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Apportioning adjudicators' fees – where do you stand?

The rights of adjudicators to receive payments for their fees are extensive and require the full co-operation of both parties to reach an acceptable conclusion, says Bill Barton.

Under the Scheme for Construction Contracts 1998, an adjudicator is entitled to determine which party is responsible for paying his fees and what proportion of these each party will pay.

Despite this, the parties are still jointly and severally liable to pay the reasonably incurred fees, meaning that should one party fail to pay, the other will be liable until the adjudicator is paid in full.

An adjudicator may decide to award his fees to the losing party, although an agreement on apportionment of fees is sometimes reached in advance, such as a simple 50/50 split.

“Parties are still jointly and severally liable to pay the reasonably incurred fees”

In other cases, the adjudicator may decide that the winning party is liable for 100 per cent of his fees, which they can then recover from the losing party. An example of such a case is Donal Pugh v Harris Calnan Construction.

Adjudicator’s right to be paid

The rights of an adjudicator to receive payment for his fees are extensive. In circumstances of resignation, revocation or even where it is discovered during the course of the adjudication that he has no jurisdiction to make a decision, the parties will still have to pay.

Simply refusing to agree a contract with an adjudicator does not release them from the liability to pay his fees, as continuing in the action, even with objections to his jurisdiction, will create a contract whereby the parties agree to pay.

Although the reasonableness of the fees can be challenged in court, the decision of liability to pay them cannot be. An example of such a case would be Castle Inns (Stirling) Ltd v Clark Contracts Ltd.

Winning and losing parties are in it together

Regardless of being a winning or losing party, you are still liable to pay the fees. It is very difficult to get the parties to play nicely when it comes to parting them with their money.

There have unfortunately been some cases where parties have avoided paying the fees of their adjudicator.

Perhaps one of the worst examples is in Faithful & Gould Ltd v Arcal Ltd, where the first defendant could not pay because they were in administration and everything possible was attempted by the second and third defendants to avoid paying in their place.

As a result of such circumstances and examples, adjudicators have strayed into dangerous territory, attempting to exercise a lien on fees by refusing to provide a decision until their fees have been paid in full.

Not acceptable to withhold decisions while waiting for fees

The courts have since made it clear that it is not acceptable conduct for an adjudicator to do so, especially in view of the timescale in which adjudication is supposed to take place.

“It is very difficult to get the parties to play nicely when it comes to parting them with their money”

St Andrews Bay Development Ltd v HBG Management Ltdis a case where an adjudicator delayed their decision by two days because they hadn’t been paid, a conduct which was condemned by Lord Wheatley.

Furthermore, some adjudicators may even attempt to write within their contract between the parties that they may exercise a lien over the publication of the decision until they have been paid.

This type of conduct has also been looked upon negatively in the courts, for example in Cubitt Building & Interiors Ltd v Fleetglade Ltd, which found that any such lien is in contravention of the very principle of the scheme.

Any attempt by the adjudicator to impose a condition of payment in advance of a decision may be seen to fail to act impartially and a breach of paragraphs 19 (1) and 19 (3) of the scheme.

A good example of these points in principle is set out by Justice Ramsey in Linnet v Halliwells LLP.

In summary, the adjudicator’s fees are a matter of contention that requires the co-operation of both parties in order to reach a satisfactory resolution.

Bill Barton is a partner at Barton Legal

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