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It's business (almost) as usual for adjudications during lockdown

As I propped up my eyelids the other night, trying to make up for lost time while working from home during the day (turns out home schooling is a multi-task too far!), I came across an interesting case.

While coronavirus is affecting our lives in so many ways, one area that seems to be able to carry on — almost — as normal, is adjudication.

So much so, that a construction business was told by the High Court in England recently that, contrary to the former’s request, the global pandemic didn’t warrant postponing these proceedings until lockdown restrictions have been lifted.

What is adjudication?

Adjudication is a method of resolving disputes specifically for those involved in the construction sector.

It involves the appointment of an adjudicator (usually an industry professional), who will decide the outcome of a dispute within a 28-day period.

Making the most of the limited time available to present or defend your case can make a huge difference on the outcome. Bearing in mind that the adjudicator’s decision is binding and must be complied with in all but very exceptional circumstances, the consequences of the coronavirus are likely to make preparations more challenging.

The case details

Millchris Developments Ltd was a contractor that had built a house for Mrs Waters.

Mrs Waters was unhappy with the project. She considered she had been overcharged and that there were defects in the property. She started adjudication proceedings to have those issues determined.

The adjudicator fixed a timetable for parties to submit evidence by 3 April, and planned to visit the site on 14 April. Of course, in the meantime, the country was substantively locked down due to the coronavirus pandemic.

Millchris wanted to suspend the adjudication until the country was out of lockdown.

It asked the adjudicator to do so on the basis that it was unable to comply with the timetable. The adjudicator refused, but offered a two-week extension.

Unhappy with that, Millchris applied to the court asking it to stop the adjudication from going ahead on the grounds that continuing would be a breach of natural justice — you’ll have guessed breach of natural justice is one of those exceptional reasons for refusing to comply with a decision.

Specifically, Millchris argued it had insufficient time to prepare for the adjudication given the lockdown measures, plus its solicitor was self-isolating, which made it difficult to gather evidence from those with knowledge of the dispute. It added lockdown measures meant it couldn’t attend the site visit.

The court was not persuaded to stop the adjudication.

The judge couldn’t see why papers could not be scanned and sent to the self-isolating solicitor; Millchris had not taken steps to contact other personnel whose input was needed; and the adjudicator’s offer to extend by two further weeks could address any truly pandemic-related delay.

So far as the site visit was concerned, the court’s view was that parties to an adjudication had no right to attend a site visit.

While Mrs Waters was likely to be present because she lived in the house, the court was not convinced this could not be addressed in some way, for example by recording the visit or raising specific matters for the adjudicator to address.

Does this mean lockdown has no effect on the progress of adjudications?

Not necessarily.

Adjudication has always been a speedy resolution method, so parties need to be in a position to pull their case together quickly.

Being able to marshal resources, obtain input from relevant staff and turn around points quickly is imperative. There is little doubt that social distancing measures, and the impact of the virus generally, may make achieving those goals more difficult and time consuming; however, in most cases, an extension of timetable is likely to get around those problems rather than bringing the process to a halt altogether.

Advice to businesses

Most adjudicators are pretty pragmatic about timetable.

They usually have limited power to extend the period for decision making without the consent of the referring party. Those looking to take advantage of that situation to effectively ambush the other side should beware, however; unreasonably refusing to allow an extension may jeopardise the ultimate decision on natural justice grounds.

So far as the courts are concerned, if they are to be persuaded to intervene to stop an adjudication, it would appear that they will only do so if there is satisfactory evidence that any difficulties caused by the current situation cannot be overcome.

Given the current suspension of all but emergency business in the courts, it may be we’ll see a marked increase in the number of adjudications during lockdown.

With that possibility looming, the advice to businesses currently involved in construction disputes is to consider how and if the preparation required can be managed within the tight timescales usually required of the adjudication process.

The use of technology to replace physical papers appears to be expected. If there is an issue with personnel availability, establish for how long. Don’t be afraid to ask for an extension to the timetable if you need it, but be prepared to justify the extra time required.

Karen Cameron

Senior associate Karen is an experienced litigator and solicitor advocate who regularly appears in the courts throughout Scotland. She specialises in commercial disputes, giving advice and support to those involved in the construction and property sector, in particular.

Posted, 15 April 2020 by Karen Cameron
Categories: Construction | Coronavirus | Coronavirus and construction | Insights | Litigation