We often hear cases referred to as having turned on their facts and, if there was ever an example of this it would be the judgment handed down in October 2021 in G&D Brickwork Contractors Ltd v Marbank Construction Ltd. The parties’ names will ring a bell with some of you because, earlier in the year, O’Farrell J refused to grant an injunction restraining G&D from bringing adjudication proceedings, and last month’s judgment from Joanna Smith J deals with the enforcement of the adjudicator’s decision.
I’m partial to the occasional flutter, and I would bet my hat that the facts of this case are so unique that it’s unlikely to be referred to a great deal in the future, let alone be one of the great adjudication reference cases such as Carillion v Davenport. However, don’t let that put you off reading what remains of this blog, as the case nevertheless sets out some of the relevant law where parties litigate prior to adjudicating (I did say the facts were unique…).
G & D Brickwork Contractors Ltd v Marbank Construction Ltd
This claim had a troubled procedural history, and proceeded at an “extremely leisurely pace”, as the facts demonstrate:
- G&D is a brickwork sub-contractor and Marbank is a building main contractor. In 2016, they entered into a contract for works at a property on the Uxbridge Road in Hayes.
- In early 2017, a payment dispute arose and, in June 2017, G&D issued a Part 8 claim in the County Court for breach of contract and claimed just over £106,000 for unpaid invoices plus interest and costs. This claim was subsequently struck out, since it should have been issued as a Part 7 claim.
- In November 2017, G&D applied to restore its claim as a Part 7 claim and provided draft particulars of claim. There followed an issue over the adequacy of those particulars of claim, along with a question mark over whether a further set of particulars had been served correctly. This culminated in the claim being struck out (the second time).
- G&D applied for relief from sanctions, which was successfully heard in April 2018. At this point, the case was listed for a costs case management hearing (CCMC) and an amended particulars of claim was served. This time, the sum in issue was just over £46,500.
- Between July and October 2018, the court proceedings were stayed expressly for the purpose of ADR, and a CCMC was listed for December 2018, although it’s unclear if that took place.
- Matters seem to go into abeyance until another CCMC was listed for January 2020. It seems witness statements were then exchanged in February 2020, costs budgets agreed and another stay for mediation ordered. This time, the court order said that
“… in the event that the matter does not settle, seek further directions by 21 June 2020, and in default the claim shall stand struck out.”
- The claim was struck out (for a third time) in July 2020, which prompted G&D’s August 2020 application for relief from sanctions, which was heard and dismissed in November 2020.
- In June 2021, G&D referred its payment dispute to four separate adjudications.
Pausing there in the chronology, that is over four years since the payment dispute started. Looking back, one wonders why G&D didn’t refer its payment dispute to adjudication back in 2017, rather than waiting until 2021. Perhaps with hindsight…
I mentioned at the outset that O’Farrell J had refused to grant an injunction restraining G&D from bringing adjudication proceedings. This meant that they could continue, although it is unclear if any but the one about Uxbridge Road (adjudication 2) did proceed.
In the injunction application O’Farrell J accepted that “the mere fact that a claim has been struck out does not necessarily preclude a claimant from then re-litigating. It all depends on the circumstances” and then noted that:
“It is correct that in so far as the adjudications trespass on a decision that has already been made by the court, that effectively prevents the current adjudicator from having jurisdiction to determine the disputes. However, that is a matter that can and should be dealt with at the enforcement stage, as explained by Lord Briggs in Bresco v Lonsdale…”
In the adjudication G&D claimed £39,000 and, in July 2021, the adjudicator awarded some £35,000. At the time, Marbank had taken part but did so without prejudice to its primary contention that the adjudicator did not have jurisdiction to hear it, and that the adjudication and any subsequent enforcement would circumvent and undermine the sanction imposed by the County Court.
Enforcement proceedings followed the adjudicator’s decision, along with Marbank’s Part 8 application seeking a declaration that it was an abuse of process for G&D to seek to enforce the adjudicator’s decision that concerned the same cause of action that had been struck out in July 2020. It invited the court to strike out the enforcement proceedings. Ultimately, this is what Joanna Smith J did.
What does all this mean?
I thought that it was interesting that the judge accounted for the fact that, unlike the conventional position for strike out of a second court action, the claim had already been adjudicated, and she acknowledged that:
“It is not difficult to see how a refusal to enforce the adjudication award in such circumstances causes prejudice to G&D – it would have the effect of granting a windfall to MCL.”
However, as the judge rightly found (in my view), G&D should not be put in a better position than if it had sought to bring a second set of court proceedings, and she made it clear that enforcement proceedings following an adjudication should not be treated any more sympathetically than would have been the case in a second court action.
Taking a step back, although G&D was successful in resisting the injunction in front of O’Farrell J, it has incurred its own non-recoverable costs in respect of the adjudication, and no doubt it will bear the costs of the enforcement proceedings. Therefore, is it appropriate to allow adjudication proceedings to continue even if the subsequent decision will not be enforceable? Is it not, to borrow a phrase from Coulson LJ’s Court of Appeal judgment in Bresco v Michael J Lonsdale, an “exercise in futility” and a waste of time and money?
As Joanna Smith J noted, the adjudication in this case was allowed to continue because, consistent with Lord Briggs’ judgment in the Supreme Court’s decision in Bresco v Michael J Lonsdale, there was potentially utility in G&D exercising its right to pursue adjudication as a means of achieving resolution of the dispute. She also said that:
“MCL might have prevailed in the adjudication thereby rendering the Enforcement Proceedings unnecessary and, in any event, dispute resolution by means of adjudication is, as Lord Briggs said at [60] ‘an end in its own right, even where summary enforcement may be inappropriate or for some reason unavailable’.”
However, although Marbank will no doubt be delighted with the result of the enforcement proceedings, it will still have incurred non-recoverable costs of the adjudication and, unless an order for indemnity costs is made, Marbank is unlikely to recover all of its costs of the enforcement proceedings.
The flip side to this particular coin is that, once the door is pushed further ajar in terms of injunctions to prevent adjudications proceeding, then there is a real risk that such applications will become de rigueur. Given the findings of the Supreme Court are here to stay, this is something we probably don’t need to worry about, but parties should nevertheless carefully consider whether they want to proceed with an adjudication where there is a risk that the adjudicator’s decision might be unenforceable.
Is all of this sorry saga going on, not at the behest of the parties concerned, quite apart from their best interests, but at that of the insurers of the solicitors who may be on the hook for issuing the wrong proceedings wrongly and in the wrong place in the first place?
Oh that we shall never know David! Thanks for taking the time to comment.
Thanks for your blog post, Jonathan. It is a common fallacy to imagine that every case in which you have appeared must have some degree of importance, and I agree with you that the facts of this case were most unusual. But as counsel for the successful party, MCL, you will hopefully allow me, indulgently, to suggest that the decision contains at least some wider lessons. I would mention three.
(1) Where an action is struck out for failure to comply with a procedural order, and relief from sanctions is then refused, it follows, precisely because relief from sanctions was refused, that the conduct of the first action was inexcusable. That matters because if the conduct of the first action is inexcusable, then, absent very unusual circumstances, a second action will be struck out as an abuse of process. It is not appropriate for the court which has to consider whether the second action is an abuse of process to go behind the earlier decision to refuse relief.
(2) If a construction dispute is complex, and if as a result substantial legal costs are going to be incurred getting the dispute resolved, then litigation has costs advantages which adjudication does not. But if you chose to litigate, ensure you comply with the rules of the game. If you breach the rules and the action is struck out, you could rerun the dispute before an adjudicator – O’Farrell J declined to grant an injunction to prevent that from happening in this dispute – but what is to be gained by that? If the adjudicator finds in your favour, you will have to go back before the courts to enforce the adjudicator’s award, and your enforcement action is almost certainly going to be struck out as an abuse of process.
(3) In Bresco v Lonsdale, the Supreme Court rejected the Court of Appeal’s view that adjudication by insolvent entities was an exercise in futility: a party to a construction dispute should be allowed to exercise its statutory right to refer the dispute to adjudication, and adjudication has real value in its own right as a means of dispute resolution, even though adjudicators’ decisions are not fully binding. But the Supreme Court pointedly did not suggest that adjudications were never capable of being, ultimately, exercises in futility. You draw attention, as did Joanna Smith J in her judgment, to Lord Briggs’ observation that adjudication is an end in its own right, “even where summary enforcement may be inappropriate or for some reason unavailable”. Lord Briggs had insolvency in mind here, but his observation was not confined to insolvency. This case is a practical illustration that, outside the insolvency context, while a party may be permitted to refer a dispute to adjudication, it does not always follow that any resulting award will be enforced.
Thanks for your thoughts on this Dermot – it’s always useful to get an insight from one of the key individuals involved in a case. What I still rather struggle with is the concept espoused by Lord Briggs that adjudication can be an end in its own right regardless of whether the resulting Decision is enforceable. I rather thought that the whole point of a party going to adjudication is to get an enforceable decision….
An excellent all encompassing well written article. Thank you, Johnathon Cope.