Show me the money - Croudace Homes Ltd v PRB Wiring Solutions Ltd [2020] EWHC 2139 (TCC)

The Technology and Construction Court (TCC) has long been reluctant to uphold challenges to the fees charged by adjudicators. This position was recently reaffirmed in Croudace Homes Ltd v PRB Wiring Solutions, [1] where the TCC enforced an adjudicator’s decision requiring the defendant to pay the adjudicator’s fees and expenses.

Background

Croudace Homes (CH), had engaged PRB Wiring Solutions (PRB) to be its electrical contractor on a development. The contract allowed CH to terminate PRB’s appointment at any time, on notice and without liability for any resulting loss or damage to PRB.

CH exercised its right to terminate and subsequently commenced an adjudication seeking a declaration from the adjudicator that it had been entitled to do so and that they had no liability to PRB as a result. PRB disputed CH’s interpretation and fought the adjudication.

In finding for CH, the adjudicator held that CH had been entitled to terminate and had done so in accordance with the contract. The adjudicator determined that PRB was liable for the adjudicator’s fees and expenses which CH should pay and PRB reimburse.

PRB accepted they were liable to pay the fees but disputed the amount charged on the basis it did not reflect the true value of the adjudicator’s work. PRB sought to rely on the amount charged by a different adjudicator in a separate adjudication to support its case. Alternatively, PRB sought a stay of execution whilst a damages claim it intended to issue in relation to the separate adjudication was resolved.

CH, relying on Harris Calnan v Ridgewood, [2] argued that as PRB’s submissions were bound to fail it was entitled to the costs of the adjudication on an indemnity basis.

Judgment

The TCC held that:

1. PRB could not challenge the reasonableness of the adjudicator’s fees
2. The existence of another adjudication decision was not a reason to grant a stay of execution and
3. CH could recover the costs on an indemnity basis

The TCC noted that PRB had taken no action to challenge the adjudicator’s fees prior to CH paying them. It was therefore too late for PRB to raise an argument of quantum before the court.

The TCC further determined that PRB’s argument was flawed as it is not reasonable to compare one adjudicator’s fee to another. There is no obligation on adjudicators to charge the same or similar fees to one another. Even if it had been open to PRB to argue this point, there was no reasonable basis upon which it could be argued that the adjudicator’s fees in this case had been too high.

Although PRB argued it had been successful in the second adjudication, the decision in that adjudication had not identified a sum of money as due or owing to PRB. There was therefore no sum due to PRB that could be set-off against the sums it was liable to pay. In any event, the court could not allow a stay of execution against an adjudicator’s decision because of prospective claims. In applying Squibb v Vertase, [3] the TCC held it was not appropriate to grant PRB’s request and that CH was entitled to judgment in the claimed sum.

In considering costs, the TCC applied Harris Calnan v Ridgewood, [4] confirming once again that parties seeking to challenge adjudication enforcement should be discouraged from running arguments doomed to fail. It was therefore appropriate for costs to be summarily assessed on an indemnity basis.

Comment

This case makes clear that parties should think very carefully before challenging an adjudicator’s fees. If there is a concern that such fees are disproportionate to the dispute in question or to the value of work undertaken by the adjudicator then these should be raised as early as possible and certainly before the other party has paid them.

In our experience adjudicators are always very careful to clearly set out their terms of remuneration during the appointment process. That being said, the very nature of adjudication does not always allow much freedom of choice and often parties will have elected to use a nominating body to select their adjudicator, which can leave parties with the feeling they are stuck with the fees charged by the person appointed. Where a party has concerns over the fees being charged by an adjudicator, it is advisable to raise these at the same time as any other concerns relating to the adjudicator’s appointment such as issues of jurisdiction and natural justice.

The discomfort around the uncertainty of adjudicator’s fees has not gone unnoticed by providers of adjudication services and there are increasingly more options for fixed fee adjudications in cases where this is appropriate. One example is the low-value dispute adjudication service TeCSA formally added to their services in January of this year. This provides a scale of fixed fees depending on the amount in dispute up to a maximum claim value of £100,000.

Of course, checking the terms of an adjudicator’s remuneration or taking advantage of the fixed fees a low-value adjudication service offers does not provide control over the total amount charged compared to the value of work received as was the issue in this case. However, it does allow the parties to gauge the potential costs of the adjudication and to assess the costs throughout the adjudication process to ensure any issues with fees are raised as quickly as possible.