Adjudicators can try to keep the award until their own bill has been settled. They can even write it into their terms and get both parties to agree to it. Doesn’t mean it’ll work
News from the front: a fair number of adjudicators are becoming peeved about not getting paid. Some are now asking for cash upfront, others are refusing to take appointments when a name from the “special list” crops up. Adjudicators do talk among themselves, you know.
Neither Cubitt Building & Interiors nor Fleetglade are on that special list. But when the adjudicator in their dispute was appointed, his autopilot system issued his usual terms of engagement. His bumf includes what is known as a lien. In short, it says he will issue his bill just before he is ready to publish his award. Once the cash is paid, he will release the award.
It’s more or less like what Marks & Spencer says to you when you buy your socks: socks for cash. Easy. And, as the judge said when Cubitt came to court to press Fleetglade to pay up the £600k or so ordered by the adjudicator: “The parties agreed the adjudicator’s specific terms of appointment.”
If they did agree these terms, it will not surprise you to learn that the adjudicator held on to the award when his bill wasn’t paid. After all, if I agree to pay you for those socks, I go barefoot if I don’t fork out the money, right?
Trouble is, Fleetglade said the award became late and unenforceable. Let me tell you how the law deals with liens and adjudicator’s bills. In the Cubitt case, the deadline for the adjudicator making the decision on the dispute was 24 November. A couple of days before then, the adjudicator’s bill went out. Neither party paid. Perhaps it was not enough notice. But both solicitors were, notwithstanding the lack of payment, anxious to receive the decision. Emails flew between the solicitors and the adjudicator.
By noon on 25 November, the adjudicator caved in. He issued his award although no fees had been paid. By that time, however, he had passed the deadline of midnight on 24 November for making his decision, yet both parties had agreed at the outset that he had a lien on the award.
The lien was an attempt to obtain an open-ended extension of time and is contrary to the whole principle of adjudication
The snag is that the lien in the adjudicator’s terms ran smack into the rules on the adjudication timetable. Those rules (in JCT and the Construction Act) make time a fundamental promise in the adjudication system. There was a clash with the adjudicator’s terms indicating he could defeat the timetable if he was not paid. The judge decided: “I do not accept that this adjudicator was entitled to exercise a lien in relation to the decision, either as a matter of contract or as a matter of law.”
A moment’s thought reveals that the lien was an attempt to obtain an open-ended extension of time and is contrary to the whole principle of adjudication as described in the 1996 act. Yes, I know you will say that the parties agreed the lien, but it can’t stand.
So, what happens now? The delivery of the award was beyond the midnight deadline. Fleetglade said, when that happens the award is void. Well, that’s not necessarily the case. There is a distinction between making the decision and publishing or sending the decision. The decision was made within the deadline, which is what the rules say.
It is not a practical interpretation of the adjudication rules to give the adjudicator until midnight of a particular day to do all his “deciding” then call him out of time if he delivers the decisions one minute after midnight. Next-day delivery is a practical understanding of the rules. It makes sense and is acceptable to the courts. The award was enforced. It was not late.
But what about this business of asking to be paid in exchange for the goods? The courts will accept all that if the adjudicator can persuade both parties to extend the time deadline for making the award to a new later time. And if I was a party to an adjudication, I would be very enthusiastic about agreeing a new later time. Why? Because if the other side does not pay its whack, it is then open to the adjudicator to recover all of the fees from my client instead. The parties remain jointly liable to the adjudicator. So it is worthwhile making sure the other bloke has stumped up.
If you remain puzzled about the two parties having agreed the lien and then the court striking down their joint agreement, the answer is easy – it’s called the law.
Tony Bingham is a barrister and arbitrator. Read his regular blog at www.building.co.uk/blogs