Outside street and metal joints view.

Cherry picking in an adjudication is fine – as long as you're the Referring Party

03 July 2017

It has been established for some time a Referring Party has the right to 'cherry pick' its claim for the purpose of adjudication - essentially selecting part or parts of a wider application or dispute and referring those to an adjudicator to make an award on rather than the full dispute or an entire account.

Indeed, the Courts have remarked that such practice is not only permissible but should actually be encouraged (see Coulson's decision in St Austell Printing Company Ltd v Dawnus Construction Holdings Ltd [2015] EWHC 96 (TCC)).  The recent decision in Mailbox (Birmingham) Ltd v Galliford Try Building Ltd [2017] EWHC 1405 (TCC) by the same judge shows that the same cherry picking approach isn't necessarily open to the Responding Party and embarking on a strategy of asking an adjudicator to consider some but not all of your potential defences is high risk.


Mailbox and Galliford Try entered into a building contract based on an amended JCT Standard form.  Part of the works being undertaken by Galliford Try were significantly delayed beyond the Completion Date and Galliford Try applied for a number of extensions of time ("EoT").  Some of these were granted but Mailbox sought to deduct liquidated damages ("LADs") from Galliford Try for the balance of the delay to Sections one to four of the Works.


In 2016, following termination of the contract, Mailbox commenced an adjudication seeking declarations as to its entitlement to deduct LADs for the full period for which the Works were delayed beyond the adjusted Completion Dates.  In its Response, Galliford Try did not seek to bring its full case but asked the Adjudicator only to consider three Relevant Events which affected only Sections three and four of the Works.  The Adjudicator made his award in November last year and found that Mailbox were entitled to substantial LADs (some £4.2 million) whilst also stating in his decision that he had not considered any Relevant Events beyond those which Galliford Try's Response relied on.


Galliford Try sought to resist enforcement of the decision but their defence was dismissed.  Fast forward to April this year and Galliford Try sought to commence their own adjudication on the lawfulness of Mailbox's termination.  Importantly, Galliford Try also argued that the Adjudicator would need to consider their entitlement to an EoT as part of the process in reaching his decision.  In response, Mailbox started Part 8 proceedings seeking declarations including that its entitlement to recover LADs had already been decided by the First Adjudicator and hence no subsequent Adjudicator could have jurisdiction to decide Galliford Try's entitlement to an EoT. 


In finding in Mailbox's favour, Coulson held that it was "beyond argument" that Mailbox was entitled to retain the full amount of LADs awarded by the first adjudicator unless and until the substantive dispute was decided by the Court.  No subsequent Adjudicator had jurisdiction to grant any EoT to Galliford Try that cut across such entitlement.  This was notwithstanding that Galliford Try had elected only to ask the First Adjudicator to consider three Relevant Events.  The dispute that had crystallised between the parties and been referred to adjudication included all time related issues and, consequently, all of Galliford Try's entitlement to an EoT. Galliford Try had taken a tactical decision not to raise its full argument with the first Adjudicator but it could not preserve the right to seek to raise alternative Relevant Events in subsequent adjudication proceedings.


Coulson's decision makes perfect sense; it can't be for a Responding Party to try to limit the scope of a dispute referred to an Adjudicator in the hope they might live to fight another day.  That said, the decision is a useful reminder of the imbalance between parties to an Adjudication and the tactical benefits that the process affords to the Referring Party.  When it comes to defending an adjudication, whilst being careful not to lose credibility, it appears that the 'kitchen sink' approach is preferable to picking cherries.