Donald Pugh, the adjudicator, did a brave thing. He instructed his solicitor to sue for that £1840. The solicitor instructed Mr Isaacs, and he immediately saw that the costs of going to court would easily overtake the sum in dispute. He was right. Any claim for less than £5000 is regarded as the work of the small claims court. The rule there is that each side pays its own costs. You can see that it is daft to spend more in costs than is being fought over. But Mr Pugh pressed on. Good for him.
I will tell you the outcome in a moment. But first let me explain the problem in getting fees paid as an adjudicator. Parliament did us all proud when it concocted the Construction Act, but it is like a Christmas jigsaw: it has a few missing pieces. The act stole a few ideas from the Arbitration Act 1996, but not the bit that says: "The arbitrator may refuse to deliver an award to the parties except upon full payment of the fees and expenses of the arbitrator."
Traditionally, the arbitrator not only sends in interim fee notes, he also sends a final note saying: "My award is now ready for taking up on payment of my fee note enclosed". And that invariably works. The parties are at this stage still laughing at the arbitrator's jokes and still pretending that he is an all-round good bloke. They don't yet want to upset him, so they pay up. But the Construction Act didn't include those magic words.
True, most adjudicators bring this device in as a term of the contract with the adjudicator and most people do pay up before getting the decision. But the awkward squad is always around the corner willing to tease the adjudicator. Some adjudicators just do the job, issue the decision and then issue a fee note, expecting to get paid.
Anyway, Mr Pugh took Harris Calnan Construction Company and Stanners Design Ltd to court using a barrister and solicitor and demanded his £1840, plus £2600 legal costs in the small claims track.
The rule is that each side pays its own costs. It is daft to spend more in costs than is being fought over. But Mr Pugh pressed on. Good for him
It was an application for "summary judgment", which means that Mr Pugh said neither defendant had a hope in hell of not paying his fees, so could he have instant judgment. Apparently, one of the defendants tried to say that the adjudicator had no jurisdiction to be the adjudicator so he couldn't be responsible for his fees. Yet that same defendant still used the adjudicator's services. The judge in the county court threw out that defence and ordered the fees to be paid.
Ah, but what about the £2600 legal fees? Barrister Oliver Isaacs persuaded the judge that since the defence was wholly misconceived and since Mr Pugh would have undoubtedly won if a complete trial had been heard, and since the whole excursion was nothing more than an attempt at delay, it was right to order this £2600 costs to be paid.
The route to that success is in the Civil Procedure Rules at number 44.3. That says the court has discretion in all matters concerning costs, including who shall pay and in what amount. Furthermore, the court can award costs on what is called the indemnity bases if it considers the behaviour of a party is not quite up to snuff.
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 email@example.com.