Systech International v PC Harrington [2011] EWHC 2722 (TCC)

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Judgment Date: 27.10.2011


(1) An Adjudicator whose decision had been found to be unenforceable by reason of a failure to comply with the rules of natural justice was still entitled to his fees.

Technology and Construction Court, Akenhead J

This case arose from the decision in PC Harrington Contractors Limited v Tyroddy Construction Limited [2011] EWHC 813 (TCC) (for a summary click here). Essentially, Tyroddy Construction Limited (“Tyroddy”) had commenced three adjudications against PC Harrington Contractors Limited (“Harrington”) for the repayment of retention monies in relation to three separate sub-contracts.  The same adjudicator was appointed for each adjudication. He was employed by Systech International Limited (“Systech”). The Terms of Engagement of Appointment of the Adjudicator outlined his charge out rate and stated that “the Parties are jointly and severally liable for payment of my charges”.  The terms and conditions also stated “I shall not be liable for anything done or omitted, including but not limited to negligent acts in the discharge or purported discharge of my role as adjudicator, unless the act or omission is in bad faith”. 

In the adjudications, Harrington  submitted that no sum was due to Tyroddy as they had been overpaid for the works carried out. The Adjudicator found in Tyroddy’s favour, having held that Harrington’s argument that Tyroddy had been overpaid was outside his jurisdiction.  He also ordered that Harrington pay his fees.
Harrington applied to the Court in March 2011 for a declaration that the decisions were unenforceable by reason of material breaches of natural justice in that the Adjudicator had wrongly failed to address Harrington’s defence that Tyroddy had been overpaid.. Akenhead J agreed.  He held that the Adjudicator had unwittingly fallen below the standards which were required to enable the decisions to be enforced, essentially on the grounds that, by ruling wrongly that issues relating to the alleged overpayment were outside his jurisdiction, he had put himself in the position that he could not and would not deal with Harrington’s defence. The Court declared that the decisions were therefore unenforceable.

Subsequently, Systech issued proceedings against Harrington to recoup the Adjudcator’s fees for the three separate adjudications. In its defence, Harrington argued that no sums were due because there was on each of the three contracts of engagement of the Adjudicator a total failure of consideration on the basis that he had produced decisions which were unenforceable by reason of breaches of natural justice. Systech argued that the Adjudicator was engaged to act as an Adjudicator and not simply to produce a decision. There was not a total failure of consideration and as such under the terms of conditions the Adjudicator’s fees remained payable.


The Court was asked to address the following issues:

  • Whether there had been a total failure of consideration by the Adjudicator.
  • Whether there was an implied term of the contracts of engagement that the Adjudicator was obliged to conduct the adjudications in accordance with the principles of natural justice.
  • Whether the Court’s decision in the earlier proceedings that the Adjudicator’s decisions were unenforceable was binding upon the Adjudicator


The Court held:

  • The bargained-for performance in this case was the provision of the role of adjudicator which itself covered not only the production of the decision but also the discharge of the remaining aspects of the role which involved the conduct of the adjudication in the period leading up to the decision.
  • As a result, there was not a total failure of consideration by the Adjudicator, albeit that his decisions had been found to be unenforceable.
  • It was not necessary to imply a term that the Adjudicator would act in accordance with the principles of natural justice since the law already secures that an adjudicator’s decision reached in breach of the rules of natural justice, if serious and significant enough, will be unenforceable. The idea that adjudicators could be sued for breach of such an implied term was contrary to Section 107 (4) of the HGCRA.
  • The Court was satisfied that there were breaches of the rules of natural justice and that the Adjudicator had honestly and unwittingly misunderstood what his jurisdiction was, and, in declining to deal with the final accounts issues, he had put himself in a position in which he was in significant breach of the rules of natural justice.
  • It was unnecessary to decide whether the Court’s earlier decision the was binding upon the Adjudicator but if it had been necessary to decide the point the Court would have held that it ws not.
  • The adjudicator was entitled to the mutually agreed fees of £22,000 plus VAT.

This summary was provided by CMS Cameron McKenna LLP.

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