An adjudicator in a property dispute who made an error that meant that his decision was unenforceable might be thought to have showed a degree of boldness in seeking to charge for the work.
However, a recent case in the High Court involved an adjudicator who did precisely that. He had adjudicated in a construction dispute concerning the return of retention money, which a sub-subcontractor claimed was due from a subcontractor. The latter denied the claim and counter-claimed that it was due a refund on amounts already paid. The subcontractor referred the matter to adjudication.
The adjudicator ruled in favour of the sub-subcontractor, but in doing so had ignored the subcontractor’s counterclaim altogether. This rendered the adjudicator’s decision unenforceable, which was established by further court proceedings in the Technology and Construction Court.
The adjudicator then sued the subcontractor for more than £20,000 in fees for his work. The subcontractor argued that it should not have to pay a penny of the adjudicator’s fees because his decision was unenforceable, and therefore essentially worthless. There had been a ‘total failure of consideration’. Where a total failure of consideration occurs, no payment can be demanded.
Surprisingly, the Court disagreed and ruled that the adjudicator was entitled to payment.
If you have a contractual dispute, contact us for advice.
Partner Note
Systech International Ltd. v PC Harrington Contractors Ltd. [2011] EWHC 2722 (TCC). See http://www.bailii.org/ew/cases/EWHC/TCC/2011/2722.html.