Lanes Group Plc v Galliford Try Infrastructure Ltd

Factual and Procedural Background

This case concerns a dispute between Company A, the main contractor engaged to carry out refurbishment works at a train maintenance depot, and Company B, a subcontractor engaged for roofing and glazing works. The relationship broke down in April 2009, and Company B pursued adjudication against Company A in late 2009 to early 2010. Subsequently, Company B issued court proceedings in November 2010 for outstanding payments and damages related to the termination of the subcontract. Those proceedings were stayed to arbitration with a judge appointed as arbitrator by consent.

Company A sent a claim to Company B in December 2010 concerning delay and termination. A series of adjudications followed in 2011 involving the appointment and challenge of adjudicators under the subcontract, which incorporated the CECA Form of Sub Contract and the Institution of Civil Engineers' Adjudication Procedure. Company B sought an injunction to restrain Company A from pursuing multiple adjudications on the same dispute, alleging unfair conduct and abuse of process.

Legal Issues Presented

1. Whether a party who abandons an adjudication reference can initiate a fresh adjudication for the same dispute.
2. Whether an adjudication agreement under a construction contract governed by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA) can be repudiated.
3. Whether apparent bias on the part of an appointed adjudicator can justify non-compliance with adjudication procedures.
4. The scope and enforceability of the statutory right to adjudication under the HGCRA, particularly concerning repeated referrals of the same dispute.

Arguments of the Parties

Appellant's Arguments (Company B)

• The adjudication agreement survives termination or repudiation of the subcontract.
• Company A repudiated the adjudication agreement by deliberately failing to serve the referral within the stipulated time, thus breaching the adjudication agreement.
• The repudiatory breach relates only to the specific adjudication reference and does not affect the overall adjudication agreement.
• There was no apparent bias on the part of the appointed adjudicator, and the breach was deliberate and conscious.
• The conduct of Company A in seeking multiple adjudications for the same dispute is unfair, unreasonable, oppressive, and amounts to abuse of process.

Appellee's Arguments (Company A)

• The concept of repudiatory breach has no place in adjudication agreements governed by the HGCRA because statutory rights to adjudicate cannot be lost by repudiation.
• The notion of partial repudiation of an arbitration or adjudication agreement is not recognised in English law.
• There was apparent bias on the part of the appointed adjudicator, justifying their refusal to serve the referral and negating any breach.
• Even if there was a breach, Company A sought a fresh adjudicator promptly, indicating an intention to continue to be bound by the adjudication agreement.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hart Investments Ltd v Fidler [2006] EWHC 2857 (TCC)	Mandatory nature of timely service of referral in adjudication; late service deprives adjudicator of jurisdiction.	Confirmed that service within the agreed time is mandatory and late service results in lack of jurisdiction.
Cubitt Building & Interiors Ltd v Fleetglade Ltd [2006] EWHC 3413 (TCC)	Similar principle on timing and validity of referral in adjudication.	Supported the mandatory requirement for timely referral service under adjudication procedure.
PT Building Services v Rok Build [2008] EWHC 3434 (TCC)	Flexibility in interpreting timing and completeness of referral documents in adjudication.	Recognised some flexibility in contractual and statutory interpretation regarding referral timing.
Heyman v Darwins Ltd [1942] AC 356	Arbitration clauses survive termination or repudiation of the main contract.	Applied analogy to adjudication agreements, indicating survival post-termination.
BEA Hotels NV v Bellway LLC [2007] EWHC 1363 (Comm)	Definition and requirements for repudiation of arbitration agreements.	Clarified that repudiation requires clear and unequivocal intention not to be bound, and breach alone is insufficient.
Makers UK Ltd v London Borough of Camden [2008] EWHC 1836 (TCC)	Test for apparent bias in adjudication under the 1996 Act.	Confirmed the application of the Porter v Magill test for apparent bias to adjudicators.
Porter v Magill [2002] 2 AC 357	Test for apparent bias: whether a fair-minded and informed observer would conclude there is a real possibility of bias.	Adopted as the standard test for adjudicator impartiality challenges.
AMEC Capital Projects Ltd v Whitefriars City Estates Ltd	Challenges to adjudicator jurisdiction and bias.	Used to illustrate the need for properly arguable objections for resisting enforcement of adjudicator awards.
Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451	Guidance on factors relevant to apparent bias and recusal.	Referenced to explain circumstances that might or might not give rise to a real danger of bias.

Court's Reasoning and Analysis

The court began by acknowledging the mandatory nature of timely referral under the adjudication agreement and relevant statutory provisions. It recognized that adjudication agreements, like arbitration clauses, survive termination or repudiation of the underlying contract. However, the HGCRA complicates the concept of repudiation because it confers an unqualified statutory right to refer disputes to adjudication "at any time," making repudiation of the adjudication agreement effectively inapplicable.

The court accepted that Company A breached the adjudication agreement by failing to serve its referral documentation within the required two-day period after appointment of the adjudicator. The court found that any alleged bias of the adjudicator did not justify this breach, though it acknowledged that the breach might attract nominal damages due to the circumstances.

The court rejected the argument that the adjudication agreement could be partially repudiated in respect of a particular dispute, holding that such a concept is not recognized in English law. Each referral does not create a separate adjudication agreement capable of repudiation; rather, the overall adjudication agreement remains alive and enforceable.

The court further found no real possibility of bias by the adjudicator appointed, considering the history of prior disputes and conduct between the parties' representatives. It noted that the breach by Company A was deliberate but influenced by an honest belief in the existence of bias.

The court identified a procedural lacuna in the statutory scheme and standard form agreements, whereby a party dissatisfied with an adjudicator could withhold referral to cause the adjudication to lapse and seek a new adjudicator, potentially amounting to abuse of process. However, the court did not conclusively rule on whether the court could restrain such conduct by injunction, as no detailed argument was presented on this point.

Holding and Implications

The court held that, although Company A was in breach of the adjudication agreement by failing to serve the referral documentation within the prescribed time, Company B's claim for injunctive relief failed. The adjudication agreement survives termination and repudiation of the subcontract, and repudiation of the adjudication agreement itself is not applicable under the HGCRA.

DISPOSED OF: The injunction sought by Company B to restrain Company A from continuing or making further adjudication applications was refused.

The decision directly affects the parties by allowing Company A to proceed with the fresh adjudication appointment and referral. The court did not establish new precedent on the limits of repeated adjudication referrals but acknowledged potential concerns about abuse of the adjudication process, leaving open the possibility of future judicial intervention under appropriate circumstances.