take.
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Construction: Adjudication -
Introduced by the Housing Grants Construction and Regeneration Act 1996, the statutory adjudication scheme is a well-established dispute resolution mechanism within the UK construction industry. The scheme is often referred to as a 'pay now, argue later' mechanism which seeks to maintain cashflow during construction projects by providing a cost-effective and swift means of determining disputes. Although an adjudication award is binding, it is not final. However, in practice an adjudication award is often the final resolution of a dispute.
The very strict timeframes within which a matter must be resolved through the scheme means that parties must act quickly. Given the pressure on time in the resolution of a dispute, can party A, the referring party, withdraw a dispute from adjudication and subsequently refer the same, or substantially the same, dispute to a second adjudication? And can party B seek an injunction to restrain A from commencing a second adjudication? Mrs Justice O'Farrell provided guidance on these issues in Jacobs UK Ltd v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC).
Legal principles
Before considering Jacobs, it is worth reflecting on some of the basic legal principles governing this area.
There is no express or implied restriction in the 1996 act or the scheme that prevents a party from withdrawing a disputed claim which has been referred to adjudication (Midland Expressway Ltd v Carillion Construction Ltd [2006] EWHC 1505 per Jackson J at paragraphs [100] and [101]). The entitlement of a party to withdraw a claim persists even after the referral, regardless of the motive for the withdrawal, and does not necessarily preclude that party from pursuing the claim in a later adjudication (Lanes Group pie v Galliford Try Infrastructure Ltd [2012] EWCA Civ 1617 per Jackson LJ at paragraphs [38]-[40]). The principle of abuse of process does not apply to adjudication (Connex South Eastern Ltd v MJ Building Services Group pie [2005] EWCA Civ 193 per Dyson LJ at paragraph [ 40 ]) .
However, as made clear by O'Farrell in Jacobs, it does not follow that the courts will never intervene to prevent a party from pursuing a claim in adjudication. Section 37 of the Senior Courts Act 1981 provides: 'The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.'
The court's power under section 37 may be exercised (a) where one party can show that the other party has invaded, or threatens to invade, a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court; or (b) where one party to any action has behaved, or threatens to behave, in a manner which is unconscionable. The court's jurisdiction extends to a power to grant an injunction restraining a party from commencing or continuing an adjudication that is unreasonable and oppressive, although the fact that a claim is being pursued by way of adjudication rather than litigation may affect the court's view as to whether or not it amounts to unreasonable and oppressive behaviour (Mentmore Towers Ltd v Packman Lucas Ltd [2010] EWHC 457 (TCC) per Edwards Stuart J at paragraphs [14] - [ 23] and Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC) per Edwards-Stuart J at paragraphs [63]-[73]).
Masood Ahmed
29 BuildLaw | Dec 2017
UNITED KINGDOM