If at first you don’t succeed: Adjudication

Kitchen sink litigation is the norm. Bring along all your disputes in one lump, for one trial, for one judgment. But it’s bonkers to do that or try that in 28-day adjudication. Lord Glennie, the judge in the recent Scottish case Barr vs Klin Investment UK, didn’t use the word bonkers; he said: “In adjudication there is no good reason why the court should seek to discourage a party from seeking an interim decision in his favour by referring short points of disputed fact on a narrow issue, rather than having to engage in what, in effect, would be a dress rehearsal for the full arbitration.” Well, er, yes, hooray. Some of us have been saying precisely that since 28-day adjudication was invented. And yet, the idea that adjudication has to be concluded in the kitchen sink of litigation thrives. Silly.

Glennie said: “It is not uncommon for there to be a number of references to adjudication during the lifetime of a contract. In submitting a dispute or difference to adjudication, a party is not required to submit all the differences, to that date. He may pick and choose. He may refer a discrete issue affecting a claim for an extension of time, in the hope that, if he is successful it will enable him to claim payment of part or all of what he alleges to be due to him. If he is unsuccessful, if will not prevent him from referring another discrete issue with a hope it will unlock payment of some or all of the sums.”

See the idea? Bite-size chunks suit 28 days. Let me tell you about this case in which the parties lobbed each dispute as it arose at the adjudicator. Barr and Klin were only at adjudication number three, but Klin’s team said the builder was having a second go at the dispute in adjudication number one, and if not, number two. Now then, it is a no-no to get a thumbs down from adjudicator Tom, then try again with adjudicator Dick, then again with adjudicator Harry. Whatever an adjudicator decides binds all future adjudicators. Only an arbitrator or judge can oust adjudicator Tom.

All this can become tricky; it did in Barr vs Klin. For all purposes, it did look like Barr was calling the rose by another name. So Klin invited adjudicator number three to resign, arguing that “the adjudicator must resign if the dispute now brought is the same or substantially the same as that which was decided at an earlier stage”. The adjudicator didn’t agree; they pressed on.

The Barr and Klin contract is the JCT 1998 with contractors’ design. Quarrel number one was all about the payer, Klin, supposedly missing the deadline for giving notice of monies due and withholding notice. The contract said the contractor’s application for payment must be paid unless the employer gives notice of rejection or withholding by a certain day. Adjudicator Tom rejected the contractor’s claim that the employer was too late. The contractor limited the referred dispute to ask only if the employer was out of time. So, when Barr lost on that point, that did not stop it bringing another adjudication on whether this application for payment was valued correctly. At first you might think Barr was adjudicating the same dispute about its interim account, but that’s not so.

Credit: Simone Lia

"Tom, Dick and Harry couldn't help us so lets give her a chance" - "I'll be with you as soon as I've found Larry and Dolly"

The next adjudication asked whether the liquidated damages clause was a penalty and therefore void. Adjudicator Dick dealt with that. The answer was yes. It was void.

Adjudication number three asked whether the withheld liquidated and ascertained damages of £375k were now repayable. Now came that fuzzy edge. The argument was run that taking the first two adjudications together, the £375k was already decided as payable and so it was impossible to order a repayment in a third adjudication. It is a subtle point. Klin was ordered to pay the £375k by the third adjudicator, but it decided to ask the Scottish court to decide the fuzzy edge. Lord Glennie came out in favour of the contractor and enforced the order to repay the money.

Adjudication is at its best when sequential topics are argued bite-size. But let me give you a tip. Stick to the same adjudicator for each one. Reality shows that there is a need to give context, shape, and backdrop to the dispute. It comes for the adjudicator byrevisiting the contract documents and stories for the next dispute. It’s cheaper, too.