14th September 2017
In this case the court considered whether when participating in an adjudication, keeping silent about the Adjudicator’s Ts & Cs was sufficient to escape liability to pay the Adjudicator’s fees.
This judgment in the Technology and Construction Court confirms that a party will be deemed to have accepted an adjudicator’s agreement if it participates and makes submissions in an adjudication, even if such submissions were made without prejudice to issues of jurisdiction.
The Court also confirmed that there is a presumption that an adjudicator will be a party to an adjudication agreement as an individual, however there are some circumstances where a company will instead enter into the adjudication agreement on the individual adjudicator’s behalf.
There had previously been a series of adjudications between Mr Harding and his employers under a building contract. Mr Linnett acted as the adjudicator in these matters and directed that Mr Harding and his employers should each be responsible for his fees in equal shares.
Throughout the previous adjudication, Mr Harding had reserved his right to dispute the jurisdiction of the adjudicator and had stated that his submissions in the adjudication were without prejudice to this jurisdictional objection. Mr Harding didn’t pay Mr Linnett’s fees and instead sought a court order that the adjudicator’s decision was unenforceable due to lack of jurisdiction.
Mr Harding’s claim was rejected by the Court and the Court ordered that Mr Harding pay his share of Mr Linnett’s fees. Mr Harding then paid these fees, but Mr Linnett also sought in separate court proceedings, payment of statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
In support of this claim Mr Linnett argued that Mr Harding had entered into an adjudicator’s agreement (which included accepting liability to pay Mr Linnett’s fees) with the company Christopher Linnett Ltd, of which Mr Linnett is a director and sole shareholder,
In order to identify whether statutory interest and compensation should be paid, the Judge first had to establish whether there was an agreement, and then which parties that agreement was between.
Mr Harding claimed that he had not entered into an adjudication agreement with Christopher Linnett Ltd or with Mr Linnett as an individual, as Mr Harding had not returned the questionnaire supplied by Mr Linnett which the parties were required to complete. One of the questions in this document was “Do you accept my Scale of Charges and Terms of Engagement?”
Mr Harding also argued that his conduct in the adjudication had been entirely without prejudice to the fact that Mr Harding did not consider that the adjudicator had valid jurisdiction to determine the dispute.
The Judge found that Mr Harding’s conduct in making submissions in the adjudication amounted to acceptance of the adjudicator’s agreement.
Whilst the Judge found that silence itself is not sufficient to show a party has agreed to enter into an adjudicator’s agreement, if it can be shown that a party has accepted an adjudicator’s agreement by conduct, then that party’s silence is relevant to show that the adjudicator’s terms and conditions have been accepted.
Here, Mr Harding had received the questionnaire and the terms of engagement from Mr Linnett, but had ignored them. However Mr Harding had continued to participate in the adjudication after he had received these documents.
It was therefore found that Mr Harding had agreed to the adjudicator’s appointment and that this appointment was on the terms supplied by Mr Linnett.
An appointment of an adjudicator is a personal contract that is to be carried out by an individual. The Judge recognised, however, that there are two situations where a limited company may be involved:
Due to the personal nature of adjudications the initial presumption will be that an agreement is with the adjudicator as an individual, unless it is set out clearly that a party is contracting with a company who will supply an adjudicator.
In this case, Mr Linnett throughout his questionnaire, correspondence, and terms of engagement referred to himself in the first person e.g. “…as Adjudicator, I shall not be liable for anything done or omitted to be done in the discharge or purported discharge of my function as Adjudicator…”
Whilst the foot of the letterheaded paper on which these documents were issued stated that Mr Linnett was a director of Christopher Linnett Ltd, and Mr Linnett’s signature gave the company details, it was held that this was a statement of fact, and was not clear enough to provide that Mr Harding was entering into an agreement with the company.
It was therefore found that Mr Harding had entered into an agreement with Mr Linnett personally, and Mr Harding therefore had to pay statutory interest and compensation to Mr Linnett, not Christopher Linnett Ltd.
Key points to note from this case are that it is possible to accept an adjudicator’s agreement by conduct and so, if you have an objection to a particular provision in the adjudicator’s terms and conditions then this objection should be expressly raised at the outset. The adjudicator’s terms and conditions should not be ignored as, when you participate in an adjudication, it is possible to accept and be bound by these documents through silence.
Finally, the adjudicator’s agreement should be read carefully to identify who you are contracting with. Whilst there is a presumption that the agreement is with the individual, this case recognises that there are circumstances where you can enter into an agreement with a company which agrees to supply an adjudicator.