T Clarke (Scotland) Ltd v MMAXX Underfloor Heating Ltd
The very brief facts of the case are that MUHL had commenced eight adjudications against Clarke and was threatening to commence another. Clarke had also commenced one adjudication itself.
Clarke became frustrated with MUHL and actually applied to court in an attempt to prevent MUHL referring any more disputes to adjudication arising out of the contract. It argued that MUHL was abusing the process.
Clarke felt that MUHL was bringing unfounded adjudications as a way to drive up Clarke’s legal costs, apparently threating that “the cost of defending adjudications will be massive”. Clarke believed that MUHL’s entire conduct was malicious and in bad faith.
Clarke argued that the right to adjudicate was a right to refer genuine disputes, which MUHL was not doing as there was no genuine dispute.
Clarke’s claims included that during the course of previous adjudications MUHL’s director had:
- Prior to the first adjudication, told Clarke he did not care whether his claims were valid or not, and would simply use the adjudication process on an item by item basis to force a settlement;
- Stated he would do whatever was required to obtain monies by way of adjudication, including making use of misinformation and misdirection;
- Misrepresented a number of key facts during the third adjudication; and
- Admitted during the third adjudication that one of its claims (that it had been instructed to stop drilling) was simply untrue.
Although the court found that “a cloud of suspicion hangs over [MUHL’s] conduct…”, it found that MUHL’s behaviour was “robust”, rather than oppressive and unreasonable. It therefore found in favour of MUHL and did not grant the injunction.
The court felt that it could only deprive a party of an express right granted by Parliament in exceptional circumstances. MUHL would be “significantly prejudiced” if it lost the benefits offered by adjudication (mainly speed and cost), especially as Clarke wanted to retain the right to adjudicate itself.
This case should not be seen as an encouragement to begin a spurious adjudication for the sake of it, which remains unadvisable. The court can still consider abuse of process during an ongoing adjudication, so poor conduct remains open to challenge.
However, the case shows that poor conduct (however poor it may be) in one adjudication does not preclude the right to bring another.
Clarke must have felt frustrated with the decision. It, and parties in a similar situation, will have to continue to defend such adjudications on a case by case basis, or take the initiative and fight on the front foot.
A full transcript of the case can be read here.
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