I’m sure there will be a few people out that suggesting that “it’s not fair” that adjudicators should get paid, even if they screw up when making their decision, leaving the parties with something that is unenforceable and, frankly, worthless. I am of course talking about Akenhead J’s judgment in Systech v PC Harrington.
Systech v PC Harrington
For those who haven’t seen it yet, in a nutshell:
- Systech sued PC Harrington (PCH) for the fees of Philip Doherty, who they employ, and who’d been appointed as the adjudicator in three adjudications between PCH and Tyroddy.
- PCH resisted payment, arguing that as the adjudicator’s three decisions were unenforceable, there had been a total failure of consideration. (Tyroddy had stopped trading the year before, so couldn’t pay, even if it wanted to.)
- Akenhead J held that there had not been a total failure of consideration, since the scope of an adjudicator’s role extends far beyond just writing a decision, it encompasses all the other stuff we do before hand, like looking at submissions, reviewing jurisdictional challenges (yawn), reading the documents and generally managing the parties and the procedure of the adjudication.
I don’t think it’s unfair
Perhaps unsurprisingly, I don’t think this judgment is unfair to the parties. I’m pleased to see the door firmly shut on yet another attack on adjudicators and ways to wriggle out of paying for the work we do.
Over the last couple of years we have seen more and more challenges to adjudicators’ decisions based on allegations of breaches of natural justice. You get to a point where you think there is so little left to challenge, and then up pops another argument, another twist on the meaning of natural justice and what we may (or may not) have taken into account when reaching our decision. It often feels as if you are damned if you do, damned if you don’t.
I think that sometimes, just sometimes, the parties would be better off spending their time (and money) trying to sort out their dispute, rather than spending time (and money) trying to make the adjudication process as hard as possible, or spending even more money trying to avoid the decision, when it is issued. I seem to remember reading somewhere that adjudication is supposed to be an interim procedure, that it isn’t final and binding on the parties. It’s a shame that not everyone remembers that, as they batten down the hatches for battle.
One last thought
The parties also need to ensure that their dispute is referred to a “safe pair of hands”. Systech v PC Harrington is just the latest case that demonstrates the importance of this.
Do I think it’s an unfair decision? I am preparing to be shot down but… Yes.
If an adjudicator expects to be paid when the decision reached is uneforceable because they “screwed up”, then it is unfair. There aren’t many “contracts” where you can get away with producing something that’s not worth the paper it’s been written on, let alone the thousands of pounds incurred in drafting it, and still expect to get paid. Restitution shouldn’t offer a remedy either; where is the benefit of all the hard work?
An adjudicator wouldn’t have been asked to do the rest of the work: looking at submissions, reading jurisdictional challenges etc, but for the need to have a decision that is, well, simply, a Decision. Not much point to the rest of the work if what’s produced isn’t a Decision at all?
And the paying party doesn’t always have a real choice in participating; the risks of non-participation by a respondent are pretty high.
Fire away!
You make some very good points. I think there is a line which can be stepped over. I’m thinking perhaps where an adjudicator might knowingly act in a way contrary to what they were instructed to do. However, absent “bad faith” situations, I still believe there should be an entitlement to be paid a reasonable fee for the task performed. In that regard, I wonder whether a “screw up” would justify a reduction and/or a lower fee?? If the time constraints increase the risk of a screw up (and if adjudication is likely to be the final staging post), then the importance of getting a high quality tribunal is heightened.
Completely agree with Louise on this one. This is what adjudicators (and I include myself amongst them) need to get to grips with. We provide a service. The service is to produce a decision that is consistent with the 1996 Act. If because of our screw up the decision isn’t enforceable, why should we get paid? Sure, we may have spent time reading all the various documents and submissions, but if the decision we produce literally ain’t worth the paper it’s written on, why should our hapless adjudication customers have to pay for it? Imagine you engage an architect to design your house, and the design he produces is worthless. OK, he spent time discussing your requirements etc and performed work, but if the design’s a dud – what’s there to pay for?
The judge in the Systech case got it wrong. Hopefully there’ll be an appeal to get the SS Adjudication back on course…
I don’t think this can be as black and white as Johan and Louise contend. It seems to me that it is possible for an adjudicator to make a “bad” decision, and it be enforced and presumably paid for, while a “good” decision (but not enforcable) would not.
It seems to me that there is an inherent risk that would be exacerbated greatly if an adjudicator knows he only gets paid if his decision is enforced. What about those “50-50” jurisdictional challenges? Or even a “80-20”? Wouldn’t the adjudicator be more likely to resign in such circumstances, on the basis that he would fear not being paid?
If an adjudicator consistently produces unenforcable decisions then presumably the nominating bodies would then have their own sanction and stop nominating the individual.
All change today – in the Court of Appeal!
Thanks Peter. We are currently writing an update and will post a link here shortly. For anyone wanting to see the Master of the Rolls’ judgment, see PC Harrington v Systech.
The update is now finished and accessible to PLC subscribers: Court of Appeal finds adjudicator not entitled to fees if decision unenforceable.
Matt has also published a blog post, New Master of the Rolls arrives with a bang.