| Date | 7 May 2003 |
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| Judgment | St Andrews Bay Development Ltd v HBG Management Ltd, Outer House Court of Session 4 April 2003 |
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| The Issue | Whether adjudicators can delay the delivery of their decision pending payment of their fees. |
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| Implication |
Adjudicators are not entitled to delay the delivery of an adjudication decision pending payment of fees. A delay of two days was not however considered sufficient to render the decision unenforceable, but a longer delay might not be treated quite so leniently. |
printSince the Construction Act first came into force, adjudicators have been unsure about the question of whether they are entitled to withhold delivery of their decision until their fees have been paid. Many adjudicators seek to impose terms within the adjudication agreement to this effect. Many others consider such an arrangement is contrary to the statutory or contractual framework within which the adjudication is constituted. Connected to this question is the further question concerning whether, if an adjudicator does withhold his decision from the parties beyond the date for delivery of that decision pending payment of his fees, will the decision once delivered late be rendered unenforceable? These matters were examined in the recent case of St Andrews Bay Development v HBG Management in the Scottish Court of Session. St Andrews had engaged HBG to build a leisure complex at Kingask near St Andrews. The contract was based upon the Scottish equivalent of the JCT 1998 With Contractor's Design form of contract. Disputes arose and these were referred to an adjudicator. HBG served a referral notice on 10 January 2003 and in accordance with the statutory requirement to deliver a decision within 28 days of that date, the adjudicator had until 7 February to give her decision. In the event, the parties granted certain extensions of time to the adjudicator, such that the decision was eventually required to be given by 5 March 2003. Not having heard from the adjudicator by 5pm on that date, HBG telephoned the adjudicator. A secretary employed by the adjudicator's firm informed HBG that the adjudicator had reached the decision but did not intend to release it until the fee had been paid. The adjudicator had not, at that time, issued an invoice for her fee. This was not done until 9pm that evening and the following day, HBG communicated its intention to pay the whole of the adjudicator's fee in order to secure the release of the decision. On the basis of this undertaking, the adjudicator released her decision by fax on 7 March 2003. The adjudicator had not requested further extensions of time from the parties for this additional two day period, and accordingly St Andrews, unhappy with the decision, commenced proceedings in the court to challenge the decision, claiming that the adjudicator had no power to reach her decision after 5 March 2003. The decision intimated to the parties on 7 March was therefore not a valid decision. St Andrews argued that a decision reached but not communicated was not a decision at all. It was noted that the standard form contract provides that if the adjudicator fails to produce a decision within the time limits allowed, the referring party can instruct another adjudicator and the original adjudicator must resign. This meant, St Andrews contended, that once the adjudicator was out of time, she no longer had jurisdiction to deal with the matter. This would equally be the case under the statutory Scheme. St Andrews argued that a strict timetable had to be adopted and applied in adjudication. There was no agreement in the adjudicator's appointment letter which would allow a failure to pay her fees to lead automatically to an extension of time. If the adjudicator wished to make it a condition that her fees be paid prior to issuing the decision, then that was a separate matter and should not affect her statutory and contractual responsibility to produce a decision on time. Lord Wheatley recognised that the Act is totally silent on the question of communication of the decision. However, it was necessary to interpret the provisions of the Act to the effect that the adjudicator was under a contemporaneous duty to communicate the decision to the parties. Not to require such an interpretation would render the whole legislation meaningless. Similarly, the requirement under the contract to deliver the decision "forthwith" should mean that the decision was to be sent immediately or as quickly as possible by what is currently regarded as conventional and universally available methods of business communication. This effectively meant that the decision should be transmitted by fax to the parties. The delivery of the decision by first class post might even be regarded as archaic and unsatisfactory. Lord Wheatley also expressed his firm view that the adjudicator was not entitled to delay communication of the decision until her fee was paid. There was nothing in the statutory Scheme or the contract which allowed this. It was perfectly permissible for the adjudicator to require the parties to come to a separate arrangement on fees, however it would not be permissible for such an arrangement to frustrate or impede the progress of the statutory arrangements for resolving disputes. Lord Wheatley concluded that it could not be said that the adjudicator had reached her decision within the time limits fixed in accordance with the statutory requirements or the standard form contract. While she had completed her consideration of the matters referred to her by the required date, she had made no effort to communicate her decision to the parties. Despite all of this, Lord Wheatley concluded that while the failure of an adjudicator to produce a decision within the time limit was undoubtedly a serious matter, he could not accept that it was of sufficient significance to render the decision a nullity. The production of the decision two days late was not such a fundamental error that it should nullify the entire decision. St Andrews were therefore refused their application to set aside the adjudicator's decision, which remained enforceable despite having been delivered late.
CJ-0317
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