It’s hard to introduce a new defence in the middle of a trial, but in adjudication – being a quick first-aid for two parties in a punch-up – it’s the very opposite
introducing a defence in an adjudication that the opponent referring party has never previously heard of is like lighting the blue touchpaper on a giant firework. Believe me, he will yell “objection” and he is right. Adjudication isn’t a time to find new arguments. It’s the time to put a sticking plaster on the bleeding wound.
The price for letting in the new argument is to abandon the 28-day timetable. New arguments from the defendant means, of course, a reply to the new arguments. Then the defendant will want to reply to the reply. Then, you guessed, each reply wheedles in more new argument.
I have seen 12 exchanges, yes 12.
The canny adjudicator will insist on 21 days from when the last ball is thumped across the net. He also switches on his pay-by-the-minute meter when reading and recapping each time a reply turns up. Expensive. The alternative is to shut out that new defence. In litigation it is a mortal sin to shut out a new relevant defence. Even in the middle of a trial, even in closing minutes, a new defence will invariably be let in.
Ah, did you see the way I drifted from adjudication to litigation? Natural. In a case called Connex vs MJ Building I talked about here (18 March, page 54) for another reason, the Court of Appeal sharply reminded us that the principles developed by courts for its procedures do not apply in adjudication.
But if we shut out a new but highly relevant defence from an adjudication, that sounds like a gross wrong. After all, the Construction Act provides “that the decision/award of the adjudicator is binding until the dispute is finally determined by legal proceedings”.
You can see that if the end decision/award is made but a good defence was shut out, the outcome in the decision is suspect. Well, why not instead bring the new defence to a separate, subsequent adjudication?
Well, hanging around for 162 years (honest) is a case called Henderson and Henderson. It is well known. It tells the lawyers that you must not try to bring a claim or defence in a second piece of litigation that you could have brought in the first. It is called an “abuse of process” but abuse of this sort doesn’t apply to adjudication.
Litigation is hellbent on avoiding successive actions but the whole policy behind construction contract adjudication is to fix the monthly wound
In any case, if the referring party has shouted an objection to bringing in a new defence he can hardly object to the new defence coming to a subsequent adjudication. There is no abuse of process.
The crunch point is precisely what is binding in the first adjudication? And then what, in the second adjudication, is also binding? The short answer is that anything new in a subsequent adjudicator’s decision is also binding. Let’s try an example. A claim for loss and expense is made and argued, then brought to adjudication. It contains numerous parts to the dispute. Call those parts “questions in issue”. Every dispute has a basis or set of quarrels. And every one of those once decided by the adjudicator is binding. The end decision or redress is to award £50,000. But the defence, which was shut out or refused in adjudication number one, was a knockdown argument that the parties agreed to limit loss and expense awards to £1. The second adjudicator hears that dispute. The dispute is whether any loss and expense clause exists to limit damages irrespective of claims to £1. The answer, says adjudicator number two, is yes. Different dispute. Same topic, same facts but different dispute not heard before. The same goes for any other defence. The adjudicator has authority to decide new disputes.
Litigation is hellbent on avoiding successive actions. The whole policy behind construction contract adjudication is precisely the opposite.
It was designed to fix the monthly wound. Each month the interim valuation involves a quarrel. The payer once had the upper hand in those quarrels – not now. The adjudicator runs on the pitch with his sticking plaster. He decides issues one at a time. There you have it; it is the elements of the overall decision that are the findings, the binding decisions. It is not fatal to run a new defence in a subsequent adjudication, it is just that for 162 years we have done it differently … in litigation.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on email@example.com.