REUTERS | Kim Hong-Ji

A referring party that “would never give up”

It is quite common for an adjudicator to be appointed multiple times, either by the same parties on one project, or by one party on different projects. This may arise for a number of reasons, including the nature of the parties’ dispute, whether the individual is named in the contract as the adjudicator or because the referring party thinks highly of that individual (for whatever reason).

I wrote about the whys and the wherefores of multiple appointments a few years ago, and they came to mind again recently when I was reading Lord Woolman’s judgment in T Clarke v MMAXX Underfloor Heating.

T Clarke v MMAXX

In case you are unfamiliar with this Scottish judgment, here’s a brief recap.

T Clarke (Scotland) Ltd was a sub-contractor appointed to carry out certain mechanical and electrical works at a primary school. In turn, it appointed MMAXX Underfloor Heating Ltd (as the sub-sub-contractor) to install heat pumps and an underfloor heating system.

Work was carried out between late 2012 and July 2013, but things did not run smoothly. The judgment refers to a number of examples of “the attitude, approach and conduct of Mr McFarlane” (he was MMAXX’s sole shareholder), including that Mr McFarlane:

  • Made several threats to suspend the works.
  • Lodged various notices claiming delay without a proper foundation.
  • Sent a large volume of inaccurate correspondence to T Clarke’s contract administrator.
  • Claimed that MMAXX had negotiated different payment terms from those agreed.
  • Made erratic applications for payment, sometimes seeking different sums for the same work.
  • Made unjustified demands for payment at a time when certain works were critical to completion of the project.

It was alleged that Mr McFarlane said in a telephone conversation that, when threatening to start an adjudication:

“…he had prior experience of obtaining money in such proceedings and ‘would never give up’.”

Also, that:

“‘I’m a maverick, I don’t play by the rules’. He also stated that he would ‘do what I need to do’ including suspending the works and reiterated that [T Clarke] would face significant legal costs.”

Eight adjudications in eight months

It seems Mr McFarlane proved true to his word as, over an eight-month period, he started eight of the nine adjudications mentioned in the judgment. It isn’t entirely clear how many of those nine were referred to the same individual, but it is clear that at least two different adjudicators were involved:

  • On five occasions the adjudicator resigned (in adjudication one, two, four, eight and nine).
  • MMAXX was successful in the third adjudication, although its “significantly exaggerated” claim was reduced from some £185,000 to £17,000.
  • MMAXX lost in adjudication five.
  • The seventh adjudication was dropped.

Regardless of what the adjudicators thought of all this, it is clear that T Clarke had had enough. It sought from the court the Scottish equivalent of an injunction (an interim interdict) to prevent MMAXX from starting any more adjudications. It argued that, among other things, MMAXX had acted improperly and would continue to do so. This was causing it to incur significant irrecoverable costs.

The court declined to grant the interdict, finding that MMAXX had not acted unreasonably or oppressively as most of the adjudications had “foundered on procedural problems”. It said the threshold for granting an interim interdict was high and had not been passed in this case.

I was quite surprised at the outcome, but I guess the case demonstrates that it is very difficult for a responding party if it finds itself faced with a referring party that will never give up. The court wasn’t prepared to accept that most of the adjudications were shams.

Interesting, I also noted that at least one of the adjudications (number seven) was dropped when the adjudicator asked MMAXX to demonstrate it could pay his fees.

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