IN THE WEST LONDON COUNTY COUNTY COURT

Case No. 9QT67607

Between:

MR CHRISTOPHER MICHAEL LINNETT Claimant

And

MISS VANESSA NICHOLSON Defendant

JUDGMENT

1. The claimant brings these proceedings for payment of unpaid fees for time spent acting as an adjudicator in a construction dispute between the defendant and her building contractor Rupert Cordle Town and Country Limited (Cordle). The work was carried out between 7 November 2008 and 14 January 2009. It seems not to be disputed by the defendant that the claimant did carry out the work charged on his invoice, that the hourly rate charged is correct and that the amount claimed is arithmetically correct

2. The claimant contends that the only legal basis for non-payment of an adjudicator's fees would be if he acted in bad faith. He states that although the defendant uses the words "bad faith" in her defence she provides no evidence that he did act in bad faith.

3. The claimant, helpfully, has prepared a very detailed witness statement in which he puts forward his own case but also identifies the points made by the defendant and he deals with those points in turn.

4. Adjudication was introduced into the construction industry by Part 2 of the Housing Grants, Construction and Regeneration Act 1996 (the Act). The contract between the defendant and Cordle in fact was not caught by the adjudication provisions of the Act but it is the claimant's case that the relevant terms of the Act have found their way into the defendant's contract with Cordle. At paragraphs 29 to 34 of his witness statement the claimant lists the key provisions of the Act. It does not apply to a construction contract with a residential occupier which for these purposes the defendant was in her relationship with Cordle.

5. It is the claimant's case that the defendant was a residential occupier and on the facts of this case did obtain the benefit of adjudication by including suitable adjudication provisions in the contract. So a residential occupier who could not obtain the benefit of adjudication by statute could do so by contracting. In this case there was in fact a dispute between the defendant and Cordle as to which form of contract applied to the works carried out at the defendant's property and whether the contract had been evidenced in writing. The claimant decided that there was evidence of a written contract and that the terms were those set out in the JCT Agreement for Minor Building Works 1998 edition. Clause 0 of that contract provides for disputes to be resolved by adjudication with provisions similar to those set out in the Act. Condition 08 provides that the adjudicator shall not be liable for anything done or omitted to be done in the discharge or the purported discharge of his functions as adjudicator unless the act or omission is in bad faith. Further, condition 06 states that the adjudicator in his decision shall state how payment of his fee and reasonable expenses is to be apportioned as between the parties and in default of such statement the parties shall bear the cost in equal proportions. Further the parties "shall be jointly and severally liable to the adjudicator for his fee and all expenses reasonably incurred by the adjudicator pursuant to the adjudication".

6. Disputes having arisen between the defendant and Cordle a Notice of Adjudication was served by Cordle on the defendant on the 3 November 2008. The Royal Institution of Chartered Surveyors appointed the claimant as adjudicator on 7 November 2008. In the adjudication both parties were represented by solicitors.

7. It is not necessary for my purposes to go into the detail of the Referral but I should note that the referral document contained about 2000 pages. On 11 November 2008 the defendant's solicitors wrote to the claimant to challenge his jurisdiction and one issue was whether the parties had agreed the terms of contract in writing, the significance of which, if not, would be the claimant would have no jurisdiction to act as adjudicator. Substantial representations were made by both parties on this issue and on 18 November 2008 the claimant notified the parties of his decision on the jurisdictional challenge, it being his decision that he did in fact have jurisdiction.

8. On the 27 November 2008 the defendant served her Response to the Referral, another voluminous document running to about 800 pages. This contained further submissions on the jurisdiction issue. On the 8 December 2008 Cordle served a Reply to the Response, another substantial document which in turn was followed on 11 December 2008 with a Response to the Reply by the defendant. The claimant issued his decision on the 12 January 2009 and that decision was to the effect that the defendant had underpaid Cordle by a sum just in excess of £100,000, finding that many of the reasons for the multitude of deductions made by the defendant to be of very little or no merit.

9. The claimant's fees, inclusive of vat were £10,381.05. Having decided that Cordle was largely successful the claimant apportioned fees and expenses entirely to the defendant, recording the fact that the parties remained jointly and severally liable, and then reserving the right to seek payment from Cordle in the event of default by the defendant. In fact the claimant has recovered half of his fees from Cordle and only sues for the balance. In subsequent correspondence, on the issue of the outstanding fees, the defendant, on 30 March 2009, sent a letter to the claimant stating that the main reason for non-payment was the claimant's lack of jurisdiction and breach of the rules of natural justice. The claimant replied on 31 March 2009 referring the defendant to the case of a Linnett v Halliwells LLP as authority for an adjudicator's right to payment where a party participates in the adjudication process, even if that participation is on a without prejudice basis to its contention that the adjudicator did not have jurisdiction to act. The defendant does not, in this case, seek to argue that she did not in fact participate in the adjudication and indeed all the evidence is to the contrary. She participated extensively at each relevant stage and I find that as a fact.

10. Turning to the defence the defendant repeats the contention that she never accepted that the adjudication was to be the method of dispute resolution between herself and Cordle. She makes the point that she repeatedly invited the adjudicator to withdraw from the adjudication process and "entered the adjudication on a without prejudice basis and maintained that status". The claimant accepts that he had to decide on whether the parties had entered into a contract, that this was a very complicated and difficult matter to deal with, especially in the time available. In his decision the claimant confirmed that the issue was not clear cut but that there was sufficient evidence to indicate that a contract in writing had been agreed. The claimant's contention is that whether he was right or wrong in this decision he remains entitled to be paid his fees. The claimant submitted that adjudication was intended to be a rough and ready approach to dispute resolution, intended 10 find a quick and cheap means of resolving disputes that occur in construction contracts which could not realistically be referred to arbitration or courts, not least for costs reasons. He submitted that it was made clear in the case of Linnett v Halliwells that if a party considers the adjudicator did not have jurisdiction to act that party should decline to take part in the adjudication if it wanted to avoid liability for fees and expenses. Having considered that case I am satisfied it is authority for that proposition and for the proposition that participation in the adjudication process results in liability for fees and expenses even if that participation is on a without prejudice basis.

11. So it seems to me I am bound to come to the conclusion that the defendant cannot escape liability in this claim on the jurisdictional point.

12. In her defence the defendant also alleges that the claimant allowed monies to the contractor but completely failed to deal with or even refer to her counterclaim. This was according to the defendant a breach of the rules of natural justice. It is the claimant's case that an adjudicator has no power or jurisdiction to deal with a responding party's "counterclaim". He puts no authority before me but submits this is as far as he is aware trite law. The claimant submits that if a responding party wants to have a counterclaim considered at the same time as the claim that party must commence a separate adjudication and try to have the same adjudicator appointed. It is for this reason the claimant suspects that the defendant's solicitor was careful not to use the word "counterclaim" in the Response to the Referral, rather submitting that the defendant had suffered loss and damage which she sought to apply by way of set off, alternatively as an abatement. The defendant's submission was that Cordle left the works incomplete and in a defective state. The claimant decided that the works were practically complete by 14 May 2008 so rejecting the defendant's submission. So clearly the claimant contends that the allegations made by the defendant were considered in the adjudication as part of the process leading to the claimant's decision. The claimant accepts with the benefit of hindsight he might have dealt with this in a better way by including a sentence at paragraph 43 of his decision stating for example:-

" In the light of the above decision, I find that works were not defective and the claims made in paragraphs 7 and 8 of Miss Nicholson's witness statement are therefore rejected".

The defendant has put forward no authority to challenge the claimant's reasoning on the counterclaim issue and so I come to the conclusion that this part of the defence fails.

13. It is the defendant's case that the claimant should not have made her liable for all of hi s fees and expenses. It seems to me that the claimant having come to the conclusion that there was a contract in writing, that he had jurisdiction and that Cordle was largely successful, he could make the costs order he did, given his powers. On the subject of the claimant's fees the defendant also expresses surprise that these increased from his "typical fees £6256 to something in excess of £10,000". It is clear to me that in writing to the parties in November 2008 in putting forward the figure of £6256 he was referring to historical average. There was certainly no quote to which the claimant could be held.

14 The defendant points out that the adjudicator could have sought payment of the full amount of his fees from Cordle. No doubt about that, the parties being jointly and severally liable. It seems to me the claimant had a discretion; he could seek payment from one or both parties. There is no and can be no requirement that the claimant seeks to recover his costs from for example the referring party or only the successful party or indeed only the losing party. The claimant had a wide ranging discretion.

15. The defendant also placed reliance on the judgement of Teare J. in proceedings between Cordle and the defendant. Cordle sought summary judgment against the defendant for monies due. It is clear that any decisions made by Teare J. were in the context of the application before him, an application for summary judgment. The application did not succeed. He came to the conclusion that an application for summary judgment was not the place to consider the complex issue of whether or not there was a contract in writing. So far as I am aware that case has never gone to trial and so there is no decision on whether there was a contract in writing or not. This is not an issue that I am asked to decide nor need I decide in the context of this small claim.

16 Another part of the reasoning for refusing the application was the failure of the claimant to deal with the counterclaim in the adjudication process and the defendant relies on this. Teare J came to the conclusion that the claimant as adjudicator should have dealt with the counterclaim before any question of enforcement of Cordle's claim arises. Of course the claimant was not a party to that case and so had no opportunity to advance the arguments set out in his evidence on which I have already made comment. The claimant's position is that Teare J. may have had "poor submissions on this issue" and that the parties failed to explain the points detailed at paragraphs 133 to 138 of the claimant's witness statement. The defendant has put no evidence before me to the contrary and so bearing in mind the nature of the application before Teare J. I come to the conclusion that there is nothing in his judgment that binds me or assists the defendant on this issue.

17. I come to the conclusion that there is no evidence of "bad faith" on the part of the claimant and no evidence of breach of the rules of natural justice.

18. It follows the claimant is entitled to judgment on his unpaid fees of £4513.50 plus VAT of £677.02, a total of £5190.52.

19. The claimant also seeks payment of interest pursuant to the Late Payment of Commercial Debts (Interest) Act 1998, which he incorporates at section 8 of his Terms of Engagement. However s.2 of that Act dictates that such interest can only apply in a contract for the supply of goods or services where the purchaser and supplier are each acting in the course of a business. The claimant accepts the defendant was a residential occupier in terms of her relationship with Cordle, and there is no evidence before me that the defendant was a business for these purposes, and so it is my judgment that the claimant cannot apply the 10% rate he seeks. He should be limited to 8%, being the rate applicable under the County Court Act, which means 99p per day for the period 3 February 2009 to 5 February 2010, namely £364.32.

20. The claimant also pleads entitlement to contractual costs pursuant to section 9 of his Terms and Conditions:-

" The Parties further agree to indemnify me against any costs arising out of my work in connection with the adjudication."

So he seeks to recover the cost of time spent in the recovery of his fees, which in my judgment comes within the contractual provision on any interpretation of the wording. The hourly rate claimed is £170 and the claimant's evidence is that he has spent a total of24.1 hours including 2.6 hours up to commencing this action, then preparing the claim form, reading the defence, completing the allocation questionnaire, preparing his witness statement, and preparing for and attending the hearing, including travel.

21. CPR 48.3 deals with costs payable pursuant to contract. Unless the contact expressly provides otherwise, those costs are presumed to be costs which have been reasonably incurred and are reasonable in amount so on the terms that apply here I must consider these costs on that basis.

22. The item of claim which requires close scrutiny is 14.1 hours for the preparation of the claimant's witness statement. That statement is an extremely well prepared document, meticulous in detail and extremely helpful to the court. However bearing in mind this claim was allocated to the Small Claims Track, the value of the principal claim and, I have no doubt, the claimant's knowledge of the issues in this case and his grasp of the relevant facts, I am not satisfied that this part of the costs was reasonably incurred or reasonable in amount. In my judgment 5 hours for the preparation of a statement should be allowed, therefore disallowing 9.1 hours at £170 per hour namely £1547.00 plus vat, £270.73, a total of£1817.73. The claimant is also entitled to judgment for his contractual costs in the sum of £2996.25. In addition he is entitled to recover £435.00 for court fees.