REUTERS | Bogdan Cristel

Homeowners beware – adjudication can catch you out

I did a quick search to see what the internet could tell me about August. Apart from being the eighth month of the year, and one of seven months with 31 days, the Anglo-Saxons called it Weod monath, which means Weed month, because it is the month when weeds and other plants grow most rapidly. It also used to be the month when we celebrated the harvest (that happens later now, thanks to Henry VIII).

August is also the last of the summer months and it is always notoriously quiet in London, with everyone (it seems) taking holiday before the new school term starts.

For the litigators among you, it is also summer recess in the courts, which means there is often very little new to write about. Therefore, I was quite pleased to see Waksman J’s judgment in ICCT Ltd v Sylvein Pinto, which dates from earlier in the year but only recently became available.

If you are unfamiliar with this judgment, it is certainly a case of “homeowners beware”.

ICCT Ltd v Sylvein Pinto

The facts of the underlying dispute are relatively straightforward.

Mr Pinto employed ICCT to undertake works to fix a leaky basement at his home. He did so at the rate of £400 per day for two men, rather than agreeing a lump sum price with ICCT. Consequently, because the men were being paid a day rate, the crux of the dispute was about the length of time ICCT’s operatives were on site. Mr Pinto told the adjudicator he thought it was only one day’s work to seal the leaks to his basement, whereas ICCT had spent several days on site, carrying our works that Mr Pinto worried about and thought went beyond leak prevention (such as improvement works, like digging channels). The adjudicator concluded that he:

“… soon decided that the men and ICCT were disreputable and stopped them attending.

… convinced himself he was being taken for a ride…”

Interestingly, one of the quotations provided to the adjudicator for the basement works  suggested approximately £25,000 worth of work was necessary and that it was not something that could be done in a few days. This was something the adjudicator took note of when deciding the dispute in ICCT’s favour, ordering Mr Pinto to pay it the outstanding sum of £6,456 and £3,726 for his fees (both including VAT).

Mr Pinto didn’t pay and so enforcement proceedings followed.

Enforcement proceedings

It is the arguments that Mr Pinto raised in those enforcement proceedings that I want to discuss.

Firstly, Mr Pinto raised a jurisdiction point. We are all familiar with the residential occupier exclusion in section 106 of the Construction Act 1996 because we are all familiar with adjudication. Not so Mr Pinto (or ICCT). As the judge notes, neither party had engaged in an adjudication before. Therefore, it is unsurprising that Mr Pinto did not know that he could (and should?) have made these points before the adjudicator and should have reserved his right to challenge the adjudicator’s  jurisdiction. By not doing so, Mr Pinto engaged fully in the adjudication process, which conferred ad-hoc jurisdiction on the adjudicator. As the judge noted:

“… there is no blanket ban against adjudications for work done to residential premises and [ad hoc adjudications] are quite often agreed in the context of residential construction contracts.”

The judge also noted that Mr Pinto’s lack of knowledge did not matter (“ignorance of the law is no excuse”) and he rejected any suggestion that the adjudicator had a duty of care to Mr Pinto to advise him that he had no jurisdiction:

“The adjudicator was entitled when he received the referral, which on the face of it appeared to be applying the scheme, referred to works, referred to the responding party and when the responding party engaged, had no obligation to enquire any further especially, as in this case, there was no reservation of rights in any way at all.”

Pausing there, some might argue that the position is not so black and white. For example, the guidance note on jurisdiction published by the Adjudication Society and CIArb says that adjudicators should enquire about such matters before accepting an appointment. I should stress though that this is only guidance (and this adjudicator was nominated by the President of the Chartered Institute of Building (CIOB).

I also thought it was interesting that Mr Pinto didn’t raise the issue of the late service of the referral as well, although this was probably due to his lack of detailed knowledge of the adjudication process and, by the time of the enforcement hearing, was also obviously subject to a waiver.

I also wonder what the result would have been if Mr Pinto had raised some consumer law issues??

No apparent bias

Although Mr Pinto raised the question of bias before the adjudicator and then again in the enforcement proceedings, there was very little substance to his point. As the judge noted, there was no prior association between ICCT and the adjudicator and there was no reason to consider that a fair minded observer would think the adjudicator was the subject of bias in this case. Also, his impartiality would not have been impugned even if there had been a recommendation because “parties nominate adjudicators and arbitrators all the time”.

Merits of the adjudicator’s decision

The judge rejected any suggestion that the adjudicator had “got it wrong” and reminded us that the enforcement process in not an appeal from an adjudicator’s decision. It was unfortunate that Mr Pinto did not agree with the adjudicator’s findings, although I would say that is part and parcel of the adjudication process.

Value of sum in dispute

The second interesting aspect of this case is the value of the claim in the enforcement proceedings: just over £10,000 (including the adjudicator’s fees and VAT). I think it is time to ask whether it is appropriate for adjudication enforcements of this value to continue going to the High Court of the TCC in London.

I realise that is where enforcement cases have traditionally been dealt with and Akenhead J (as he was then) confirmed in West Country Renovations v McDowell that this would continue regardless of the amount in dispute because of:

“… the need to build up a body of case law which is consistent in these important areas of construction law business.”

However, we now have an established body of adjudication case law and enforcement proceedings could be referred to the County Courts or to the other High Court centres outside London with designated TCC judges. Many of those judges have experience of adjudication. For example, prior to his elevation to the High Court bench Waksman J was a Senior Circuit judge who dealt with TCC business, among other things.

It is arguable that our TCC High Court judges in London should be free to deal with the higher value and more complex cases. Perhaps Akenhead J’s lower limit of £250,000.00 should be changed so that it applies to adjudication business in the TCC in London, as well as general claims?

2 thoughts on “Homeowners beware – adjudication can catch you out

  1. Both Westlaw and Practical Law are subscriber-only services. If the judgment is not available on a public website (like BAILII), you could try contacting the judge’s clerk for a copy of the judgment.

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