Lanes Group PLC v Galliford Try Infrastructure Limited
Case reference:
[2011] EWHC 1035 (TCC)
Tuesday, 19 April 2011
Key terms: Appointment of Adjudicator – Same dispute – Part 8 - Injunction – s108
Galliford engaged Lanes as a subcontractor for certain roofing and glazing works. Disputes arose and the relationship broke down with each party blaming the other for the termination/repudiation of the subcontract. Galliford commenced adjudication and, in accordance with the subcontract, applied to the ICE for the appointment of an Adjudicator. The ICE appointed an Adjudicator. Galliford did not consider this Adjudicator to be “appropriate” and, because of a previous history between the solicitors and the Adjudicator, his impartiality was questioned. Galliford therefore proposed not to proceed with the Adjudication Notice and serve a fresh Adjudication Notice and requested the ICE nominate an Adjudicator in this new adjudication.
Lanes issued Part 8 proceedings seeking an injunction to restrain Galliford from continuing or making further applications to adjudicate a particular dispute. Lanes argued that there was a repudiatory breach of the adjudication agreement in that there was a deliberate and conscious refusal by Galliford to serve the Referral within the agreed time period such that the adjudication could not proceed. This was accepted by Galliford. Therefore this specific dispute which had been referred to that Adjudicator could not proceed.
The Judge held that in principle, there was no reason why a solely contractual adjudication clause in a contract between the parties should not be subject to the same approach as in arbitration. However, the position was complicated when the contract was a “construction contract” within the meaning of the Act. The Judge considered that s 108(5)’s reasoning made the concept of repudiation of an adjudication agreement within a “construction contract” difficult to comprehend because the Act required, in an unqualified way, the party to have the right at any time to refer a dispute to adjudication. The party could not lose this right to adjudicate by repudiating the adjudication agreement and the concept of repudiation did not apply to statutory rights.
However, there could be a breach of the subcontract adjudication agreement by either party which may result in damages and which, in certain circumstances, could justify the court’s intervention by way of an injunction. There was such a breach of the adjudication agreement here as the subcontract required the adjudication to be conducted under the ICE Adjudication Procedure. This procedure required the referring party to send the Referral documentation within two days of the appointment of the Adjudicator. Galliford failed to do so. It did not matter that there was apparent bias on behalf of the appointed Adjudicator. If there was bias, the breach would be nominal which would attract little, or any, damages because it could not be expected that parties would go through with the adjudication if such bias existed and incur substantial costs by pursuing adjudication when the Adjudicator was apparently biased. Further, in this case, Lanes were challenging the Adjudicator’s jurisdiction so any damages would be small, if non-existent.
The Judge did not rule out the possibility that an argument could be deployed to the effect that the Court could by injunction restrain a party, albeit with appropriate safeguards, from pursuing the same relief for the same dispute, time and again, in adjudication.