Adjudication - a second bite of the cherry?

Enforcement of an adjudicator’s decision refused as an abuse of process in G&D Brickwork Contractors Ltd v Marbank Construction Ltd

As we all know the courts are very reluctant to interfere with an adjudicator’s decision and an adjudication award will almost invariably be summarily enforced unless there is a breach of natural justice or a lack of jurisdiction. However, in the recent case of G&D Brickwork Contractors Ltd v Marbank Construction Ltd [2021] EWHC 3009 (TCC) (Marbank) enforcement was refused for another reason – namely that the enforcement proceedings were themselves an abuse of process.

This blog post will briefly look at the decision in Marbank and how the court dealt with this somewhat unusual set of circumstances.

Background

• G&D brought a County Court claim against Marbank in June 2017 in respect of unpaid invoices in relation to a construction project.
• G&D’s claim was struck out twice due to procedural and substantive errors, but relief was granted and the claim continued. The claim was finally struck out a third and final time in July 2020. G&D once again applied for relief from sanctions, but this time their application was dismissed (in November 2020).
• Approximately eight months later, G&D commenced an adjudication (one of several) in relation to the outstanding payments which had formed the basis of its earlier County Court claim.
• In June 2021 Marbank applied for an injunction to stop G&D from bringing adjudication proceedings in respect of a claim which had already been the subject of County Court proceedings. However, this application failed. (O’Farrel J followed the decision in Bresco and directed that these arguments should be properly dealt with at enforcement stage, rather than by way of injunction).
• On 23 July 2021 the adjudicator made an award in G&D’s favour, which G&D sought to enforce by way of a summary judgement application.

Marbank argued that, because the claim had already been struck out by the County Court, the summary judgement enforcement proceedings were an abuse of process. Therefore, Marbank invited the court to exercise is discretion under CPR Rule 3.4(2)(b) and strike out the claim for enforcement.

Outcome

The court considered what was needed to conclude that this was an abuse of process. There are a number of cases in this area, which are by their nature very fact specific.

The court questioned whether the first action (i.e. the County Court claim) was struck out as itself being an abuse of process or was the conduct of G&D in the first action inexcusable? If the answer to either of those questions was yes, then the case law directed that the second action (i.e. the claim for enforcement) would be struck out as an abuse of process, save in vary unusual circumstances.

Mrs Justice Joanne Smith (Joanne Smith J) found that the conduct of G&D in the first action was inexcusable by virtue of its failure to comply with various Court orders during the proceedings and noted that the claim had already been struck out twice before the final strike out in July 2020. The court also found that there were no very unusual circumstances present. Therefore, the claim for enforcement was struck out.

Key takeaways

While this case is unusual, there are number of points that are worth noting.

• During the injunction application in June 2021, the court noted that there was nothing to stop G&D from referring the dispute to adjudication, in circumstances where the dispute had not been finally determined by the Court, as the Construction Act gives parties the right to adjudicate “at any time”. So while G&D’s decision to litigate in court first and adjudicate afterwards may be unusual, it was permissible.
• G&D had made a number of submissions that its failures in the County Court claim were effectively failures by its solicitors and that G&D should not suffer as a result of its solicitors’ mistakes. However, the court noted that this was not a very unusual circumstance. Rather this would suggest that G&D may have a negligence claim against its solicitors!
• G&D argued that in circumstances where the adjudicator had made an award in G&D’s favour, a failure to enforce the award would effectively grant a windfall to Marbank. The court agreed, however in the particular context, this was not a very unusual circumstance that would militate against a strike out.
• Joanna Smith J was very clear that G&D should not be able to take a "second bite of the cherry" and put itself in a better position than it would have been in if it had sought to bring a second set of proceedings in court simply by resorting to an adjudication procedure that would not be open to the majority of litigants (e.g. in cases where the Construction Act does not apply).

Finally, this case serves as a useful reminder to parties to carefully consider what may be the best forum for bringing a dispute. In this case, G&D could potentially have saved itself a lot of trouble, time and costs by referring the dispute to adjudication in the first place.