Linnett v Halliwells LLP [QBD (TCC)]

Hearing dates: 17 th December 2008

The Hon. Mr Justice Ramsey :

Introduction

The claimant, Christopher Linnett (“the Adjudicator”), was appointed in an adjudication between ISG InteriorExterior Plc (“ISG”) and the defendant, Halliwells LLP (“Halliwells”), arising out of a contract to carry out the fit out works at Halliwells' new offices in Manchester. ISG were the referring party in the adjudication and Halliwells were the responding party

In these proceedings the Adjudicator claims his fees and expenses against Halliwells, who raised jurisdictional challenges during the course of the adjudication. Halliwells contend that they are not liable directly to the Adjudicator for his fees and expenses, having taken an objection to the Adjudicator's jurisdiction, which they still maintain. They say that the only route for the Adjudicator to obtain payment of fees and expenses is from the referring party, ISG, who can then seek to claim them from Halliwells in enforcement proceedings which would be challenged by Halliwells on jurisdictional grounds.

Although the fees claimed are modest, this case raises a question of general importance concerning the ability of an adjudicator to recover his fees from the responding party to the adjudication when that party raises questions of jurisdiction.

Background

On 7 December 2007 ISG and Halliwells entered into an agreement under the 1998 JCT Standard Form of Building Contract, with various amendments and supplements (“the Building Contract”).

By Article 5 and Clause 41A of the Building Contract it was agreed that either party could refer any dispute or difference arising under the Building Contract to adjudication in accordance with Clauses 41A.2 to 41A.8 (as amended), with any dispute then being finally determined by legal proceedings.

Disputes arose under the Building Contract and ISG served a Notice of Adjudication dated 22 May 2008 on Halliwells, pursuant to Clause 41A.4.1 of the Building Contract. ISG applied to the RICS on 23 May 2008 for nomination of an adjudicator, as provided for in Clause 41A.2.

On 28 May 2008 the Adjudicator was nominated by the RICS. On the same date he sent a letter to ISG and Halliwells enclosing, amongst other things, his Terms of Engagement. ISG served the Referral by fax on the Adjudicator and Halliwells on Thursday 29 May 2008. On the same day ISG posted the attachments to the Referral to the Adjudicator and Halliwells. Halliwells received the attachments on Friday 30 May 2008. The copy sent to the Adjudicator did not reach him on that date. On Monday 2 June 2008 the Adjudicator telephoned Pinsent Masons, ISG's Solicitors, and Pinsent Masons offered to forward a further copy by courier. The Adjudicator suggested that they should wait and see if it arrived in the post on 3 June 2008. He wrote to Pinsent Masons on 3 June 2008 to say that he had not received the posted copy. A further copy was sent by courier and arrived with the Adjudicator on 4 June 2008.

From those facts, as Monday 26 May 2008 was the Spring Bank Holiday, it is apparent that the Referral was received by the Adjudicator and the Referral and attachments were received by Halliwells within 7 days of the Notice of Adjudication. However the Adjudicator did not receive the attachments within that period of 7 days.

On 28 May 2008 the Adjudicator wrote to the parties enclosing his Terms of Engagement (in error 2007 terms), together with a document setting out an “Adjudication Policy and Procedure”, a “Slip Rule” and an “Adjudicator's Questionnaire”.

On 3 June 2008 the Adjudicator wrote to the parties with amended Terms of Engagement enclosing 2008 terms in place of the 2007 terms previously sent in error. Both sets of terms provided as follows:

“Liability for Payment

The Parties are to be jointly and severally liable for payment of my fees and expenses in any event. …

Acceptance

Any objections to this Scale and these Terms by the Parties shall be made in writing to me within 7 days of receipt.”

On 5 June 2008 Pinsent Masons, on behalf of ISG, wrote to the Adjudicator, enclosing the “Adjudicator's Questionnaire” duly completed. Paragraph 14 of the Questionnaire stated “Do you accept my Scale of Charges and Terms of Engagement?”. It was answered “ Yes”. The document evidently accepted the Adjudicator's earlier terms. In the covering letter Pinsent Masons referred to the fact that the Adjudicator's 2008 Terms of Engagement had been sent to ISG but nothing further seems to have been said about these terms.

On 5 June 2008 Halliwells wrote a letter to the Adjudicator which contained the following statement: “This letter is written without prejudice to the responding party's contention that the adjudicator does not have jurisdiction to deal with the matters purportedly referred to him.”

The letter continued in these terms:

“A copy of the Notice of Adjudication was served by fax and post on the Responding Party on 22 May 2008. Accordingly, service of the Referral on both the Adjudicator and the responding Party should have occurred on 29 May 2008 at the latest. It is clear from the correspondence referred to above that service of the Referral did not in fact take place until 4 June 2008. The Referral was therefore served out of time.

In the circumstances, we invite the Adjudicator to now withdraw from the Adjudication. For the avoidance of doubt, we do not grant the Adjudicator the power to decide upon his jurisdiction.

Should the Adjudicator not be prepared to withdraw from the adjudication, we invite the Adjudicator to revise the directions given in his letter dated 5 June 2008 requiring service of the Response by Friday 6 June 2008 to provide for service 7 days from the date of receipt by him of the Referral i.e by 11 June 2008.”

On 6 June 2008 Pinsent Masons wrote to the Adjudicator and said that they would “not object if, in the light of Halliwells' fax and on reflection, you are minded to direct that Halliwells have until 11 June 2008 to serve the Response”.

The Adjudicator wrote to the parties on 6 June 2008 referring to that letter and saying that he assumed it was agreed that the adjudication should run from 4 June 2008 to 2 July 2008. In that letter he also said that he did not accept Halliwells' assertion that the Referral was served out of time. In doing so he decided against Halliwells' jurisdictional argument and evidently decided to proceed to consider the merits.

Halliwells acknowledged that letter and on 10 June 2008 served a Response, which again raised the same objection as the letter of 5 June 2008 and stated:

“This document, together with all future documents generated in this Adjudication is submitted without prejudice to the Responding Party's contention that the Adjudicator does not have the Jurisdiction to deal with the matters purportedly referred to him.”

At paragraph 3 of the Response Halliwells also said that while they did not dispute that there was a construction contract in writing “there is no longer a construction contract fully evidenced in writing for the purposes of the Housing Grants Construction and Regeneration Act 1996”. They said at paragraph 11 of the Response that the original contract had been “varied by oral agreement and/or by conduct”. They then continued at paragraphs 18 and 20 as follows:

“18. As a result of the fundamental variations to the original Contract, the Adjudicator does not have jurisdiction to deal with the matters purportedly referred to him.

…

20. The Responding Party invites the Adjudicator to consider his jurisdiction in light of the above and, having done so, invites the Adjudicator to withdraw from this misconceived Adjudication. For the avoidance of doubt, the Responding Party does not grant the Adjudicator the power to decide upon his jurisdiction.”

On 11 June 2008 Pinsent Masons raised objections to matters in the Response and, at the direction of the Adjudicator, served a Reply to Response on 16 June 2008.

On 13 June 2008 the Adjudicator wrote to the Parties and concluded

“Unless I receive a completed questionnaire from the Responding Party I will assume the answers to questions 1 to 9 as given by ISG are agreed and that my terms are also agreed. However without positive affirmation, I cannot make the same assumption about the slip rule referred to at question 13.”

On 17 June 2008 Halliwells responded to say this:

“You do not have jurisdiction to deal with the issues purportedly referred to you for the following reasons:-

1. If a contract is a construction contract to which the Act applies, the parties must comply with the Act and all the terms must be in writing. In circumstances where the contract is one to which the Act applies, but is not Act compliant in that not all the terms are in writing, then the Adjudicator does not have jurisdiction. This is the position here. The Adjudicator is referred to Treasure & Son Ltd v. Dawes [2007] EWHC 2420 (TCC), which follows and clarifies the position in RJT Consulting Engineers Ltd v. DM Engineering (Northern Ireland) LtdUNK[2002] BLR 217.

2. Any decision in the Adjudication would be a nullity as the Referral and its accompanying documentation were not served on the Adjudicator on 30 May 2008 but rather on 4 June 2008. This is contrary to the prescriptive provision of the clause 41 of the original contract, and also contrary to the requirements of the Act, and accordingly the Adjudicator...