Pay and display

It is common for adjudicators to state that they will not release their decision until their fees have been paid. Despite the widespread nature of this practice, it was not scrutinised until the Scottish Court of Session heard St Andrew's Bay Development vs HBG Management.

The developer, St Andrew's Bay, entered into a contract with HBG on the standard Scottish building contract with contractor's design for the building of a leisure complex. The contract contained the usual adjudication provisions.

A dispute arose between St Andrew's and HBG and an adjudicator was appointed. Her standard terms of appointment required payment of her fee before her decision would be released.

After various extensions of time, the adjudicator's decision was required by 5 March 2003. By 5pm on 5 March, HBG had not heard anything and was beginning to wonder what had happened to the decision. The adjudicator's office indicated that the adjudicator had reached a decision but did not intend to release it until her fee had been paid. At this point, no invoice had been rendered for the fee. That evening, the adjudicator confirmed this and sent an invoice. The following day, HBG indicated that it would pay the fee in order to get the decision, which was in its favour. The decision was released on 7 March 2003. At no time did the adjudicator ask for any extension of time beyond 5 March.

St Andrew's applied to the court for a review of the decision, arguing that the adjudicator had no power to reach the decision after 5 March 2003 and as a result it was not valid. St Andrew's asked for the decision to be set aside in its entirety.

Though it is true, as HBG pointed out, that section 108(2)(c) of the Construction Act does not say anything about communicating the decision, the judge agreed with the court in Bloor Construction (UK) vs Bowmer & Kirkland (London) that it would not make any sense if the delivery of the decision was not similarly required. To read the section in any other way would frustrate the speedy resolution of building contract disputes because an adjudicator could delay for as long as necessary until his or her fees had been paid. The position was the same under the contract, which clearly separated out the duty to make the decision and then communicate it to the parties "forthwith", all within the agreed period.

It follows that the adjudicator is not entitled to delay communication of the decision until his or her fees are paid. There is of course nothing to prevent the adjudicator from reaching a separate arrangement for payment of his or her fees but that arrangement must not frustrate or impede the progress of the statutory arrangements.

In these circumstances, what were the remedies available to St Andrew's? The case was heard by the court on 20 March 2003 and the judge noted that St Andrew's had not taken advantage of the opportunity to submit the referral to another adjudicator. The judge referred to Ballast vs The Burrell Co (Construction Management), which confirmed that the scheme should be interpreted as requiring the parties to comply with a decision unless the adjudicator has no jurisdiction to determine the dispute. This case was a technical failure, not a jurisdictional issue, and no challenge had been offered to its merits.

What conclusions can we draw from St Andrew's Bay? If you are an adjudicator, it would be prudent to ensure your requirements for the payment of fees fit in with the statutory timescale; probably the most practical approach would be to obtain undertakings from both parties to that effect. If you are one of the parties, the effect seems to be that although you can require the adjudicator to issue the decision without waiting for payment, if the adjudicator fails to do so within the time this does not necessarily mean that the decision is invalid. Whether you consider that to be a good thing or a bad thing is going to depend largely on the decision you wanted in the first place.