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Injunction in adjudication, where does that leave the adjudicator’s fees?

When I was reading Edwards-Stuart J’s judgment in Twintec v Volkerfitzpatrick, I was a little bit surprised to see he’d granted an interim injunction to prevent the referring party (Volkerfitzpatrick) from continuing with its adjudication while he decided whether the adjudicator was properly appointed. On the facts, the final injunction was less of a surprise. Perhaps what was more surprising was that the responding party (Twintec) had elected to use the injunction route, rather than the more common declaratory relief route (under CPR Part 8).

However, I suspect that was more to do with the time it would have taken to get the Part 8 hearing listed (something in the region of 28 days), compared to the first injunction hearing, which seems to have been just a few days after the notice of intention and (by my calculations) before Volkerfitzpatrick was due to serve its referral.

Twintec v Volkerfitzpatrick

The dispute with Twintec that Volkerfitzpatrick referred to adjudication is part of a much larger, multi-party £160 million pound claim that is proceeding in the High Court. That claim concerns a wine warehouse and bottling plant near Bristol, which is alleged to be unfit for its purpose. One of the complaints relates to the floor slab, which Twintec laid.

The trial of the multi-party action is currently listed for the end of this year. As Twintec was only joined into those proceedings last summer and served its defence in November 2013, there must be a lot of work for its team of advisors to do between now and then. I suspect the last thing that team needed was to be distracted by an adjudication notice, when it arrived in early December.

Adjudicator invalidly appointed

It seems to me that on this occasion Twintec was lucky, since Edwards-Stuart J found that the adjudicator had not been properly appointed. That gave it the “get out of adjudication” card it needed.

How easy would it have been for Volkerfitzpatrick to have approached an adjudicator nominating body (ANB) without looking at the draft standard form DOM/2 sub-contract someone probably found in a drawer somewhere? Oh, to have the benefit of hindsight (and a copy of the judgment). On this occasion, the court held that the parties’ letter of intent did not incorporate those terms. If the provisions of that sub-contract had been properly disregarded, and the RICS had been contacted under the provisions of the Scheme for Construction Contracts 1998, Volkerfitzpatrick would have been able to have its adjudication and Twintec would have had to deal with the concurrent litigation and adjudication proceedings.

Because Parliament introduced the concept of “at any time” when it introduced statutory adjudication, Edwards-Stuart J made it quite clear that concurrent proceedings were insufficient to persuade him to grant an injunction:

“…if the referral were to proceed it would put Twintec and its advisers under great pressure, but in my judgment that pressure is not of itself sufficient to amount to an exceptional circumstance so as to justify the court in restraining [Volkerfitzpatrick] from further pursuit of the referral… Twintec’s main complaint is about the additional costs, duplication and use of resources that defending the proposed adjudication would involve. However this, in my view, is a burden that parties to a construction contract sometimes have to accept.”

Twintec suggested that the timing of the adjudication was “for the collateral purpose of causing maximum disruption and pressure on Twintec’s experts”. While the court was not interested in hearing that line of submission, as an objective onlooker, it is hard to draw a different conclusion, irrespective of Parliament’s intention.

What about the adjudicator?

So, Twintec has its injunction and Volkerfitzpatrick has said it will not start another adjudication. But what about the adjudicator?

On this occasion, the first interim injunction was issued before the referral was served. The court’s ultimate finding that the adjudicator was invalidly appointed got me wondering about whether he would be entitled to charge for the small amount of time he incurred between accepting his appointment and being told of that injunction? Certainly there is no suggestion in the judgment that jurisdictional issues were raised with him, or that he had an opportunity to make a non-binding decision on it. In fact, the judgment seems to suggest that, ultimately, he was content to have his Christmas holiday and await the outcome of the injunction application.

While some may wonder what exactly the adjudicator has to charge for, being involved for less than a handful of days, why should an individual be out-of-pocket even for a few hours of work just because a third party (in this case, the referring party), made a mistake? How different is it to a situation where an adjudicator is invited to resign and does so because of the responding party’s successful jurisdictional challenge?

I guess whether the adjudicator elects to charge for the time he incurred is a matter for him, commercially. I would certainly assume that he is protected by the judgment in Linnett v Halliwells LLP, making both parties jointly and severally liable for his reasonable fees and expenses (although liability is most likely to fall on the referring party). I don’t think this is a case where Dyson J’s judgment in PC Harrington Contractors Ltd v Systech International Ltd applies (although without an adjudicator’s decision and a breach of the rules of natural justice, can it??).

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