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05 May 2020

MillChris Developments Ltd v Waters [2020] 4 WLUK 45

by Paschal Walsh, UK Regional Director - UK

Introduction

This is the first judgement to address the impact of the COVID-19 health crisis on the process of carrying out an adjudication. This judgement indicates the approach the Technology and Construction Courts will take when deciding on challenges to adjudication proceedings under the present circumstances.

The Issue

MillChris Developments Ltd (‘MillChris’) had carried out works in the Waters’ property in September 2017. In November 2019 MillChris ceased trading, but on the 23March 2020, the Waters launched an adjudication claiming that they had been overcharged and that there were defects in the works. The timetabling for the adjudication was determined, including a site visit. MillChris wrote to the adjudicator advising that the deadline was impossible to comply with because of the circumstances surrounding the COVID-19 health crisis. The adjudicator decided that it was reasonable for the adjudication to proceed but with a two-week extension.

MillChris then sought to obtain an injunction from the TCC to prevent the adjudication continuing, on the basis that the restrictions arising from COVID 19 would mean that the adjudication proceedings would be a breach of natural justice.

The Judgement

Jefford J sitting in the TCC refused to grant an injunction following the guidelines in American Cyanamid Co v Ethicon Ltd [1975] A.C. 396 which state that there must be a serious question to be tried and damages would not be an adequate remedy. Further to American Cyanamid, the case of Lonsdale demonstrated that injunctions will only be granted ‘very rarely and in very clear-cut cases’.

The TCC was dissatisfied with MillChris’ reasonings for why the crisis was preventing the adjudication from taking place. The court held that an adjudication could be carried out even under the present circumstances surrounding the COVID-19 health crisis, but alternative methods were required. The causal link between MillChris not being able to gather evidence seemingly had little to do with COVID-19 restrictions but rather their own inability to organise the evidence. The court also held that the two-week extension was ample time to mitigate MillChris difficulties in obtaining the necessary documents for adjudication.  Finally, the site visit could have been carried out solely by the adjudicator and there was no right for MillChris to be present.

The court emphasised the importance of pragmatism in the face of the major disruption that COVID-19 has presented. This includes finding and using alternative methods of delivering documents and communications which is becoming almost entirely electronic in any case.

Conclusion

In conclusion, COVID-19 restrictions will not prevent adjudication proceedings from taking place.  It is likely that further time will be allowed to the parties to provide and submit evidence in the adjudication proceedings, which is consistent with Systech’s experience of adjudications since the COVID-19 restrictions were implemented.

To find out more about how COVID-19 may impact the Construction Industry, please click here.

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