BECK Interiors Ltd v Eros Ltd [2024] EWHC (TCC), 28 June 2024
Howard Kennedy LLP has acted (with senior counsel, Mr Andrew Singer KC and junior counsel, Mr Mischa Balen) for BECK Interiors Limited ("BECK") in a recent application in the Technology and Construction Court ("TCC") seeking an injunction against Eros Ltd ("Eros"). The injunctive relief sought by BECK was to have four adjudication notices issued by Eros withdrawn, and to restrain Eros from issuing any further notices unless Eros first obtained permission from a Judge authorised to sit in the TCC. Ultimately the Court declined to grant the injunction, emphasising the high bar needed for an applicant to satisfy a court to intervene in the adjudication process.
Background
Eros engaged BECK as the fit-out contractor for the new Mandarin Oriental Residences at Hanover Square, Mayfair. BECK commenced an adjudication against Eros in relation to an extension of time claim in March 2024 ("Adjudication 1"), and some weeks later issued a further adjudication in relation to liability for installation of certain building services ("Adjudication 2"). Adjudication 1 was ongoing at the time of the injunction hearing, however the adjudicator since awarded extensions of time in BECK's favour. BECK were successful in Adjudication 2, however, Eros has since commenced Part 8 proceedings regarding the same adjudication.
In a 13-day period in May 2024 Eros issued four separate adjudications against BECK for sums exceeding £34M. In summary Eros seeks: £3.6M in alleged increased pre-opening costs, £6.35M regarding the true valuation of a payment notice, £8.6M in alleged liquidated damages and £15.8M for alleged delayed and lost sales. Eros then threatened to issue a further adjudication claiming approximately £40M from BECK for a claimed loss of chance. In late June 2024 BECK then applied to the TCC for the injunction.
Right to Adjudicate
The TCC has jurisdiction to grant an injunction, but it is a jurisdiction that the Courts are reluctant to enforce. The right to refer a construction dispute to adjudication is a statutory right. The general position is that a party should not be prevented from pursuing its right to refer a dispute to adjudication, except in the most exceptional circumstances. Authority has established that an injunction restraining adjudication may be granted where an adjudication is unreasonable and oppressive.
BECK's Arguments
BECK considered that the timing of the launching of the adjudications, and the strain on BECK and its legal team, was oppressive and unreasonable. BECK had also made challenges to the jurisdiction of the adjudicators, as well as the directed timetables (as had Eros), however all adjudicators issued non-binding decisions that they did have jurisdiction to determine the disputes.
Eros's Arguments
Eros argued that its conduct in bringing the adjudications was not unreasonable and oppressive, and by virtue of the statutory right to adjudicate 'at any time' under the Housing Grants, Construction and Regeneration Act 1996, Eros were entitled to commence its adjudications.
The Court's Decision
The Court rejected BECK's injunction application. It noted that given the statutory right to adjudicate at any time, and referring to previous decisions, the Court is reluctant to 'police' adjudications. The facts of a particular case would have to be exceptional for the Court to consider a reference to be unreasonable, even if the circumstances of that reference might be oppressive. The Court noted there is an inevitable burden of dealing with multiple adjudications at once, and Parliament were aware of this when legislating that a dispute can be referred at any time. The Court also noted, as had occurred in the present case, that it was up to the adjudicator to determine whether Eros had behaved unreasonably within each of the adjudications. Accordingly, BECK was not without a remedy. Regardless of the outcome of the injunction application BECK was entitled to attempt to resist enforcement of an adjudicator's decision in each adjudication, if it considered the adjudicator had breached the rules of natural justice.
As for whether Eros could be prevented from launching any future adjudications without leave of the Court, this has never been granted before. However, the Court noted this may be granted in cases of a vexatious litigant.
Comment
The Court's rejection of BECK's injunction application is unsurprising and serves as a reminder to responding parties in adjudications of two important points. First, the Courts are unwillingly (except in the most exceptional cases) to interfere with the adjudication process. Second, the 'unreasonable and excessive' test which must be satisfied is a very high bar. No case before the Courts has met this threshold, with only obiter comments suggesting conduct which may be considered sufficiently unreasonable and excessive enough to merit an injunction being granted.
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