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Croudace Homes Ltd v PRB Wiring Solutions Ltd: Timing important when challenging adjudicator’s fees

Alexander Jullienne in our Construction team gives his thoughts on Croudace Homes Ltd v PRB Wiring Solutions Ltd, a recent case in which the TCC enforced an adjudicator’s decision requiring the defendant to pay the adjudicator’s fees and expenses.

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The TCC has confirmed in Croudace Homes Ltd v PRB Wiring Solutions Ltd  [2020] EWHC 2139 (TCC) that a party intending to challenge the reasonableness of an adjudicator’s fees, should take effective action to do so and in any event prior to payment, otherwise it will lose its right to challenge.

The claimant (Croudace) was successful in an adjudication against the defendant (PRB) that it was entitled to terminate its contract with PRB in respect of a project at Tetsworth, Mount Hill Farm and would not be liable for loss and damage arising from the termination. The Adjudicator decided that PRB was liable for 100% of his fees and expenses and directed that Croudace pay his fees and expenses in the first instance, and then reclaim the sum back from PRB.

Croudace paid the Adjudicator’s fees, however PRB refused to reimburse Croudace for those fees. Croudace subsequently commenced adjudication enforcement proceedings against PRB seeking reimbursement of the Adjudicator’s fees.

Although PRB accepted liability to reimburse the fees paid to the Adjudicator it sought to challenge the quantification of those fees.

In dismissing PRB’s challenge, Mr Nissen QC concluded that it was not open to PRB to challenge the fees because no effective action had been taken to challenge the reasonableness of the adjudicator’s fees at the appropriate juncture. Mr Nissen QC confirmed that in the absence of any evidence of a challenge to the reasonableness of the fees of the Adjudicator before Croudace had paid them, it was “simply too late and inappropriate” to raise issues as to quantum when it had already been paid.

Further, Mr Nissen QC said that in any event, PRB’s challenge to the reasonableness of the fees by relying on the quantum of fees incurred by a different adjudicator presiding over a similarly contested adjudication, would not have succeeded. Mr Nissen QC remarked that in adjudication, the adjudicator’s costs can vary considerably and that there was no reason to suppose that different adjudicators will charge the same amount for performing the same adjudication let alone a different adjudication.

Whilst Croudace ultimately obtained judgment together with an order for indemnity costs, it was undeniably inconvenienced by PRB’s approach. Such inconvenience may not have arisen had the Adjudicator directed that PRB pay the Adjudicator direct instead of involving Croudace in the payment process. Whilst this would have prevented Croudace having to issue enforcement proceedings, most adjudications contain terms and conditions to the effect that the parties will be jointly and severally liable for the adjudicator’s fees and disbursements meaning they might have been dragged into the proceedings in any event. One takeaway is that parties should at the outset look to agree how the adjudicator’s fees will be paid if they are successful/unsuccessful in an attempt to avoid similar situations such as those faced by Croudace in future adjudications.

 

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Alexander Jullienne

Associate

alexander.jullienne@collyerbristow.com