REUTERS | Christian Charisius

Scottish Inner House confirms the right to adjudicate at any time

For those of you that practise solely in England, the Inner House of the Court of Session is the Scottish equivalent of the English Court of Appeal. As we seldom see decisions related to adjudication from either court, it is therefore worthwhile taking a look at Lord Bracadale’s judgment in T Clarke v MMaxx Underfloor Heating, if only for the support the court gives to the adjudication process.

T Clarke(Scotland) Ltd v MMaxx Underfloor Heating Ltd

If you are unfamiliar with this case, it was something Matt looked at earlier this year.

In essence, (as Matt summarised), T Clarke was a sub-contractor appointed to carry out certain mechanical and electrical works at a primary school. In turn, it appointed MMAXX as a 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. Over an eight-month period, MMaxx started eight adjudications, many of which failed for procedural reasons. A ninth adjudication was started by T Clarke.

Clearly T Clarke reached a point where it 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:

  • In the Outer House, Lord Woolman declined to grant the interdict, finding that MMAXX had not acted unreasonably or oppressively as most of the adjudications had “foundered on procedural problems”. The court said the threshold for granting an interim interdict (injunction) was high and had not been passed in this case.
  • In the Inner House, Lord Bracadale supported Lord Woolman’s conclusions, upholding his decision to refuse to intervene and grant the interim interdict sought.

At the time of Lord Woolman’s judgment, Matt expressed his surprise at the outcome, but I wasn’t quite so sure. Obviously it’s easy for me to say that now an appeal court has supported the original judgment! However, the relief sought was wide ranging and could have set a precedent with potentially significant consequences for adjudication.

English authorities on injunctions

In reaching its conclusion, the Inner House considered two English cases that were also concerned with injunctions in adjudication:

  • In Mentmore Towers v Packman, Edwards-Stuart J decided that he had the power to stay adjudication proceedings, and accordingly did so. However, in that case Packman-Lucas had obtained adjudicators decisions in its favour, which Mentmore had consistently failed to honour. This put Packman-Lucas to great expense. When Mentmore started three adjudications of its own, the court granted an injunction, staying each one until the court orders arising out of the original enforcement proceedings had been complied with.
  • In Twintec Ltd v Volkerfitzpatrick Ltd, Edwards-Stuart J granted an injunction because he concluded that the adjudicator had been wrongly appointed and therefore “no useful purpose would be served” if the adjudication proceeded. However, there was nothing to prevent another referral to adjudication being made.

The difference in this case was that T Clarke was applying for an injunction to prevent any future referrals to adjudication, and the Inner House agreed with Lord Woolman that this would constitute a significant limitation to the right provided by Parliament under the Construction Act 1996. It also agreed with the general proposition that no party should be restricted from pursuing its right to adjudicate, save in the most exceptional of circumstances.

The Inner House said that Lord Woolman was entitled to come to the conclusion that MMAXX’s behaviour was not unreasonable or oppressive but was consistent with a robust approach. Therefore, it dismissed T Clarke’s appeal.

Cannot curtail a party’s right

While I can understand T Clarke’s frustrations, I do agree with the Inner House’s decision. Any opposite conclusion would most likely result in an increase in parties seeking injunctive relief for what they believed was oppressive and unreasonable behaviour where there were multiple adjudications. Overall, I think that would be bad for the industry. I may be looking at things through rose-tinted spectacles, but I think that the majority of parties and their representatives don’t start multiple adjudications simply to be vexatious or to grind the other party into submission. This wouldn’t appear to be a cost effective approach, given that their own costs will be irrecoverable in any event.

Finally, this is my first blog on a Scottish adjudication case since the referendum result, and I am very glad that I’ll hopefully get to write many more over the coming years.

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