This question was recently considered by the TCC in the case of Mailbox (Birmingham) Limited v Galliford Try Building Limited [2017] EWHC 1405 (TCC).

Mailbox employed Galliford Try (“GTB”) to construct a development in Birmingham. Under an amended JCT contract, the construction works were split into separate sections. GTB applied for a number of extensions of time in relation to specific sections of the works. Whilst some of the extensions of time were allowed, various significant claims were rejected as a result of a failure of GTB to provide adequate information.

In March 2016, Mailbox sought liquidated damages in the region of £5 million. A termination notice was later served by Mailbox, for GTB’s failure to proceed “regularly and diligently”. No resolution was reached between the parties over the following months and so Mailbox commenced adjudication proceedings (Adjudication 1) seeking an award of liquidated damages.

GTB limited its defence to a claim for extensions of time in relation to three specified events, despite stating that it had a “full” extension of time claim. The adjudicator rejected the extension of time claims and awarded Mailbox a significant sum as liquidated damages.

GTB commenced separate adjudication proceedings (Adjudication 2) challenging the lawfulness of the termination of contract. In an attempt to show it was progressing regularly and diligently, GTB sought a determination of its entitlement to additional extensions of time beyond the three events considered in Adjudication 1. If allowed, those extensions of time would have had a potential impact upon the amount of Mailbox’s liquidated damages.

Mailbox commenced court proceedings to enforce the adjudicator’s decision following GTB’s failure to pay. Mailbox also sought a declaration from the court that no adjudicator in other proceedings could have jurisdiction over any further claims for extensions of time by GTB.

Mr Justice Coulson concluded that Mailbox’s entitlement to liquidated damages could not be reduced in subsequent adjudication proceedings. The adjudicator’s award could only be modified if a court were to reach a contrary view. Furthermore, the judge held that Adjudication 1 encompassed all time-related issues in the dispute and it was an “unwise course” for GTB to limit its defence in Adjudication 1 by reference to certain events, and to then select additional relevant events to rely upon in subsequent proceedings. Mr Justice Coulson emphasised that his ruling did not prevent GTB from continuing its challenge to the termination of the Contract.

For employers

Whilst much turns on the scope of the dispute referred, this is a welcome confirmation that an adjudicator’s award of liquidated damages is not vulnerable to multiple adjudication proceedings by a contractor and so will be treated as binding unless, or until overturned, by the Court.

For contractors

When facing a claim for liquidated damages in adjudication there are risks in cherry picking only parts of a claim for extension of time as a defence, as it may be that in any subsequent adjudication the adjudicator will not have jurisdiction to consider other time-related issues.