| Date | 23 January 2002 |
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| Judgment | Stubbs Rich Architects -v- W H Tolley & Son Limited, CC 8 August 2001 |
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| The Issue | Challenging the reasonableness of adjudicator's fees. |
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| Implication |
The fees charged by adjudicators may be challenged if, and only if, the adjudicator has acted in bad faith |
printShould an adjudicator be entitled to hold on to his decision until his fees have been paid, and how much should the adjudicator be entitled to be paid? These two questions are commonly asked by parties commencing an adjudication, particularly where, in smaller disputes, the costs of the adjudication may seem to be disproportionate. Section 56 of the Arbitration Act 1996 states that in respect of arbitration, "the (arbitrator) may refuse to deliver an award to the parties, except upon full payment of the fees and expenses of the arbitrator". The section goes on to provide that, where an award has been withheld, a party may apply to the court for an order that the award should be delivered providing the arbitrator's fees are paid into court. The court may then direct the proper amount payable to the arbitrator.No such Scheme exists for adjudicators. However, many adjudicators do require payment of their fees in full before releasing their decision and seek to include a term to that effect in the adjudicator's agreement. The difficulty of this approach is that where the parties do not immediately pay up, the decision of the adjudicator may become invalidated by the passage of time. Section 108(2) of the Construction Act states that a construction contract shall "require the adjudicator to reach a decision within 28 days of referral, or such longer period as is agreed by the parties . . .". Clause 19(3) of the Scheme adds to that provision by stating that "as soon as possible after he has reached the decision, the adjudicator shall deliver a copy of that decision to each of the parties to the contract". We have had no judicial guidance on this point. It is possible however that a decision delivered, say, two weeks out of time, would be refused enforcement by the courts. How then would an adjudicator insist upon payment for what might be regarded as a worthless decision? Though this point remains unresolved, adjudicators may feel more comfortable in accepting that payment should follow the delivery of their decisions as a consequence of the case of Stubbs Rich Architects -v- W H Tolley & Son, heard in August of last year. Tolley was a building contractor based in North Devon, who carried out minor building works for the Torridge District Council under two separate JCT Agreements. Disputes arose between Tolley and Torridge District Council on both contracts and these disputes were referred to a partner of Stubbs Rich Architects, who was appointed adjudicator. During June 2000, the adjudicator investigated the two disputes and delivered two written decisions on 1 July. He also enclosed as part of his decisions invoices for his fees, where he claimed a sum of the order of £1,500 plus VAT. Approximately three weeks later, Tolley paid the adjudicator's fees in full, but claimed this was "under duress", alleging that the hours performed by the adjudicator were unreasonably excessive. Later that month, Tolley issued a claim in the small claims court at Bath to recover what it regarded as an overpayment on the adjudicator's fees. Prior to hearing that case, the District Judge made an order that Tolley should clarify its case by serving a report from an independent architect, showing that the time spent by the adjudicator was unreasonable. Tolley failed to serve such a report. Nevertheless, the matter came before the District Judge who found in favour of Tolley. Firstly he held that an adjudicator does not, as a matter of law, enjoy an immunity from a claim that his hours and remuneration are unreasonable. Secondly he held that in the particular case, the adjudicator's hours were in fact excessive. He ordered the adjudicator to repay some £1400. The adjudicator repaid that amount but sought and obtained leave to appeal. In the matter of immunity, on appeal the court considered the provisions of Section 108(4) of the Construction Act. "The contract shall also provide that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator, unless the act or omission is in bad faith". In the judgment of the court, these words were to be given their ordinary and natural meaning. The adjudicator's fees formed an integral part of the adjudication agreement, and accordingly, were caught within the words "anything done or omitted in the discharge or purported discharge of his functions as adjudicator". Thus, the adjudicator's fees could only be challenged if the adjudicator had acted in bad faith. Dealing with whether the adjudicator's hours had been excessive, the court held that the small claims judge had fallen into grave error. In the absence of any independent expert evidence, the judge had applied the criterion of a reasonably competent solicitor. This was entirely inappropriate. The solicitor prepares a one-sided case for argument in court. The adjudicator on the other hand has to read the files, interview the parties, visit the sites and then prepare his decisions. The position of the adjudicator was analogous to a challenge to an arbitrator's fees "the court does not substitute its own view for that of the arbitrator. In order to make good an allegation of misconduct, very clear evidence is required and it is not enough to show that the amount demanded is more than the court would have considered appropriate if it had been approaching the matter afresh".
CJ-0203
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