Paying the Adjudicator’s Fees

By Victoria Russell, Fenwick Elliott

Science and Technology Facilities Council v MW High Tech Projects UK Ltd [2015] EWHC 2889 (TCC) (21 October 2015).

This was an application for summary judgment, seeking to enforce two decisions of an adjudicator.

The Defendant disputed the validity of the decisions because it said that the adjudicator did not have jurisdiction under the contract between the parties to determine the dispute at all; the Defendant said that the Scheme applied but because the adjudicator had been appointed under the contractual provisions, and not under the Scheme, he lacked jurisdiction. The appointment had been invalid.

By agreement of the parties, the adjudicator’s decision concerning the parties’ costs, and the allocation of his costs between the parties, was issued separately. He decided that of his fees of £9,408, £7,056 would be payable by the Defendant and the balance by the Claimant. At the enforcement hearing, it was confirmed by the Defendant that it had indeed paid the adjudicator the sum for his fees that he had ordered. Payment had been made by BACS and there was therefore no covering letter explaining the basis of the payment. The Claimant relied upon this as demonstrating that the Defendant had treated the adjudicator’s decision as valid and that as a result, the Defendant could not now challenge it and assert it was invalid.

The question for the Judge to decide was thus whether the Defendant, because it had paid the adjudicator’s fees, was treating his decision as binding and had waived or lost the right to maintain any objection to it.

The adjudicator’s terms and conditions expressly provided as follows:

“Each party to the reference shall be liable for my fees on a joint and several basis save that if, in my sole discretion, I consider that I have no jurisdiction to proceed with the reference my fees shall be payable solely by the Referring Party….

3. My fees will be payable notwithstanding that my decision is subsequently found by a court to be unenforceable by reason of lack of jurisdiction”.

The Claimant objected to the Defendant relying upon these terms as neither party had expressly accepted them after the adjudicator had sent them to them. The Claimant submitted that silence cannot amount to acceptance, and so the terms and conditions were not agreed, relying upon Linnett –v- Halliwells LLP [2009] EWHC 319 (TCC) as authority for the proposition that silence does not amount to acceptance of the adjudicator’s terms and conditions. In that case, Ramsey J set out the various options available to a party who objects to jurisdiction but who nevertheless continues to participate in an adjudication.

Mr Justice Fraser, whilst respecting that decision, pointed out that it is a matter of contract as between the adjudicator and the relevant party and is therefore a fact specific situation. He said that:

“It is possible to signify acceptance of proposed contract terms by conduct and I find that is what the Defendant did”.

Agreement of the Defendant to the adjudicator was given following a full reservation of rights.

Mr Justice Fraser did not accept that by merely paying the fees, the Defendant had in these specific factual circumstances lost the right to challenge jurisdiction on enforcement. Taken together, the express terms of the letter reserving the Defendant’s rights and paragraph 3 of the adjudicator’s terms and conditions were “compelling” evidence to allow the Defendant to challenge jurisdiction on enforcement, irrespective and regardless of the payment by the Defendant of the adjudicator’s fees.

In the event, the Judge decided that there was nothing in the points raised by the Defendant and the Decisions should therefore both be enforced, with summary judgment.

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