Herschel Engineering Ltd v Breen Properties Ltd [2000] HT 00/107

This summary was provided by CMS Cameron McKenna LLP.

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A party can commence court proceedings, and then commence concurrent adjudication proceedings dealing with the same issue, provided that the court has not given final judgment. Commencing court proceedings does not operate as a waiver of the right to adjudicate. The Court commented that it may have granted a stay of execution if there was a doubt over H's ability to repay

Dyson J, Technology and Construction Court

14 April 2000

The parties entered into a contract which provided that disputes would be referred to adjudication in accordance with the conditions set out in the "Construction Act 1996." B refused to pay two invoices submitted by H, and H issued proceedings in the County Court. B failed to file a Defence, and H obtained judgment. B successfully applied for the judgment to be set aside. The possibility of a reference to adjudication was raised before the District Judge, who made an order that there be a stay of 28 days for adjudication to be considered. H appealed against this order.

Meanwhile, H indicated that it wished to refer the non payment dispute to adjudication. The first adjudicator resigned in a dispute over fees, and a second adjudicator was appointed. Despite being invited to do so, B took no part in the adjudication proceedings. The adjudicator awarded sums to H. B applied for an injunction to restrain the adjudication, but the application was not heard. B refused to pay; H issued an application for summary judgment for the sums ordered to be paid by the adjudicator.

B argued that it was being vexed, harassed and put to unnecessary expense by the two sets of proceedings. It argued that the Court should not entertain two concurrent proceedings for the same cause of action, alternatively that H had waived its right to adjudicate. H relied on the right to adjudicate being available "at any time."

The Court rejected B's arguments. Arbitration and adjudication were not so analogous that case law on concurrent proceedings and waiver would apply.

Adjudication is not final whereas a decision of the County Court will be. The Act expressly states that adjudication is available at any time, and the fact that these words were omitted from the Scheme is of no significance. Parliament would have said if it had intended that adjudication could not be commenced after court proceedings had begun.

The Act also makes it clear that a claimant is not deemed to have waived his right to adjudicate if he commences court or arbitration proceedings.

The Court considered whether to grant a stay but refused. It saw no reason why H should be kept out of its money until a full trial took place. It noted that there was no evidence that H would be unable to repay the sum if it was unsuccessful in a full trial, but also said that if there had been a doubt over H's ability to repay, it would probably have granted a stay of execution pending determination of the County Court proceedings.

A party can commence court proceedings, and then commence concurrent adjudication proceedings dealing with the same issue, provided that the court has not given final judgment. Commencing court proceedings does not operate as a waiver of the right to adjudicate. The Court commented that it may have granted a stay of execution if there was a doubt over H's ability to repay.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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