Enforcing an adjudication can be a damned expensive business, especially when there’s a proce - as one unfortunate subcontractor found out
How much money does enforcement cost? Glibly we talk on this page about popping along to the High Court and asking the odd judge to “make the other bloke obey the very nice adjudicator’s award”, or asking the same judge “to sling out the half-baked numbskull adjudicator’s silly award”. That’s all very well, but how much does all this popping along cost? There is a good example in a case called BAL (1996) Ltd vs Taylor Woodrow Construction Ltd. Let me tell you the story.
Nationwide Anglia Property Services’ headquarters at Swindon needed remedial works. Taylor Woodrow was appointed main contractor and BAL, trading as BACO Contracts, tendered £3.5m for the subcontract package on the glazing over four phases. Nationwide used a letter of intent to proceed. So, Taylor Woodrow did the same with BACO (BAL). The form used was the Taywood subcontract package with the letter of intent bolted on the side to allow a “bit-by-bit” contract. Eventually a list of quarrels accumulated, so BACO called for an adjudicator. By then the authorised spend was £2.2m. BACO’s account however was at £2.8m. Dear me, said Taywood, where did you, Mr BACO, get the right to go over the cap in the bit-by-bit release? Tricky issue for the QS adjudicator.
He held a meeting. Barristers turned up to explain the effect of the £2.2m cap. Not cheap. On top of that there was the list of quarrels regarding the measured account, variations, loss and expense. Another meeting was required for all that. Surveyors turned up. Not cheap, either. Meanwhile, flummoxed by lawyers’ arguments about the cap, the adjudicator sought “legal assistance from my own source”. He spent four hours with a solicitor and, two days later, another four hours with a barrister. Not at all cheap.
At last the adjudicator issued his formal binding decision. The subcontractor, he said, had been prevented from completing on time, was asked to undertake significant additional work and should be paid. As for the “cap argument”, he decided that said cap had fallen off when Taywood piled on the work. Right or wrong, it is not for the court to inquire into his findings of fact or law. The decision is binding until the dispute comes up for a full trial. Taylor Woodrow was supposed to pay up. Except for one snag. Can you spot it?
The adjudicator hadn’t reported the advice he received from the lawyer sources. This is a mortal sin for an adjudicator. You can see why. If the adjudicator obtains advice as to whether BACO’s or Taywood’s barrister gave the right explanation of the law, the advice has to be put to the parties. Worse still, the “private” advice from the lawyers to the adjudicator might raise a fresh point not discussed by the parties and introduce an argument not on the original list of arguments. This mortal sin consigned the adjudicator’s award to the skip. By the way, the entire list of arguments went down the pan, even those that had not required legal advice.
So what about the costs? BACO’s legal costs in coming to enforcement in the High Court were £20,000 plus. Taywood’s were £13,000 plus. The court awarded Taywood nearly all of that. So the popping along to the High Court cost the loser £33,000. Well, no, actually it didn’t. It was a damn sight more. Let’s work it out. The adjudicator’s fees were thrown away – another £8264. Then there were the fees of the lawyers it consulted. Is that it? No, not quite. Thrown away, too, was all that it cost BACO to run the adjudication. Thrown away, too, was all that it cost Taywood to run the adjudication. We can only guess what that little lot came to. £50k? £60k? £70k? And remember BACO walked away from the adjudication and the court with none of the cash awarded to it.
So the popping along to the High Court cost the loser £33,000. Well, no, actually it didn't. It was a damn sight more. Let's work it out ...
No, I am not “getting at” the adjudicator. He is a good chap who according to the court made a mistake in the procedure. He ought to have published to the parties the advice he obtained. The end result, had he done that, may have been no different to what his award now said.
But, we can’t take that chance can we? And let me say this: can I have this same adjudicator in my next dispute please? Because he won’t make that mistake ever again. But others will …
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on firstname.lastname@example.org