Liverpool County Court

His Honour Judge Marshall Evans QC

(Judgment delivered 29 July 1999)

The Claimant entered into a contract with the Defendant to carry out certain building works. A dispute arose. The contract did not contain an express provision for adjudication. Accordingly, the provisions of the Scheme applied. Mr Ronald West was appointed as adjudicator. The adjudicator made an award in the Claimant’s favour for approximately £28,500. In addition, the Claimant had asked the Adjudicator to determine the payment of their costs of adjudication. The adjudicator decided that the provisions of the Scheme gave him the power to do this and he awarded the Claimant 70% of the costs of the adjudication. The Defendant refused to comply with the adjudicator’s decision in regard to the costs element and the Claimant issued an application for summary judgment.

The claimants in this application for summary judgment were the claimants under the adjudication. The adjudicator made an award in their favour of approximately £28,500. The claimants had asked for costs.

He said at paragraph eight of his adjudication: "In their claim the claimants request me to determine the payment of costs of and in the adjudication. Under the Housing Grants Construction and Regeneration Act 1996 I have the power to do this. Whereas in arbitration it is normal for costs to follow the event, in adjudication under the Scheme I may make my decision based on the behaviour of the parties in attempting to resolve their differences. I therefore decide as follows…". He dealt with his own feels and costs, and then he effectively awarded the claimants 70 per cent of the costs of the adjudication, postponing assessment.

[The adjudicator said,] "I consulted Cottam’s book and read Macob Civil Engineering v Morrison Construction judgment. I also referred to the adjudication schemes. Macob gives little guidance on this aspect but philosophises on the reasons for adjudication. A wide variation exists with respect to costs in various schemes. ICI and CIC are specific in that they do not give the adjudicator any power to award costs, whilst the scheme under the Act remains silent on the matter.

"GC/Work/1(1998) in Condition 59 states that the adjudicator has full power to award costs and expenses just like an arbitrator or judge, but that is a reference to a different scheme. I reason that as the scheme under the Act remains silent in comparison with other schemes being specific either way, this leaves the adjudicator the option to award in certain circumstances. If the parties make no mention of costs then the adjudicator cannot himself raise it."

I pause to say that I am not so sure about that if he has got jurisdiction to award costs, because, and I was referred to the scheme, one of the things which an adjudicator can do under paragraph 20: "He may take into account any other matters which the parties to the dispute agree should be within the scope of an adjudication or which are matters under the contract which he considers are necessarily connected with the dispute". However, that is what the adjudicator said.

Essentially, the Claimant says that under Macob this is a decision; the scheme is a straightforward scheme. I should give it a purposive interpretation. To avoid challenge to decisions of adjudicators in the courts, it should simply be enforced subject to the overriding review provisions which in this case, as there is an arbitration clause, will take place in an arbitration should there be one.

In any event, says the claimant, there is power in the adjudicator to award costs. Not so, says the defendant. The adjudicator has no power because that would require a statutory power which there certainly is not expressly, and there are countervailing policy reasons why there should be no power to award costs which make that policy equally as valid as the one advanced by Mr Bowdery, who has argued on behalf of the claimant that plainly there ought to be power to award costs.

Public policy has been stated to be an unruly horse, and indeed it is. I am therefore cautious about public policy, apart from saying at the moment that plainly this scheme needs a purposive construction. It is intended to provide a swift and, no doubt it was hoped, cheap – although the facts in this case rather suggest that it is not as cheap as might have been hoped – means of interim resolution of disputes so that who was to hold the money in the meantime could be determined. But says the defendant, where there is no power to do what the arbitrator has done, you should not blindly enforce a decision just because it is a decision. It is as null and void, in effect they are saying, as if the adjudicator had never been properly appointed.

I do see that there may be and probably will be cases in which there is some fundamental flaw in the process of appointment – and I will go no further than that – as to a decision of the adjudicator which would justify the court in intervening and saying: "This is not a decision of an adjudication under the scheme and accordingly it shall not be enforceable."

I am very doubtful whether a point like the one in this case falls within that area in any event. But, primarily, I decide that the adjudicator has got power to award costs, at least where, as in this case, costs have been expressly sought in the application placed before the adjudicator, and where he has allowed representation, at least on behalf of the defendant by lawyers, and apparently on behalf of the claimant by a firm of dispute pursuing quantity surveyors, whom I am told are the leaders in that specified field of extracting money from contractors up the line, or it may be denying it to contractors down the line.

The scheme is incorporated as applicable by an implied term in the contract by virtue of the section and subsection to which I have already referred (section 114, subsection 5 of the 1996 Act). When you look at the scheme, the crucial parts appear to me to be paragraphs 13 and 16. Paragraph 13 says: "The adjudicator may take the initiative in ascertaining the facts and the law necessary to determine the disputes and shall decide on the procedure" those are the important words "to be followed in the adjudication.

In particular, he may do a great many things, which are set out in (a) to (g), but which represent, in effect, case management in a variety of forms and, by (h), "issue other directions relating to the conduct of the adjudication".

Mr Evans on behalf of the defendant would say that it should be construed – at least he would say if he was still allowed to – eiusdem generis, or he would now have to think of a much more clumsy phrase such as meaning something like the ones before. I think it was intended and plainly intended to be a sweep up clause to give the adjudicator general power to control, regulate, and direct all matters relating to the procedure, its implementation, conduct, and the hearing and so on, and that it is wide enough to give the adjudicator a discretion as to whether it is appropriate in the circumstances of the particular case to make an award of costs, and of course to adjust such award both by assessment of the proper level of the total costs and by proportioning the amount payable by steps, which in the other order the adjudicator in this case in fact took, I add, entirely consistently with the approach adopted in the CPR which must represent the latest word in national policy in respect of the correct approach to the costs of adversarial procedures, even though of course they do not actually apply to the adjudication.

Furthermore, if there were any doubt about that general power that I have derived from 13(h) by paragraph 16.1: "Subject to any agreement between the parties to the contrary and to the terms of paragraph (2) below, any party to the dispute may be assisted by or represented by such advisors or representatives whether legally qualified or not as he considers appropriate."

"(2) Where the adjudicator is considering oral evidence or representations, a party to the dispute may not be represented by more than one person unless the adjudicator gives directions to the contrary".

 It is those last words, again, which indicate to me that the intention is to give the adjudicator a very wide control indeed of the procedures to be adopted in a hearing, or the procedure before it may not involve a hearing, of the adjudication, and all matters ancillary thereto.

Furthermore, the adjudicator having reached that decision, in my opinion, and on my ruling as to the law correctly, plainly it is to be enforced. But I also even if I had doubt about it, think there is great force in Mr Bowdery’s submission that following Macob the adjudicator has made a decision. It is not clear or plain in any sense that it is void, ultra vires, null or anything else.

Furthermore, bearing in mind that this was plainly a substantial construction contract – it was not putting in a window in place of one that was rotten, but part of a major construction project from the size of the sums involved in what was but a part of the work - I would myself incline to the view that it would be appropriate to imply a term that the adjudicator under the scheme took place, to give what in reality is business efficacy to the contract under the doctrine famously expressed in the case of The Moorcock, or as a necessary incident of a contract of this nature, including such a clause for adjudication, in accordance with the principles for implying terms in contract enunciated in the House of Lords.

Summary judgment for the claimant with costs assessment.