|
Yes, folks, it’s the fab follies
A client bent on scuppering an adjudication can
whistle up all sorts of loony tunes – including favourites such
as ‘There Ain’t No Contract in Writing’, ‘Git that Adjudicator
Outta Here’ and ‘Here Come the Judge’. Altogether now…
“When are we going to stop this nonsense?
We adjudicators are quite capable of deciding a dispute about
the existence of an oral term”
“This is one of those rare cases where the
judge erred in enforcing the adjudicator’s decision.” Ears
pricked up at that. That’s what the Court of Appeal said
recently in Lead Technical Services vs CMS Medical.
The adjudicator awarded £83,541 in fees to be
paid by the client for the consulting engineer’s services. The
client refused. So the engineer asked a court in Leeds to
enforce. And the judge did.
Unusually, the client still would not pay. It
said the judge ought not to have enforced. Mind you, it had
earlier said that the adjudicator ought not to have adjudicated.
Before that it had said to Lead Technical Services there was no
right to adjudication.
The Court of Appeal also had a problem with
its own procedures. Both the adjudicator and the judge moved
quickly to give their decisions, but the Court of Appeal took
more than a year from the award to decide to boot it out. Too
long.
So how come the judge was wrong to enforce?
Here is the story. Lead Technical Services is the consulting
engineer for a warehouse, offices and separate block of starter
units. As is becoming not so unusual, the contractor and the
client had a difference of opinion about professional fees.
Instead of falling out, they went to adjudication. Also not
unusual was an early dogfight called the judicial challenge. I
confess that I enjoy these exciting intervals. The idea is that
the respondent gets in a mild strop about there being no right
to adjudicate. Over the years I have seen some right daft
attempts to derail the wagon. Snag with that is the tendency to
groan, “Here we go again”, and treat a good challenge with a
wrinkled nose. So I have to de-wrinkle these days. Some of the
challengers have got good. By the way, I will tell you what test
I use for the challenge later.
The client told the adjudicator that the
professional services agreement with the consulting engineer was
signed in November 2002. But the agreement was replaced nine
months later by a deed of appointment. The adjudication rules in
the deed were not the same as in the original agreement. That
meant, said the client, that the adjudicator had been appointed
by the wrong body. If that was correct, the adjudicator had to
resign. It is one of those loony rules that ought to be buried.
The client’s next objection to adjudicating
is an old favourite. It arrives with trumpets blowing and
showgirls dancing: “There is no agreement in writing.” What?
Yes; we have a “deed of appointment” heaving with rules but, oh
dear, oh dear, there was an oral agreement in which, it is
alleged, the fees would be capped at £20,000.
Well, says the Court of Appeal, if that is
so, we haven’t got the right to adjudicate because the
Construction Act requires contracts to be in writing. Yes, I
know there is one but the torpedo is the disputed oral agreement
on fees. When, oh when, is the DTI or parliament, going to stop
this money-wasting nonsense? We adjudicators are quite capable
of deciding a dispute about the existence of an oral term.
The adjudicator and later the judge could not
see how the “deed of appointment” nine months after the first
consultant services appointment overtook the first “deal”. The
deed was fatally flawed, they said. The Court of Appeal saw it
the other way. Not flawed at all. It trumped the earlier
contract. That being so, the “new” rules in the deed pointed to
which body should appoint the adjudicator. The wrong appointing
body appointed the adjudicator, so the adjudication was a
nullity.
But even if the right nominating body had
been used, there was still the dispute regarding the oral term.
The judge and adjudicator ruled that the oral term did not
exist. But the Court of Appeal said it did. That decision had a
disastrous impact on the adjudication. The existence of a
disputed oral term stops the adjudication taking place. The
client said it was a fee cap of £20,000. The consultant sent a
bill for £90,000. So, for two reasons the Court of Appeal set
aside the adjudication. Lawyers will say, yes of course;
contractors will wrinkle their noses.
I promised to give you the test I use for
jurisdiction challenge: “The adjudicator cannot act where there
is a real prospect based on cogent grounds of establishing the
adjudicator has acted without jurisdiction.” Wrinkled nose?
Readers are invited to forward recent
judgments for reporting in this column (with full
acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple,
London EC4Y 7EU. DX: 37164 Biggleswade
Top
|
