Is adjudication serving to resolve small payment disputes and provide cash flow?
We were recently required to run a small (circa £40k) dispute through the adjudication process for one of our clients. The dispute itself was fairly simple and comprised of the usual story of a groundworks subcontractor having undertaken instructed works and subsequently being ignored by the main contractor.
The subcontractor unfortunately hadn’t received a payment certificate and hadn’t issued an invoice to enable us (or their solicitors) to allow a statutory demand or similar to be served.
The decision meant that a small subcontractor, who had not yet been paid for work undertaken for a regional contractor, now had to make a not unsubstantial payment for the adjudicator’s fees
The adjudication notice and referral were issued without any notable comments and then there began the myriad of (and unfortunately now far too usual) jurisdictional challenges, all of which served to be tactical and without any real prospect of success but clearly required the adjudicator to at least consider their contents and thereby increase his fee. Having responded to these challenges the responding party then chose to withdraw themselves from the adjudication, presumably on the basis that there was no defence that could be raised (it was a very simple case of an agreed scope for an agreed sum having been completed without any defects).
Upon it becoming clear that the adjudication was proceeding ex-parte, and upon the facts that no documents relating to the dispute (other than the jurisdictional challenges) had been served we suggested that the adjudicator need not take his full 28 days in which to make his decision (after all, the Scheme does say within 28 days), the reply we received was that he would proceed in accordance with natural justice (which meant he’d give his decision on the 28th day).
Upon the adjudicator making his decision (which unsurprisingly consisted of an outright win for our client) he decided that it was going to be far too difficult to obtain his fees from the losing party so required our client to pay his fees and seek reimbursement. The decision meant that a small subcontractor, who had not yet been paid for work undertaken for a regional contractor, now had to make a not unsubstantial payment for the adjudicator’s fees.
The main contractor then chose to completely ignore the adjudicator’s decision instructing them to make the outstanding payment. We then chased the money on our client’s behalf and subsequently instructed a solicitor to do likewise. Our client (the small subcontractor) was now all out of money and whilst the numerous judgments suggest that the courts would enforce an adjudicators award applying for summary judgment was simply going to cost too much for them.
In the end (one month after the decision) the main contractor rang up our client and suggested he go to their offices for a meeting. During this meeting our client was told that there was no need to go through the hassle of adjudication to get their money. But, our client only got a cheque for half his money (he was on the verge of going bust and had nothing left to bargain with) and none of his costs.
The question has to arise, how is natural justice served when an un-defendable dispute doesn’t provide a particularly quick decision and doesn’t provide for a quick and cheap enforcement procedure?
Ryan Greening is a director at Bennington Green