Adjudicator’s fees disallowed

Posted: 24th October 2012

In the context of a building contracts dispute, an adjudicator was not entitled to be paid his fees after producing a decision which was unenforceable by reason of breaches of the rules of natural justice, the Court of Appeal has ruled.

Resolving an important issue on which there was no previous legal authority, the court – presided over by the Master of the Rolls, Lord Dyson – ruled that, although the adjudicator had acted in good faith, the unenforceability of his decision meant that there had been a total failure of consideration.RCJ

The adjudicator had unwittingly fallen below the standards required of him by entirely failing to deal with a critical part of a contractor’s defence to a money claim against it by a sub-contractor. Due to that breach of natural justice, the adjudication decision was ruled unenforceable by a High Court judge.

However, the judge had gone on to order payment of the adjudicator’s £22,000 fees on the basis that the considerable amount of work he had done in attempting to resolve the dispute amounted to contractual consideration.

Allowing the contractor’s appeal against that decision, Lord Dyson, sitting with Lords Justice Davis and Treacy, said that neither party to the adjudication had intended that the adjudicator should be paid for producing an unenforceable decision.

Lord Justice Davis concluded: ‘I would conclude in the present case that the adjudicator is not entitled to be paid any fees. He has not produced an enforceable decision which determines the matters in dispute which is what this contract required of him before his entitlement to fees arose.’