It is a commonly cited example of the courts’ unwillingness to interfere with the adjudication process that commencing an adjudication with 37 lever arch files just before Christmas was deemed not to be sufficiently unfair to the receiving party that the court was willing to grant an application to injunct a referral once it has started. This principle was demonstrated again recently when the court declined to grant an injunction requiring a party to a construction contract to withdraw four simultaneous adjudication notices.
The applicant had contracted under a JCT contract to carry out works at a property for the respondent. The first adjudication was commenced by the applicant and concerned the timing of a deed of variation; the adjudicator found in the applicant’s favour. A second adjudication commenced by the applicant was also found in its favour. The respondent then commenced CPR Pt.8 proceedings, relating to the scope of the work. There was a live dispute as to what the applicant was entitled to be paid. A third adjudication was commenced by the respondent in May 2024 claiming £3.8 million for alleged defects in the applicant’s work. The applicant disputed the adjudication, arguing that no dispute had crystallised. The adjudicator rejected the jurisdiction challenge. The fourth adjudication was brought by the respondent. Again, the applicant challenged jurisdiction, which the adjudicator rejected. The respondent commenced the fifth adjudication on 28 May, which was a claim for £8.6 million by way of liquidated damages. The respondent subsequently gave notice of intention to refer a further adjudication claiming £15.5 million.
The applicant contractor applied for an injunction restraining the respondent from issuing any further adjudication notices without the permission of the court, and requiring it to withdraw four adjudication notices already initiated by the respondent.
The Housing Grants, Construction and Regeneration Act 1996 s.108 allows a party to a construction contract the right to refer a dispute for adjudication at any time. The court has jurisdiction to grant an injunction, for instance where it was clear that the adjudicator lacks jurisdiction or the adjudication would be unreasonable and oppressive, but it is a jurisdiction that should rarely be exercised.
In this case the fact that a referral to adjudication had been brought in parallel with existing litigation raising the same issue was not in itself a ground for restraining the referral. The facts of the case had to be exceptional before the court was justified in concluding that a referral of a dispute to adjudication was unreasonable, even though it might be oppressive. Parliament had expressly approved a party’s right to start an adjudication in circumstances that could effectively amount to an ambush of the responding party. That, of itself, did not justify the interference of the court.
There was an inevitable burden on the poor, hard-pressed lawyers in dealing with them at the same time, but that was the product of the right to begin adjudication. The right to refer a dispute to adjudication at any time conferred a commercial advantage on the referring party and that had been known by Parliament when the Act was passed. If the respondent had raised an unreasonable proposal, that was a matter for the adjudicator to deal with within the adjudication. The real risk was that if the court halted adjudication because a party was acting unreasonably, that would open the door to the court policing adjudications. Further, the applicant was not without a remedy. If the adjudication proceeded, and the applicant believed there had been a breach of natural justice, it would be entitled to rely on such breaches to resist enforcement. On that occasion, a judge would be in a much better position to conclude whether any breaches of the rules of natural justice had taken place and, if so, whether they had caused real prejudice to the applicant.
There is a distinction between litigation and adjudication; in adjudication only one dispute can be raised at once. Had the respondent in this case put forward all four points into one adjudication, then the applicant would have rightly complained. As to whether the court should prevent any future adjudications without the permission of the court, there was no authority for such a sweeping injunction to be granted. The court would not say it could never be granted, for example in the case of a vexatious litigant, but that was not the instant case.
It is only in exceptional circumstances that the court should exercise its jurisdiction to grant such an injunction on the basis that the proceedings were unreasonable and oppressive. There was an inevitable burden on the non-referring party in dealing with numerous adjudications at the same time, but that is the product of the right to begin adjudication.
Should you wish to discuss any of the issues raised in this article, please contact Michael Bonning.
