This is Lord Woolman's summary of the question posed in T Clarke (Scotland) Limited v Mmaxx Underfloor Heating Limited [click here], also described by him as a "novel point".
This point arose from Clarke's application for an interim interdict (Scottish equivalent of injunction) to prevent Mmaxx from initiating any further adjudications against Clarke.
This was not only a novel point but one which could have had far reaching implications for adjudication.
Clarke was a subcontractor for the redevelopment of West Linton Primary School. Maxx was their sub-subcontractor.
Clarke made various allegations about the attitude, approach and conduct of a Director of Maxx. These included claims that he made unjustified threats to suspend the works, lodged unfounded notices of delay, required instructions to undertake work which was part of the contract and made erratic, unjustified and duplicated applications for payment "because he could". He was claimed to have said that he "would never give up" and that he would "do what I need to do", requiring Clarke to incur significant legal costs.
Nine adjudications had been commenced, eight of them initiated by Mmaxx. Some did not proceed as they had not been properly referred or because there were jurisdiction issues. In one, Mmaxx claimed £184k and were awarded £17k.
The test for interim interdict in Scotland is that there must be a prima facie case on the merits and the balance of convenience must favour the interdict being granted.
In relation to the prima facie case test, Clarke argued that whilst Parliament had granted a right to refer genuine disputes to adjudication, that right did not extend to sham disputes. It was said Maxx had acted improperly in the adjudications and there was a reasonable apprehension that they would do so again.
On balance of convenience, Clarke's argument was that it had incurred significant irrecoverable expenses in each of the adjudications and that Mmaxx would still have a remedy in court, even if not allowed to adjudicate.
Mmaxx argued that it should not be deprived of its statutory right to adjudication. Allegations made of past conduct were not an indication that any future referral to adjudication would be in bad faith. It would be prejudicial to have the remedy of adjudication removed since court would be a more expensive option.
The English cases which dealt with applications for injunctions of adjudications were referred to. They established that a party would not be prevented from adjudicating except in the most exceptional circumstances and their conduct would have to be unreasonable and oppressive.
The judge noted that whilst a "cloud of suspicion" hung over Mmaxx's conduct, that would not amount to the "most exceptional circumstances" required for a court to deprive a party of an express right conferred by Parliament. It was also said there was no clear inference of unreasonable and oppressive conduct. There was concern that granting the interdict would mean that Mmaxx would not be able to commence any adjudication, no matter how justifiable.
This decision is to be welcomed. Clarke's frustration at the circumstances in which it finds itself is understandable. However, there are often cases in which a series of adjudications may be required for valid reasons. If an interdict is granted to prevent adjudication in one case, where is the line to be drawn in future cases? Courts could find themselves being asked to curb what is otherwise an unfettered right to adjudicate set out in statute based on allegations of "who said what to who" being made by parties embroiled in what can often be bitter disputes where many statements are made in the course of heated discussions.
It is understood that this case is under appeal.