| Date | 13 June 2007 |
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| Judgment | Mott Macdonald v London & Regional Properties Ltd, TCC 23 May 2007 |
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| The Issue | Payment of the adjudicator. |
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| Implication |
The adjudicator may not retain his decision until payment is received. |
printOver the past nine years many thousands of decisions have been made by adjudicators and although the Act provides that they should only be temporarily binding, most of them have become the final determination of the dispute in question, with neither party seeking to take the dispute any further – whether that be to court or arbitration. Making all of this happen has been the responsibility of the adjudicator. Whilst performing an important role it is as well not to forget that he provides his service (the making of a decision) as a servant of the parties and has a contractual relationship with them. Whilst the adjudicator and parties all share a common interest in ensuring that the rules of natural justice are applied and a fair decision is reached, the adjudicator is also interested in ensuring that he gets paid for the highly skilled services he provides. Pity therefore the many adjudicators who receive nominations from the RICS and similar nominating bodies whereby the first they know of a dispute or the parties is when it is enquired of them whether they are available to act and whether they have any conflicts of interest that would prevent their nomination. If they choose to accept the nomination (and most do) they could soon find themselves in contract with two parties previously unknown to them providing high value services and running up a bill of several many thousands of pounds. This should then be coupled with a realisation that at least one of the parties is likely to feel unhappy with the decision and, most probably, that will be the party whom the adjudicator has decided should be responsible for the payment of his fees. What then can the adjudicator do to protect himself and his livelihood in such a position? The first and most obvious step to take is to make sure that the parties are jointly and severally liable for his fees. This is a requirement of the Scheme, is provided for by several of the other standard adjudication rules and is imposed by many adjudicators as a part of their standard terms. Making the parties jointly and severally liable in this way means that the adjudicator is no longer limited to recovering his fee from the party he decided should be responsible for its payment (normally the loser), but may recover from whomsoever he feels is most able to pay him. The next obvious step that might be taken is for the adjudicator to say that he will not release his decision until his fees have been paid, and making this a condition of his appointment by the parties. Such a right is expressly available to arbitrators by section 56(1) of the Arbitration Act 1996. In taking this position adjudicators are often careful to distinguish between reaching their decision (which they are obliged to do within the statutory 28 day period, unless extended in the manner allowed by the Act) and releasing their decision – which could take place some time later when payment has been received. Whilst at first glance it might seem obvious and unobjectionable that the adjudicator should not be obliged to give the parties the benefits of his labours until such time as he has received payment for them, such an approach was strongly disapproved of in the recent case of Mott MacDonald v London & Regional Properties Ltd, where Mott MacDonald sought the enforcement of an adjudicator’s decision made in their favour. The adjudication had been conducted under the Scheme and the adjudicator’s conditions of appointment sought to make the release of the decision conditional upon the payment of his fees and expenses by the referring party. Although the judge had already decided not to enforce the decision because the contract to which it related was neither in writing nor evidenced in writing, he went on to criticise the adjudicator’s payment provisions at two levels. Firstly, he observed that the Scheme required the decision to be delivered to the parties “as soon as possible” after it had been reached. This meant that it was not permissible for the adjudicator to withhold the decision pending the payment of his fees by any party. In this case there was a delay of six days between the decision being reached and it being delivered to the parties and the judge considered this to be unacceptable. It was suggested that any delay in delivery should be minimal and, if it were not, would result in the decision being unenforceable and, probably, a nullity. If the decision were a nullity then, arguably, the adjudicator would have no entitlement to payment at all (as he had failed to produce the decision he had contracted to provide) and might even be liable to the parties for their wasted costs. Secondly, he was concerned at the requirement that the fee should be paid by the referring party, at least in the first instance, as by so doing the adjudicator could appear to be financially beholden to one party. As he was looking to one particular party to make payment of his fee this could give an appearance of partiality and thus be contrary to rule 12(a) of the Scheme. The message for adjudicators is clear therefore, that they must be willing to work at risk and trust to their ability to recover the fee subsequently from one or other of the parties. One consequence of this is that adjudicators may be less willing to accept appointments where one or both of the parties is unknown to them.
CJ-0723
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