In this case a developer asked the court to grant an injunction in an on-going adjudication because it believed that certain Coronavirus / Covid-19 related issues would result in a breach of natural justice.
In this article, I explain what the case is all about, what the court decided and what I think the decision will mean moving forward for everyone involved in adjudication. I also go into a bit of general detail on how the courts make decisions in relation to granting or refusing injunctions.
The facts of the case are relatively straightforward, so I have bullet pointed them below for ease of digestion:
The developer made an application to the court for an injunction to stop the adjudication process. It argued that this was necessary because, if the adjudication went ahead, it would be conducted in breach of the rules of natural justice because it would not have had sufficient time to prepare its evidence due to the Covid-19 induced ‘lockdown’. To be more specific, the developer argued that:
For anyone who is not that familiar with adjudication, the concept of ‘natural justice’ is a big deal. Not only that, it is an absolute cornerstone of our entire legal system. Natural justice essentially equates to ‘fairness’ in the process of decision-making. The common law recognises two fundamental rules required by a fair procedure:
that a man may not be a judge in his own cause, and that a man’s defence must always be fairly heard
Sorry ladies, the rules above are so old that they bear masculine nomenclature from the courts. They obviously have universal application!
The point is, if a decision offends either of the rules above, the decision will be outside of the jurisdiction of the decision-maker’s authority. In other words, the decision would be unlawful.
In the context of the MillChris v Waters case, the developer was essentially arguing that, because it could not properly prepare its evidence due to Covid-19, that its defence would not be fairly heard by the adjudicator and hence the adjudication process would breach the fundamental rules outlined above.
The court applied the American Cyanamid guidelines, rejected the developer’s application and did not grant the injunction.
You might think this runs against the grain of what we discussed above with respect to natural justice, but that is before you hear the court’s very clear reasoning. Before looking at that reasoning, I first want to explain to the non-lawyer reader what the American Cyanamid guidelines are, because I do enjoy divulging important legal knowledge!
The ‘American Cyanamid guidelines’ is a reference to the guidance set out by the House of Lords (now the UK Supreme Court) in the case of American Cyanamid v Ethicon  AC 396. This guidance is generally used by the courts to help them decide whether or not to grant an injunction.
The guidelines are not in bullet point form (for good reason), but I have tried my best to do this below:
So to summarise that, the courts do not just grant injunctions willy-nilly. They will only do so if a high threshold has been met by the facts of a case.
The court began by confirming that it had the power to grant an injunction in an on-going adjudication process, particularly when one party is no longer trading, but that it would only do so rarely and in very clear-cut cases. For anyone who wishes to read around this point, I recommend looking at the recent Court of Appeal decision in Bresco Electrical (in liquidation) v Michael J Lonsdale (2019) EWCA Civ 27.
In terms of the developer’s core arguments (which are bullet pointed in section above) the court decided that:
In light of the above, the court had no difficulty in deciding that there would not be a breach of the rules of natural justice if the adjudication was allowed to continue. Because there was no serious issue to be tried, the injunction was refused (applying our American Cyanamid guidelines).
I am sure that the developer in this case must have faced logistical issues in preparing its evidence due to the Covid-19 outbreak. I regularly represent parties in adjudication (sales pitch!) and I know how time consuming preparing evidence can be. That said, the developer was clearly not prejudiced by an inherently ‘unfair’ process as it had the ability, albeit in slightly unusual circumstances, to ensure that its defence was heard. I find it hard to imagine a scenario where the two-week extension proposed by the adjudicator would not have been sufficient for the developer to gather the required evidence in a £45,000 dispute.
This case, as ever, turned on its own specific facts.
What if the key factual witnesses were hospitalised with Covid-19? What if there was physically no way to scan or deliver the papers to the solicitor? What if the Adjudicator requested a hearing and wouldn’t let someone attend because they were displaying symptoms of Covid-19?
Depending on the answers to the hypothetical questions above, the outcome of this case could have been very different. The court noted that it is unprecedented to have an adjudication injuncted because of a pandemic. However, the court also noted that there might be circumstances where an injunction may be granted.
I think that is the key take away here. This case is NOT authority to say that the courts will shy away from giving injunctive relief in an on-going adjudication due to Covid-19. They will if the circumstances warrant it and the high threshold has been met. This case is simply another authority which demonstrates that the courts only grant injunctions in adjudication in rare and very clear-cut cases.
The next ‘big court decision’ I expect to see is one which relates to a party resisting enforcement of an adjudicators’ decision on the grounds that Covid-19 resulted in a breach of natural justice. If I was a betting man, I would say you should expect to see an article on that within the next 3 months or so!
To get in touch with William Brown, you can phone 020 7022 2192 or email William.Brown@QuiggGolden.com
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