Did you know that there is a version of The Construction Index for the USA? Visit the site No thanks
Follow us on Twitter Follow us on LinkedIn Follow us on Instagram
Daily construction news
Weekly plant news

Construction News

Wed November 22 2017

Related Information
Related Information
Related Information

News » Law » Adjudication – when taking part counts » published 12 Sep 2017

Adjudication – when taking part counts

A defendant can find itself unintentionally bound by an adjudicator’s agreement and responsible for fees, interest and other costs. Sarah Evans, senior associate in the construction team at Irwin Mitchell LLP, explains.

Leaving it blank might make no difference... Above: Leaving it blank might make no difference...

In the case of Christopher Linnett Ltd v Harding (trading as MJ Harding Contractors) [2017] EWHC 1781 (TCC), the employers had entered into an adjudicator’s agreement. But had the contractor? And if so, with whom and on what terms?

The facts

The claimants were adjudicator Christopher Linnett and his company, Christopher Linnett Ltd.

The defendant, Harding, was a building contractor; no stranger to adjudication and the Technology & Construction Court (TCC) after earlier battles with employers Paice and Springall.

The defendant and employers had previously litigated enforcement of an April 2016 adjudication decision reached by Mr Linnett; he had ordered the defendant to pay just shy of £300,000, with the parties equally responsible for his fees. The court had enforced the decision and payments were made, albeit late.

This latest case concerned the adjudicator’s claims for payment of statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, which accrued during the delay in settling his fees, together with statutory compensation and debt recovery costs.

Straightforward? No. The defendant argued that it had not concluded an adjudicator’s agreement and the only relationship with Mr Linnett arose out of the adjudicator’s obligation to comply with the scheme.

Rewind to 2016. Following Mr Linnett’s appointment as adjudicator, he wrote to both parties on 8th March 2016 with a copy of his standard terms of engagement and questionnaire. He asked both parties to complete and return the questionnaire. All references in the letter were to him personally as adjudicator, apart from the statement: "Christopher M Linnett is a director of Christopher Linnett Limited…”

The terms of engagement included provision that “any objections to these terms must be made in to me writing within seven days of issue” together with provisions for payment terms and overdue accounts. The adjudicator’s questionnaire included the question: "Do you accept my scale of charges and terms of engagement?"

‘Yes’ said the employers, returning the questionnaire. The defendant neither completed the questionnaire nor accepted the terms of engagement. Instead his solicitor reserved all his rights and position regarding participation, including with regard to the adjudicator’s jurisdiction. In subsequent emails the defendant’s solicitor put forward the defendant’s contentions as to how he considered the adjudicator’s fees and expenses should be split. The issue was ultimately left in abeyance and the adjudication proceeded with the defendant’s full participation.

Questions for the court

  1. Was the defendant party to an adjudicator's agreement?
  2. If so, was the agreement with Mr Linnett or his company?
  3. What were the terms of any such agreement?
  4. Was either claimant entitled to interest, statutory compensation and debt recovery costs?

The Judgment

  1. Yes. The defendant was party to an adjudicator’s agreement.

By sending emails, participating in the adjudication process and requesting the adjudicator to act, notwithstanding the reservations as to jurisdiction, an adjudicator's agreement was concluded by conduct.

The defendant by its conduct asked Mr Linnett to carry out work and make a decision. The court referred specifically to an email sent by the defendant’s solicitor to the adjudicator stating “we look forward to working with you”. There could be “no other sensible conclusion”. The defendant had requested the adjudicator to adjudicate the dispute and he did.

  1. The adjudicator’s agreement was concluded with Mr Linnett personally.

It is a question of fact in each case as to whether the adjudicator's agreement was made with an individual or with a firm/ limited company.  However, “where it is understood by all parties that the role of the adjudicator is to be personally performed by an individual, the natural starting point is likely to be that the adjudicator's agreement would also be with that same individual”.

Here, the parties knew the role of adjudicator was to be performed by an individual. It was necessary to make it clear that the adjudicator's agreement would be with a different entity if that is what was intended. That had not happened.

  1. The terms of the adjudicator’s agreement were as sent out on 8th March 2016.

The adjudicator’s agreement was formed by conduct. The defendant knew that the services were only being offered on the basis of the terms sent on 8th March 2016. There were no other terms in play. Once the terms had been sent out, it was for the defendant to say that he did not accept those terms. Otherwise the conduct which formed the basis of his acceptance of the offer would be conduct on those terms.

  1. Yes. The court ruled that the Late Payment Act applied to the adjudicator’s agreement and awarded interest.

As a qualifying debt, statutory compensation was also due. The adjudicator was also awarded costs for time reasonably spent in recovering the debt in accordance with the 2013 Late Payment Regulations.

Conclusion and lessons

Adjudicators also operating under limited companies should review their documentation and standard terms carefully. If the agreement is not with you as an individual, spell it out.

Parties to adjudications should not ignore the adjudicator’s agreement. If you do not agree to the terms, say so immediately. Otherwise taking part is likely to be enough to bind you to an agreement on those terms.

And beware... an express objection to terms and a jurisdictional challenge may still not change the position. Should it ultimately be held that the adjudicator did have jurisdiction, by taking part a party could still be bound by an implied term to pay the adjudicator’s reasonable fees and expenses.

 

 

MPU

Download our free construction news iPhone / iPad app. Sign up to our FREE email newsletters or subscribe to our RSS feed for regular updates on the latest Construction News, Plant News, Contract News & Supplier News. The Construction Index also provides the latest Construction Tenders, Construction Market Data & Construction Law Commentary all FREE.

This article was published on 12 Sep 2017 (last updated on 12 Sep 2017).

More News Channels