On 20th September 2022 we held the first in a series of adjudication practical workshops designed to raise and debate the practicalities of various topics which arise during adjudication proceedings.
The next workshop scheduled for 15th December 2022 was very quickly fully subscribed upon release of bookings (but has had to be postponed until early next year, owing to the transport strikes). The topic for the next workshop is ‘Jurisdiction’. I shall prepare another article, such as this one, following that workshop.
The topic for the first workshop was ‘Adjudicator’s Terms and Conditions’. Whilst ‘Chatham House Rules’ applied to the workshop and, therefore, there are some constraints as to what I am permitted to report about it, I set out below some of what I am permitted to report.
Approximately twenty or so individuals, ranging from very experienced adjudicators to those yet to receive their first appointment, attended the workshop. The workshop was delivered and moderated by Sean Gibbs and Dean Sayers (both of whom are practicing adjudicators with many appointments as adjudicator under their belts, in addition to vast experience as party representatives in adjudication proceedings). The following topics were discussed:
Do adjudicators issue their term and conditions to the parties as a matter of course?
Only one individual stated that they do not issue their terms and conditions to the parties as a matter of course. Everybody else did issue their terms and conditions to the parties as a matter of course. The majority of attendees agreed that it was prudent to issue their terms and conditions to the parties at the outset (usually immediately following confirmation of their appointment).
Is sending a questionnaire to the parties a good way to obtain their agreement to the adjudicator’s fees?
It was acknowledged by many in the room that obtaining the parties express agreement to their fees was a rare occurrence. If an adjudicator has any particular concerns as to the parties’ agreement to their fees (and the subsequent payment thereof) then, perhaps, a way to deal with this could be to send a simple questionnaire to the parties at the outset asking questions such as ‘Are the correct parties x and y?’, ‘Is the Notice of Adjudication dated [date]?’, and then including a question ‘Do the parties agree to my rate of [£xxx.xx per hour]?’
Is it a good idea to issue interim invoices during the proceedings so to avoid problems getting paid at the end of the proceedings?
The majority stated that they did not issue interim fee invoices, although a minority did think this was a good idea (whilst acknowledging that they would be unable to withhold their Decision if such invoices went unpaid).
Is it a good idea to issue updated of time spent on communicating with the parties during the proceedings, reading submissions, and suchlike?
Again, the majority stated that they did not do this, although it was acknowledged that this may be helpful in some instances.
How do adjudicators decide what rate they should charge for their services?
The majority agreed that the rates their charged were calculated based upon a combination of their own knowledge and experience of the substantive matter in dispute, their own knowledge and experience acting as adjudicator, the current market rates for adjudicator’s services, and their own overhead costs (such as insurance, offices, IT, stationary, etc, etc).
Have any perceived problems with adjudication costs been solved by the introduction of a variety of ‘low value’ adjudication schemes?
The large majority in the room agreed that the recent introduction of a range of ‘low value’ adjudication schemes (“LVD Schemes”) went little, if any, way to addressing the perceived problem of the significant costs incurred by parties taking part in adjudication proceedings. The majority felt that the more pressing problem for parties was the cost of party representation in adjudication proceedings (something which the LVD Schemes do not resolve). However, it was acknowledged by the majority that the LVD Schemes are attractive to some parties, but in reality the LVD Schemes are only ‘tinkering at the edges’.
What rate is reasonable for an adjudicator to charge?
There was a wide range of rates charged by those in the room (ranging from £225/hr to £400/hr). These rates were calculated based on the factors set out earlier in this article. Furthermore, the majority in the room agreed that any rate in excess of £450/hr would be unreasonable. Yet further still, when it came to preparing their invoices, many in the room stated that they ‘tax’ their own fees anyway (by way of looking at what it is they have been asked to decide and what would be a reasonable fee in the circumstances); therefore, hourly rates become less of a significance.
Should adjudicators provide timesheets with their invoices as a matter of course?
The majority felt this was a bad idea, whilst acknowledging that they kept detailed time records and would, in any event, provide a detailed timesheet upon request by one or both of the parties.
Should adjudicators include a term relating to ‘debt recovery’ in their terms and conditions?
It was unanimously agreed that every adjudicator should, in their terms and conditions, include a term relating to the recovery of any part of their fees which went unpaid by the parties (most commonly done by way of a term setting out what rate would be charged for all time spent pursuing a debt and stating any relevant statutory provisions (such as the Late Payment of Commercial Debts (Interest) Act 1998, the Late Payment of Commercial Debts Regulations 2002 and the Late Payment of Commercial Debts Regulations 2013).
Should adjudicators charge for time spent dealing with any disciplinary complaints?
The majority felt this was a bad idea, potentially unethical, and potentially contrary to the rules of some of the institutions by which they are bound.
Should adjudicators include terms relating to the use of assistants, secretaries, and suchlike?
The room was split on this issue, with some seeing no problem in including such terms and some seeing it as having the potential to cause problems. In any event, everyone in the room acknowledged that including such terms, and subsequently charging the parties in relation thereto, does have the potential to cause jurisdictional issues (as seen in some recent cases reported in the TCC).
Should adjudicators include terms relating to payment in the event of an unenforceable decision?
It was unanimously agreed that, if they wish to be paid in such circumstances, adjudicators should include a term providing for payment of their fees whether or not their Decision is enforceable (but acknowledging that such a term may not be enforceable where the adjudicator is found by the Court to have acted in bad faith)
Other Discussions
i) It was unanimously agreed that adjudicator’s terms and conditions are vital to avoiding problems with payment and suchlike following the service of an adjudicator’s Decision.
ii) It was unanimously agreed that adjudicators should include a term allowing for payment of their fees upon resignation for any reason.
iii) Attention was drawn to the Court of Appeal’s judgement in Steve Ward Services (UK) Limited v Davies & Davies Associates Limited [2022] EWCA Civ 153, in which it was held that [pursuant to the adjudicator’s terms and conditions issued to the parties at the outset of the adjudication proceedings] adjudicator’s fees prior to resignation and fees for debt recovery were both payable at the rate of £325/hr. This judgement underlines the importance of adjudicator’s terms and conditions.
iv) The majority agreed that, save in exceptional circumstances (such as a significant amount of work (unusually) being done between appointment and receipt of a referral), an adjudicator should not be paid (and should not charge a fee) if a referral is never received.
v) There were differing opinions on whether an adjudicator should be paid (and should thus charge a fee) if a referral is received but no further work is done on the matter (such as where a referring party withdraws or the parties settle). In any event, it was acknowledged that if such a payment is to be due then a term to this effect should be included in the adjudicator’s terms.
Dean Sayers, Sayers Commercial Ltd