Can an Adjudicator recover his fees where he has produced an invalid decision?

Systech –v- Harrington Contractors CLL (2011) Technology and Construction Court

Harrington was working on 3 major projects, including Wembley Stadium, and in each case sub-contracted steel reinforcement works to Tyroddy.  Tyroddy took Harrington to adjudication in respect of retention monies pursuant to each of the 3 contracts (see our e-News of May 2011).

The Court held that the Adjudicator’s decisions in favour of Tyroddy were unenforceable due to breaches of natural justice.  Harrington obtained a declaration from the TCC accordingly.  Meanwhile Systech, as employer of the Adjudicator, had sent Harrington an invoice for fees.  Harrington subsequently informed Systech that it would not be paying the Adjudicator’s fees and Systech sued.

HELD:

1. The contract to perform adjudication services involved the performance by the Adjudicator of a number of services including considering all the evidence, reading all the submissions, administering the adjudication and of course delivering his Decision.  Although his decision was ultimately held to be unenforceable on natural justice grounds, it was not true to say that the Adjudicator was guilty of a “total failure of consideration”.
2. The consideration from Harrington was its share of the fee, the consideration from the adjudicator was the performance of the services.  He had performed most of the services and the fact that he had not performed one, albeit the most important, was not sufficient to justify the conclusion that there had been a “total failure of consideration”.  Consequently, Harrington was ordered to pay up.

Comment:

1. Adjudicators will usually have payment of their fees supported by the Courts unless it is proven that they have acted dishonestly, fraudulently or in bad faith.
2. The Judge went out of his way to stress that where an adjudicator has done “his honest best” in performing his role as adjudicator, even if ultimately the Decision is unenforceable, the Court would be very slow to find that his fee was not enforceable.
3. There is a strong public policy commitment to supporting the adjudication process.  Adjudicators are repeatedly faced with the challenges to their jurisdiction and to their decisions on “natural justice” grounds, many of which are spurious.  If an adjudicator is worried that by being robust and standing up to such challenges, he risks doing a lot work for no pay, then he is likely to err on the side of caution, and this will encourage bullying tactics towards adjudicators.