In Beck Interiors Ltd v Eros Ltd [2024] EWHC 2084 (TCC), the Court refused to grant Beck's application seeking an injunction to restrain Eros from issuing notices of adjudication.
Background
Beck Interiors Limited ("Beck") had been engaged by the Defendant, Eros Limited ("Eros"), as the design and build fit out contractor. The works were for a development now known as The Residence, Mandarin Oriental in Hanover Square, and included fitting out the hotel with 50 rooms, a retail space and 79 residential apartments.
Between 17 and 30 May 2024, Eros initiated four adjudications:
On 17 May 2024 claiming £3.8 million for alleged defects in Beck's reporting and forecasting, and also pre-opening costs, incurred as a result of the difference between the anticipated opening date of the hotel and the actual opening date;
On 21 May 2024 seeking determination of the true value of an interim certificate;
On 28 May 2024 claiming £8.6 million by way of liquidated damages;
On 30 May 2024 claiming approximately £15.5 million for additional financing costs incurred due to the delay in selling apartments because of the defects caused by breaches of Beck's obligations.
Beck's arguments against these adjudications included that the claim was weak and for unliquidated damages, and liquidated damages were the exclusive remedy; jurisdiction was challenged; and Eros was unreasonable with regards to the timetable.
After their arguments were largely rejected by the adjudicator, Beck issued an application:
- to prevent Eros from issuing any further notices of adjudication without first obtaining permission via a judge in the Technology and Construction Court; and
- for Eros to withdraw all four notices of adjudication.
Decision
The judge refused Beck's application.
Whilst it was agreed that the Court maintains the jurisdiction to restrain a party from initiating further adjudications, it was also confirmed to be "…a jurisdiction that will rarely be exercised…". The following three authorities were highlighted as being illustrative of this:
- Dorchester Hotel Limited v Vivid Interiors Limited [2009] EWHC 70 (TCC) in which Coulson J said "It will only be appropriate in rare cases for the TCC to intervene in an ongoing adjudication. It is important that, wherever possible, the adjudication process is allowed to operate free from the intervention of the Court."
- Michael J Lonsdale Electrical Ltd v Bresco Electrical Services Ltd (in liquidation) [2018] EWHC 2043 (TCC) in which Fraser J said: "What these cases make clear is that although the Court has the necessary jurisdiction to grant an injunction in respect of an ongoing adjudication, it will only do so very rarely and in very clear cut cases."
- Marbank Construction Ltd v G&D Brickwork Contractors Ltd [2021] EWHC 1985 (TCC) in which O'Farrell J said: "…it is only in very rare cases that the Court will interfere in the adjudication process by way of injunctive relief…"
The judge also highlighted circumstances in which an injunction was likely to be granted, such as:
- Where the adjudicator would lack jurisdiction so that there was no prospect of pursuing the adjudication to an unenforceable decision or award, as was the case in Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC), where an injunction was sought to prevent the adjudication on the grounds that the appointment was void, given that the adjudicator was appointed under a provision that did not exist. The injunction was granted on that basis.
- Where the adjudicator was oppressive, as was the case in Jacobs UK Ltd v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC), where an injunction was sought to restrain the pursuit of a second adjudication after the first had been withdrawn. The judge confirmed that the courts had jurisdiction to grant an injunction so as to restrain a party from commencing or continuing an adjudication that was unreasonable or oppressive.
In this case, the judge did not accept Beck's arguments on the basis that:
- There was an inevitable burden in Beck having to act in four concurrent adjudications, but such was the product of the right to commence an adjudication at any time; and
- Despite the adjudications being over a short period of time, Eros were mostly agreeable to the extensions to the timetable as Beck had requested, and there was nothing seen to regard them as being "unconscionable, unreasonable or oppressive in Eros' approach in the individual adjudications"
The judge was also concerned with the impact of a court preventing an adjudication due to an allegation of unreasonable behaviour by an adjudicator, as it risked opening the door to the court policing adjudications. The judge cited Dorchester Hotel again in which it had been alleged that an adjudication was being conducted in breach of natural justice, and to which Coulson J had held that despite having jurisdiction to make such a declaration, it was jurisdiction that should be exercised very sparingly.
The judge also commented that if Beck considered that there had nonetheless been a breach of natural justice, such was a matter that could be raised in the resisting of enforcement.
Take-away
Only in exceptional circumstances will the Court grant an injunction to restrain adjudication proceedings. Absent such circumstances, it is extremely difficult for a party to show that it will suffer some kind of irremediable prejudice, notably because decisions in adjudication are temporarily binding. Further, if there is some merit in any jurisdictional or breach of natural justice arguments, these remain available in defence of enforcement proceedings.
