Adjudicators - Is it right they get paid even when they get it wrong?

Should an Adjudicator be paid even when his decision is found to be unenforceable? That was the question faced by Mr Justice Akenhead recently in Systech International Ltd -v- PC Harrington Contractors Ltd when one of the parties to adjudiction, Harrington, refused to pay the Adjudicator`s fees when three decisions were found to be unenforceable by reason of breaches of natural justice.

I do not propose to go into the facts in any detail but briefly, the adjudicator had failed to consider in the adjudications issues raised by Harrington relating to the final account on the basis that these were outside his jurisdiction. By taking this decision, the adjudicator had put himself in a position whereby he could not and would not deal with the defence put forward by Harrington. Faced with an unenforceable decision, Harrington refused to pay the adjudicator`s fees on the basis that there had been a total failure of consideration. 

The Court decided that the adjudicator was entitled to his fees. Although the decision was unenforceable, there had been partial performance by the adjudicator of the contract between him and the parties. The role of the adjudicator as outlined in Housing Grants, Construction and Regeneration Act, the Scheme and the contract with the adjudicator went beyond simply producing a decision. It included a number of other functions including giving directions to enable the parties to present their case, generally handling the adjudication procedure, addressing correspondence form the parties and considering all submissions and evidence. 

Not surprisingly, there have been mixed views on the decision. Some welcome the decision as a further step to prevent parties refusing to pay fees when a decision is unenforceable because there has been a breach of natural justice. For others, where the whole purpose of referring disputes to adjudication is in order to obtain an enforceable decision, there has, not surprisingly, been criticism. 

There is however likely to be some limits to this decision, Mr Justice Akenhead differentiated between the adjudicator who has done their honest best and circumstances where there is a suggestion of dishonesty, fraud or bad faith on the part of the adjudicator. The Judge did not go as far as to say that in those circumstances the adjudicator`s fees would not be payable but he did indicate that this may well be a different position.

Parties should therefore be careful when seeking to withhold an adjudicator`s fee, and read the terms of the contract with the adjudicator. However the contract, particularly in light of this decision is likely to ensure that fees are payable, regardless of whether the decision is enforceable or not.

5 January 2012

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.