The adjudication agreement must stay alive and capable of being operated in relation to any other disputes.
Galliford Try Infrastructure Ltd., GTI, was the main contractor for refurbishment works at the Inverness Train Maintenance Depot. Lanes was the roofing subcontractor. The parties fell out with each accusing the other of repudiation of the subcontract. GTI used another subcontractor to complete the works, and Lanes commenced adjudication proceedings in December 2009.
In November 2010, Lanes issued proceedings in the Technology and Construction Court against GTI in relation to the outstanding value of its work at the termination and damages for wrongful termination.
After this, GTI served a Notice of Adjudication, in which it contended that it had correctly determined Lanes’ subcontract, or, alternatively, that Lanes had repudiated the subcontract. GTI’s solicitors wrote to the Institution of Civil Engineers (ICE) requesting the appointment of an adjudicator, and Mr. Mark Dixon be appointed. Lanes responded that any adjudicator appointed would have no jurisdiction, and objected in particular to Mr. Dixon because he had previously acted as adjudicator between the parties and would be biased against them. GTI protested, but the ICE appointed Mr. Howard Klein as adjudicator. Lanes continued to reserve their position, and their solicitors wrote to the ICE stating that they did not consider Mr. Klein to be an appropriate adjudicator because they had encountered of Mr. Klein when he had acted for the opposing party in another dispute, which had been acrimonious. They suggested that this previous dealing would make it difficult for Mr. Klein to be seen to act with impartiality. They attached a fresh adjudication notice, and asked the ICE to appoint a different adjudicator.
Lanes took the view that GTI’s decision not to serve its statement of case under paragraph 4.1 of the ICE Adjudication Procedure was a repudiatory breach of the adjudication agreement contained in clause 18B of the parties’ subcontract. They purported to accept this repudiatory breach. Lanes pointed out that GTI’s correct course of action should have been to ask Mr. Klein to resign, or ask the court to remove him. Since GTI had not taken this route, Lanes said that, if their argument on repudiatory breach of the adjudication agreement was wrong, then it invited Mr. Klein to dismiss GTI’s claims. Lanes stated that it would resist any application by GTI for fresh adjudication proceedings.
In April 2011, Lanes commenced Part 8 proceedings seeking an injunction restraining GTI from "continuing or making further applications to adjudicate a particular dispute". Lanes maintained that “the defendant’s conduct, [in seeking to refer the same dispute to adjudication three times] is unfair, unreasonable and oppressive and amounts to a breach of the adjudication agreement and/or is an abuse of process which ought properly to be restrained by the Court." This was accompanied by an application for an interim injunction seeking to restrain GTI from pursuing the adjudication of the dispute or from making further applications to adjudicate the dispute which had been the subject of its applications and Notices of Adjudication.
Lanes argued that that adjudication agreements, like arbitration agreements, survive contractual termination or an accepted repudiation. It was alleged that there was a repudiatory breach of the adjudication agreement because there was a deliberate and conscious refusal by GTI to serve the Referral within the agreed time period, i.e. 2 days after the appointment of the adjudicator by the ICE, so that the adjudication with Mr. Klein could not proceed.
In principle, the judge saw no reason why a solely contractual adjudication clause in a contract between parties should not be subject to the same approach as in arbitration. However, the situation was complicated if the contract was a “construction contract” within the meaning of section 108 of the Housing Grants Construction and Regeneration Act 1996. The reasoning behind Section 108(5) made the concept of repudiation of an adjudication agreement within a "construction contract" difficult to comprehend because the Act requires in an unqualified way that a party to such contract “has the right” “at any time” to refer a dispute to adjudication. The party cannot lose its right to adjudicate by in some way "repudiating" the adjudication agreement and the concept of repudiation does not apply to statutory rights.
The judge held that the adjudication agreement survived the determination or accepted repudiation of the contract. It was common ground that the parties’ subcontract was a “construction contract” as defined by the Act. It followed, therefore, that, in practice, the adjudication agreement in the subcontract could not be repudiated as such. However, the judge accepted that there could be a breach of the subcontract adjudication agreement which might entitle a party to damages or in some circumstances may justify the court’s intervention by way of an injunction.
Even if the concept of repudiatory breach were to apply to the adjudication agreement, Lanes’ argument failed. The adjudication agreement must stay alive and capable of being operated in relation to any other disputes.. In the absence of clear wording in the subcontract adjudication clause, there was no room to say that the overall adjudication agreement could in some way be broken down into separate agreements for each and every dispute which is referred to adjudication. The concept of repudiation was inapplicable, and, even if it were not, there was no separable agreement to refer the specific dispute to adjudication which could be repudiated.
The judge concluded that GTI had been in breach of the adjudication agreement because it had agreed to the adjudication procedure contained in the subcontract, which included a requirement to serve the Referral documentation in time. However, its conduct was not repudiatory, even though it had been deliberate.
Lanes Group plc v Galliford Try Infrastructure Ltd. [2011] EWHC 1035 (TCC)
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