Adjudication: John Roberts Architects Limited v Parkcare Homes (No 2) Limited
A responding party was not entitled, on the construction of the adjudication clauses in the contract, to an award of his costs in circumstances where the referring party had discontinued an adjudication after accepting that the adjudicator had no jurisdiction. The contract only gave the adjudicator jurisdiction to decide matters referred to him in the Notice of Intention to Refer and he could only order costs awards as part of his decision on the matters referred to him the Notice. There was no implied term that the adjudicator could make such an award, nor was the defendant estopped from arguing that the adjudicator had no jurisdiction to make a costs award.
His Honour Judge Havery Q.C., Technology and Construction Court
25 July 2005
In October 2002, Parkcare Homes employed John Roberts Architects (JRA) to provide architectural services in relation to certain building works. On 11 May 2004, Parkcare Homes' parent company sent (on behalf of Parkcare Homes) JRA a letter claiming £1,363,834 which it claimed as a result of failings in the standard of service provided by JRA pursuant to the contract. The letter gave JRA 7 days to respond, failing which Parkcare would issue an adjudication. On 21st May 2004, having received no reply, Parkcare served a notice of adjudication. JRA agreed to participate but contended that the adjudicator had no jurisdiction on the basis that (given the limited time JRA had to respond) there was no dispute. Following discussions between the parties, both parties invited the adjudicator to resign, which he did.
On 10th June 2004 Parkcare issued a second adjudication, in the same terms as the previous notice. JRA agreed not to take any points as to the adjudicator's jurisdiction but, when it served its response to the notice, it did raise jurisdictional points. The day after JRA served its response (7th July), Parkcare's solicitors wrote to JRA and the adjudicator accepting that the adjudicator did not have jurisdiction on the ground that no dispute had arisen, and that it was therefore inappropriate for the adjudication to proceed. Parkcare paid the adjudicator's costs up to the date of discontinuance.
JRA subsequently asked the adjudicator for an award of costs, and to for a formal order that Parkcare's claim be dismissed. The adjudicator refused to make the order on the basis that he had no jurisdiction to do so, but concluded that he did have jurisdiction to award costs and he ordered that Parkcare pay JRA £87,131.04. He also ordered Parkcare to pay £14,643.44 in respect of his additional fees following the discontinuance of the adjudication.
Parkcare refused to pay and JRA brought Part 8 proceedings, claiming the £87,131.04 as damages for breach of contract. The contract between the parties incorporated the Model Adjudication Procedures (MAP) published by the Construction Industry Council, with amendments. Clause 20 of MAP stated that the adjudicator "shall decide the matters set out in the Notice…" Clause 29 (as amended) stated that - "The Adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another as part of his decision".
Parkcare argued that the phrase "as part of his decision" (in clause 29) meant that once the adjudication was discontinued, the adjudicator ceased to have any jurisdiction in relation to the dispute, and that he could only order a payment of costs as part of his decision, not as a decision on its own. JRA argued that, given that the contract empowered the adjudicator to award costs, the parties could not have intended that the referring party could discontinue the adjudication, perhaps just before a decision was made which the party believed would be against him, leaving the other party without any remedy to recover his costs.
As to the interpretation of clause 29, the Judge found that the adjudicator could only direct the payment of legal costs as part of his decision as to the matters set out at clause 20. Since the adjudicator had not made a decision under clause 20 (i.e. he had not made a decision on the basis of matters set out in the Notice of Intention to Refer to adjudicate) he had no jurisdiction to decide liability for costs.
The Judge rejected JRA's argument that there was an implied term that the adjudicator should have the power to make an order for costs notwithstanding that one party had discontinued the adjudication. He ruled that terms will only be implied in order to give business efficacy to a contract to prevent a failure of consideration which could not have been contemplated by the parties. Equally, it would not be implied simply because it represents good practice or represents an obvious duty on one party – for a term to be implied on the basis of obviousness it should be so obvious it went without saying. The Judge considered that the term JRA were arguing should be implied clearly fell short of that.
The Court also rejected JRA's argument that Parkcare were estopped from asserting that the adjudicator had no jurisdiction (argued on the basis that Parkcare had initiated the adjudication, concurred in the appointment of the adjudicator and prosecuted the adjudication thereby causing JRA to incur costs) since all Parkcare had done was treat the adjudicator as having jurisdiction in accordance with the contract. Parkcare had not thereby promised not to exercise any power it might have not to discontinue the adjudication.
Finally, the Court rejected JRA's argument that it was a term of the contract that a party would not invoke the adjudication procedure save where there was a dispute or difference properly referable to adjudication (i.e. that the contract entitled a party to invoke the adjudication procedure only where there was a dispute or difference under the contract, and that it could not do so where there was no dispute). The Court held that the situation in which it turned out that a party was not entitled to bring the adjudication (i.e. because it is found the adjudicator had no jurisdiction) is different from a situation in which a party is forbidden from bringing such an action. For similar reasons, there was no implied term to this effect – whilst a person should not invoke adjudication when he knows there is no dispute, it is by no means obvious that he should not invoke adjudication where "he believes, wrongly as it turns out, that there is a dispute". There was no suggestion of bad faith on the part of Parkcare in making its claim.
