Lanes Group Plc v Galliford Try Infrastructure Ltd

A contractual adjudication procedure in a construction contract survives termination or accepted repudiation. Where the Housing Grants, Construction and Regeneration Act 1996 applies, the statutory right to refer a dispute to adjudication at any time cannot itself be repudiated. A party may nevertheless breach the contractual procedure by failing to serve its referral within the agreed period. Such a breach does not create a separate agreement for each dispute or permit partial acceptance of repudiation. The apparent-bias test remains whether a fair-minded and informed observer would conclude that there was a real possibility of bias. A previous heated professional dispute, without more, will not necessarily satisfy that test.

Galliford Try Infrastructure Ltd engaged Lanes Group Plc as a subcontractor. After disputes concerning termination and payment, Galliford Try served a notice referring its claims to adjudication. The Institution of Civil Engineers appointed Mr Klein, but Galliford Try declined to serve its referral documentation, alleging possible apparent bias, and sought a fresh nomination. A second adjudicator was appointed.

Lanes commenced Part 8 proceedings seeking to restrain the fresh adjudication, contending that Galliford Try’s failure to proceed was an accepted repudiatory breach of the adjudication agreement. The issues were whether the adjudication agreement could be repudiated, whether a particular reference constituted a separable mini-agreement, whether Galliford Try had breached the agreed timetable, and whether apparent bias existed.

1. The claim was dismissed. Galliford Try had breached the contractual adjudication procedure by failing to send its referral documentation within two days of Mr Klein’s appointment, as required by paragraph 4.1 of the ICE Adjudication Procedure. A materially late referral deprives the adjudicator of jurisdiction, although the contractual and statutory provisions may require a flexible interpretation as to what constitutes timely and complete service.
2. The adjudication agreement survived termination or accepted repudiation of the subcontract. It was a dispute-resolution provision intended to govern disputes arising after termination. The position applied with particular force because section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 gives a party to a construction contract a right to refer a dispute to adjudication at any time.
3. That statutory right cannot be lost by repudiating the adjudication agreement. Although a contractual adjudication agreement may be breached, and in suitable circumstances the court may grant an injunction, the concept of repudiation does not apply to the statutory right.
4. Repudiation operates on the contract as a whole. There was no rational basis, absent clear wording, for treating each reference as a separate agreement capable of partial repudiation while leaving the general adjudication agreement in force for other disputes.
5. Even if repudiation had been available, the conduct was not repudiatory. Galliford Try had an honest, though mistaken, belief that apparent bias existed, and its request for a further nomination indicated that it did not intend to abandon the adjudication agreement.
6. The court nevertheless found no apparent bias. Applying the fair-minded and informed observer test, the earlier heated dispute between the adjudicator and the opposing solicitor, occurring about 14 months earlier and arising in unrelated adjudications, did not establish a real possibility of bias.
7. The court left open, without deciding, whether repeated attempts to obtain a preferred adjudicator could be restrained as an abuse of the adjudication process where the same relief for the same dispute was repeatedly pursued.