Steve Ward Services (UK) Limited (SWS) was employed to carry out construction operations at “Funky Brownz” restaurant. The premises are owned by BIL, Ms Vaishali Patel was a director and the majority shareholder of BIL. The works were carried out under an unsigned contract between SWS and Ms Patel, however all invoices were addressed to and paid by BIL.

As at completion of the works, SWS claimed an unpaid balance of £35,974.29. A dispute arose as to whether the works were complete, as well as issues relating to defects and snags. 

In September 2020, SWS began adjudication proceedings against BIL for the unpaid sums. However, the request for nomination of an adjudicator was made before the Notice of Adjudication had been issued to BIL. The Adjudicator resigned. A second Notice of Adjudication was issued to BIL and following this, the same adjudicator, Mr Davies, was nominated.  Mr Davies found that the contract was between SWS and Ms Patel and that BILL was not a party to or identified in the Contract. As a result of this, Mr Davies concluded that he lacked jurisdiction and resigned again. Mr Davies stated he “could not issue a Decision in relation to the contractual rights of one of the contracting parties…where the other contracting party was not a party to the process.” Mr Davies then issued an invoice for £5,148, providing a breakdown of his time charged. SWS refused to pay the invoice because it claimed that Mr Davies had committed a repudiatory breach of his appointment.

The issues before the Court were (i) whether there was a threshold jurisdictional issue and (ii) the effect of the Adjudicator’s Terms and Conditions. In respect of the first issue, Mr Roger ter Haar stated that it would have been wiser for Mr Davies to make inquiries into the parties’ position as to who the contracting parties were and to ascertain whether both parties accepted that he had jurisdiction. There was no dispute as to the identity of the contracting parties or his jurisdiction and therefore resigning on this basis was erroneous. Mr ter Haar, considering whether the Adjudicator was nevertheless entitled to his fees, concluded that the Adjudicator “acted in accordance with what he regarded as being his duty” and this was not a “deliberate and impermissible refusal to provide a Decision.” In addition to this, paragraph 9(1) of the Scheme permits the Adjudicator to resign at any time on giving notice to the parties; therefore the resignation itself was not a breach of Mr Davies’ terms of engagement.

The second issue was the Adjudicator’s Terms and Conditions. Mr ter Haar looked at Clause 1 of the Adjudicator’s T&C’s in relation to fees payable and found that this should be interpreted as meaning that the Adjudicator is not entitled to be paid where there was bad faith. Mr ter Haar did not find that the Adjudicator had acted in bad faith.

The final topic that Mr ter Haar considered was reasonableness under UCTA. As Clause 1 is concerned with payment of fees, and does not refer to contractual performance, it seems unlikely that it would be caught by Section 3 of UCTA. In any event, paragraph 9(1) of the Scheme gives the Adjudicator an unfettered right to resign which is relevant to the contractual performance the Adjudicator is expected to perform. In the event he is mistaken as to Section 3, Mr ter Haar had “no hesitation” in finding that Clause 1 satisfied the reasonableness requirement in UCTA. 

The first takeaway from this case is that an adjudicator should take care to make full enquiries regarding jurisdiction before resigning. However, the case also provides comfort to adjudicators: notwithstanding that the resignation in this case was “erroneous”, the adjudicator got paid, and the judgment suggests that it will only be in the most egregious cases that an adjudicator will be deprived of their fees.