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Reminder that adjudicator’s appointment lapses if no decision

Some judgments seem destined to be blogged about (at least by me) and Baldwin v J Pickstock Ltd is one such judgment. It’s all about the adjudicator’s decision (or lack of), whether there was an extension of time for reaching that decision and whether the adjudicator had properly resigned and should be paid for the work he did (even though he did not reach a decision). It’s not quite Cubitt Building & Interiors v Fleetglade, but it does demonstrate how adjudicators need to be alive to banana skin tactics, even those coming from the referring party!

Baldwin and another v J Pickstock Ltd

Mr Baldwin accepted an appointment to act as an adjudicator in a dispute between J Pickstock Ltd (as the referring party) and Manstal Ltd (as the responding party). The nomination came via the RICS and the adjudication was to be carried out using the rules of the Scheme for Construction Contracts 1998.

The parties agreed to the adjudicator’s standard terms and conditions, which included (at clause 3.2) that:

“Should I resign as Adjudicator prior to reaching my Decision due to what I consider is a valid challenge to my jurisdiction to decide the dispute referred to me, then the Referring Party will be liable for payment of my fees and expenses.”

At the start of the adjudication, the adjudicator issued his directions. These include the statement that:

“I normally require 3 weeks form receipt of the last submission (when there are more than 2 rounds of submissions for me to consider) within which to reach my Decision.”

During the adjudication, the adjudicator asked for a number of extensions of time to deliver his decision. He repeated his need for “3 weeks” after the submissions and calculated his extensions to allow that.

It all came unstuck in May 2016, when the adjudicator asked for an extension to Tuesday 7 June. The responding party agreed “within minutes” but the referring party’s solicitor didn’t reply. In fact, the referring party “remained silent throughout the period” until 31 May when its solicitor wrote querying where the adjudicator’s decision was. It seems the referring party had been working on the basis that there was an agreed extension of time to 27 May and had expected to receive the adjudicator’s decision before or during the Whitsun bank holiday weekend.

Understandably, the referring party’s position caused a number of email exchanges between the adjudicator and the parties. Eventually, the adjudicator stopped work and then resigned, two days after the 7 June deadline.

Should the adjudicator get paid?

As the adjudicator was owed some £28,000 odd, this was the critical issue in this case. The adjudicator relied on clause 3.2 of his terms and conditions and paragraph 9(1) of the Scheme, which provides that:

“An adjudicator may resign at any time on giving notice to the parties to the dispute.”

The question for the court was what “at any time” in paragraph 9(1) means. Ultimately, it was persuaded by the arguments advanced on behalf of the referring party, which can be summarised as follows:

  • The purpose of an adjudicator’s appointment is to produce an enforceable decision (PC Harrington Contractors Ltd v Systech International Ltd).
  • If adjudicators want to protect themselves from a situation where their decision proves to be unenforceable, they should include a suitable provision in their terms and conditions. (These are sometimes referred to as Systech clauses.)
  • The adjudicator’s appointment is an entire agreement requiring performance by reaching a decision within the agreed time frame (which will be as set out in paragraph 19 of the Scheme or as revised by agreement between the parties).
  • The case law suggests that, if the adjudicator has not reached a decision by the end of the agreed time frame, the appointment lapses. Here, that was midnight on 7 June 2016.

Accordingly, the adjudicator’s claim for fees failed as he had tried to resign two days after his appointment lapsed. The judge referred to what the adjudicator did in the following terms:

“Stopping work was an understandable response but not a solution. Stipulating for a yet further extension of time of unspecified duration, especially in the face of [the referring party’s] assertions that the deadline for reaching a decision had already passed and that consideration would not be given to any extension of time beyond 27.5.16, was not. Most critically of all, [the adjudicator], as an experienced adjudicator and as evidenced by the email traffic, knew by 17.30 on 7.6.16 that (1) the disputing parties’ agreement was required to any extension of time, (2) [the referring party] had stated clearly that it regarded the deadline for reaching a decision as having already passed and had expressly refused to agree an extension to 7.6.16 or any later date, and (3) resignation had become a realistic possibility. [The adjudicator] had no basis for thinking that the deadline for reaching a decision would extend beyond 7.6.16. It was for him alone to decide whether or not to invoke cl.3.2 before midnight on that day.”

As the judge noted, had the adjudicator resigned on 7 June, “the outcome would have been very different”. It may seem harsh, but it is the reality of the “rough justice” of adjudication. As an adjudicator, it is always worth having one eye on the clock and we all know that, next time, the resignation letter will be sent.

Silence may not be golden, it all depends

One aspect of the judgment that all parties should take note of are the findings about the extension of time to 7 June being agreed. Despite the referring party staying silent and appearing to “run the clock down” (conduct the court viewed as “reprehensible”), the court held that the adjudicator was entitled to treat the referring party’s silence as agreement. As it noted:

“… it was incumbent on [the referring party] to make its position clear by responding to [the adjudicator’s] email. In the absence of an express response… [the adjudicator] was entitled to treat [the referring party’s] silence as agreement to an extension for the adjudicator to reach his decision to 7.6.17. The TCC authorities contain no suggestion that it is incumbent on an adjudicator to press for a response. The adjudicator’s entitlement to rely on silence must be a fortiori where the silent party causes or contributes to the need for an extension of time.”

It is always a difficult one. How many emails do you send? How much should you chase? As I said last year when this issue cropped up in Actavo UK Ltd v Doosan Babcock Ltd:

“Without wanting to sound wise after the event, this sort of ‘confusion’ underlines the importance of confirming things in writing. If you think the parties have agreed something at a meeting (or in correspondence), it is always sensible to say so. Here it seems that is exactly what the adjudicator did, when he emailed on 26 September to say his decision would be issued on 5 October. If no-one responds negatively to that, I think it is fair to assume that you have been given the extension. In my experience, parties love to write to you (and each other) and argue about all sorts of things, big and small, and there is no way one party would leave an extension of time unchallenged if it disagreed with it.”

MCMS Ltd Matt Molloy

3 thoughts on “Reminder that adjudicator’s appointment lapses if no decision

  1. I was the Adjudicator in this case. This was the 2nd adjudication between the parties. Pickstock lost the 1st “smash & grab” adjudication (before another Adjudicator I know well) in which they were the Responding party. And Pickstock were then the Referring party in this acrimonious kitchen sink type final account dispute follow on adjudication with over £1M in issue. There was little love lost between the parties & their respective solicitors. I held a heated meeting with the parties & there were numerous challenges to my jurisdiction. The cause of the deliberate derailment of this adjudication by the Referring party Pickstock, which came completely out of the blue & late in the day when my Decision had been substantially written, was Pickstock sending me an undirected lengthy submission containing new evidence which I reluctantly allowed in & gave the Responding party an opportunity to answer on the basis of what I took to be an agreed further EOT for my Decision to accommodate those two new submissions The two mistakes I made were allowing in that late undirected Pickstock submission in the first place (mindful of the tension between Scheme Part 1 paras 15 & 17), & having done so then trusting Pickstock’s solicitor who the Judge named & shamed & whose behaviour he described as “reprehensible”. They say you learn from your mistakes, & learn most from the painful ones. My mistakes were certainly painful as I didn’t get paid for the work I did. And the lessons I learnt from them were firstly to be more robust in the future by rejecting late submissions I have not directed be served, & secondly to be more careful who I trust.

  2. I would have thought that a referring party must have at least an implied obligation to cooperate with the appointed adjudicator, unless unusual circumstances prevail. In circumstances where due to lack of co-operation by the referring party, an adjudicator declines to proceed to a decision and the referring party is not then liable for the wasted fees, it leaves the door open for a referring party to sabotage with impunity, if it is perceived that it is not likely to be successful.

  3. Matt
    Unfortunately this case simply serves to highlight what many party representatives consider acceptable behavious in adjudication. Some think this fast paced forum provides a licence to be ignorant, rude and often threatening. This is not limited to claims consultants but is prevelent amongst solicitors also. It would be good to see the Solicitor’s Regulation Authority introduce some clarity regarding its Code of Conduct and requirement on solicitor’s to act with integrity and not knowingly or recklessly mislead the court. I believe the wide definition of “court” includes the Tribunal as Adjudicator.

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