Like many adjudicators, in the current climate I am concerned that parties may go bust and I will not get paid. I have already experienced one or both parties going bust after the decision has been delivered, and I haven’t been paid. Being entitled to a few pence in the pound in the insolvency doesn’t really help pay the bills!
Having a lien over the decision could help, but is no longer an option (no thanks to me and Coulson J!).
It is easy to assume that if a party is represented by reputable solicitors, the solicitors will have carried out financial checks and/or obtained money on account. However, that money may not extend to my fees. Understandably, the solicitors will be more concerned about their own exposure in preparing the case for adjudication.
What can adjudicator’s do to help themselves?
It can be useful for any potential adjudicator to carry out financial checks on companies and private individuals before accepting an appointment. Even then, this may be of little comfort if the latest company accounts were filed, say, 18 months ago. Keeping “an ear to the ground” and listening to what other people are saying within the industry may be equally useful. Other industry professionals and adjudicators may know more about what is really happening than any one else at the moment.
Is issuing a provisional invoice the answer?
In terms of getting paid, I know some adjudicators who are issuing a provisional invoice based on an estimate of fees, say, 7 days in advance of the decision date and sending an adjusting invoice or credit note when the decision is published. This is one option, but I don’t believe it would protect them entirely from party insolvency. In my view, it is better to rely on the joint and several nature of the parties’ liability for my fees. Obviously, if both parties are insolvent this is of little help.
What difference has Chris Linnett made?
Thanks to Chris, we now have clear guidance from the TCC that even if one or both parties fail to enter into a written contract with the adjudicator, they will still be jointly and severally liable for his fees, regardless of whether they challenge the adjudicator’s jurisdiction. The only exception to this is if the responding party raises a jurisdictional challenge and the adjudicator immediately resigns. However, if, as part of that challenge, the responding party asks the adjudicator to make a non-binding decision on jurisdiction, it will be liable for those fees, but not any future fees if it withdraws from the adjudication. It is all about the benefit being conferred on the parties.
This is a welcome decision, particularly in the current economic climate. No doubt adjudicators up and down the country are queuing up to buy Chris a pint as a thank you!
What about the Construction Act 1996?
Baroness Hamwee has proposed an amendment to clause 135 of the amendments to the Construction Act 1996, which includes making the parties “jointly and severally liable for any sum which remains outstanding following the making of any determination on how the payment shall be apportioned”.
This amendment, if it survives, will come too late for many. Given the length of time the changes have taken so far, the current recession may be over before that Bill makes it on to the statute books. It may also not be necessary, in the light of Ramsey J’s judgment in Linnett v Halliwells LLP.
Ultimately, if party insolvency continues to be a factor in the failure to pay adjudicators, we may see an increase in adjudicators’ hourly rates (to cover not only their losses but also the extra expense of having to sue for fees). A sad fact of life is that those that can pay may end up paying for those that are unwilling or unable to do so.