It can often be tempting, where it suits it, for a party to argue a point one way in one adjudication, but then argue the same point the opposite way, on the same issue, in a subsequent adjudication between the same parties. The courts generally take a dim view of what is known as “blowing hot and cold” or, in more colloquial terms, “trying to have your cake and eat it”. It is what lawyers call “approbation and reprobation”.
Actavo UK Limited v Doosan Babcock Limited
The risk in taking this approach was seen in the case of Actavo UK Limited v Doosan Babcock Limited. The case concerned two adjudications. The first adjudication involved the claim by the Claimant Actavo for payment in relation to its payment application. It said there had been no valid payment or pay less notice. From the judgment it appears to be what is often referred to as a “smash and grab” type adjudication.
Actavo succeeded in the adjudication, but Doosan Babcock failed to pay. Part of the decision in the first adjudication was that the Late Payment of Commercial Debts (Interest) Act 1998 (“the Late Payment Act”) applied, and the adjudicator awarded the Claimant circa £17,000 in interest.
Court proceedings commenced
Faced with non-payment, Actavo commenced court proceedings to enforce the decision of the first adjudicator by way of summary judgment.
In parallel with those court proceedings, Doosan Babcock commenced its own adjudication in relation to the value of the final account, saying it had overpaid Actavo.
Prior to the court hearing for enforcement of the first adjudicator’s decision, the second adjudicator issued his decision, which in effect reduced the sum due to Actavo. As well as defending enforcement of the first adjudicator’s decision, Doosan Babcock had also issued Part 8 proceedings (an expedited form of court proceedings not involving cross examination of witnesses or a full trial). It sought a declaration that the Late Payment Act did not apply to the claim in the first adjudication and so, contrary to the first adjudicator’s decision, no interest was due to Actavo.
Doosan Babcock’s position on interest
The issue we are concerned with for this article is Doosan Babcock’s position on interest.
As noted above, in the court proceedings Doosan Babcock sought a declaration that the first adjudicator had got it wrong, and that the Late Payment Act did not apply.
Their problem was that in the second adjudication (which it commenced) it argued (presumably because it suited it to do so), that the Act did apply.
Courts dislike ‘blowing hot and cold’
That “blowing hot and cold” by Doosan Babcock was one of the factors which led the court to refuse to give the declaration sought, that the Late Payment Act did not apply at the same time as deciding on the claimant’s application for summary judgment. It made no finding either way on the issue, other than that it would not be appropriate to decide the interest issue by way of the expedited Part 8 procedure at that hearing.
Parties therefore need to be aware of the risk, where there are multiple adjudications, that running conflicting arguments in different adjudications without proper justification, can lead to problems, whether during the subsequent adjudication or later on when it comes to enforcement. Where a party does change its position on a particular issue, it needs to set out clearly the reason why it has done so, in order to justify the change.
  EWHC 2849 (TCC)