Case law analysis: the recovery of adjudicators' fees.

Summing up

The case: Christopher Michael Linnet -v- Halliwells LLP, EWHC 319 (TCC), 24 February 2009.

The issue: Whether an adjudicator can recover his fees from the responding party where that party raises questions of jurisdiction.

The implication: The courts will, in cases such as the one considered here, consider that an adjudicator's fees are recoverable notwithstanding the raising of a question of jurisdiction.

My colleague Gary Peters recently and briefly quoted the case considered here as an example in respect of the law on election. In its own right, the case was described by HH Judge Ramsey, as raising "a question of general importance", although the fees at the root of the dispute and sought by the adjudicator were in fact modest.

Mr Linnet (the adjudicator) was nominated in response to an application from ISG Interior Exterior plc (ISG), which had entered into an agreement for fit-out works with Halliwells LLP (Halliwells) under the 1998 JCT Standard Form of Building Contract, with various amendments and supplements (the building contract).

Due to the vagaries of the postal system, the attachments to the referral were not received by the adjudicator within the seven-day period required for such receipt, albeit the referral itself was received by both he and Halliwells within the statutory period.

On 5 June 2008, the parties responded to the 'adjudicator's questionnaire', Halliwells' reply opening with the statement: "This letter is written without prejudice to the responding party's contention that the adjudicator does not have jurisdiction to deal with the matters purportedly referred to him."

It is clear from the letter that the challenge was based upon the fact that in Halliwells' opinion the referral was served out of time.

The adjudicator wrote to the parties on 6 June 2008, saying he assumed it was agreed that the adjudication should run from 4 June 2008 to 2 July 2008. His letter also stated that he did not accept Halliwells' assertion that the referral was served out of time.

On 10 June 2008, Halliwells served its response, while again raising its challenge to the jurisdiction of the adjudicator.

The adjudication proceeded and, in his decision delivered on 28 June 2008, the adjudicator wrote: "It seems to me the only impact of the first copy of the referral documents being lost in the post was that Halliwells was given an extra five days to prepare and serve the response. My late receipt of the supporting documents caused no difficulties whatsoever and it cannot possibly have caused any prejudice to Halliwells."

Fees and expenses

He also gave notice that, in light of his decision, he had apportioned his fees and expenses entirely to Halliwells, and shortly thereafter duly sent his invoice.

Halliwells responded, that it had not agreed to the adjudicator's appointment, that it had contested the adjudicator's jurisdiction, and accordingly it would refuse to pay the fees.

In the course of proceedings to recover the debt, the adjudicator made application for the matter to be referred to the TCC at the High Court, in light of the issues raised being of general interest to those involved in construction adjudication, a request with which the court agreed.

In his judgment, HH Judge Ramsey said that in the position where a party has raised a jurisdictional challenge, it was left with two options - to make an assertion of lack of jurisdiction and withdraw, or to make such assertion but continue to participate in the proceedings on a without prejudice basis. In this latter instance participation while not giving the adjudicator jurisdiction to make a binding decision, it is requesting the adjudicator to carry out work and make a decision.

Jurisdictional challenge

Judge Ramsay held that if there is a valid jurisdictional challenge and if a party has not participated in the adjudication, that party can have no liability for the fees and expenses of the adjudicator.

If, however, a party has participated in the adjudication process, albeit without prejudice to its contention that the adjudicator did not have jurisdiction, then in principle, by participating and thereby requesting the adjudicator to adjudicate on the dispute, he considered that the party will generally be liable for the reasonable fees and expenses of the adjudicator.

He found that the late service on the adjudicator of the documents accompanying the referral did not, on the facts of this case, invalidate the referral and thereby deprive the adjudicator of jurisdiction.

Thus he decided that, in the circumstances of this case, Halliwells was liable to pay the reasonable fees and expenses of the adjudicator, even if he did not have jurisdiction, although he had found that the adjudicator did have jurisdiction.