Architect – Contract – Novation – Defendant project manager retaining claimant architect – Site owner subsequently dispensing with claimant’s services – Dispute arising as to sums payable under contract – Adjudicator making award in favour of claimant – Claimant seeking to enforce decision – Whether adjudicator having jurisdiction – Whether defendant establishing novation – Whether defendant establishing bias on part of adjudicator – Claim allowed
In 2008, the claimant architect firm was retained to provide services in respect of the extensive refurbishment and extension of a Grade 1 listed building (the premises). At all material times, the premises were owned by DA, a company incorporated in the Bahamas, which was said to be owned and controlled by L. DA retained the defendant as project manager for the development. The contract for the claimant’s services was expressly stated to be between the claimant and the defendant; the parties entered into a binding contract in February 2008.
Some discussion had taken place over the possibility that another company would employ the claimant. At some stage, the claimant started to invoice another company (Euro), which apparently did not in exist at that time, but which it was thought would be the vehicle by which the development was to be pursued. It was apparently to be registered in Singapore, but did not exist sufficiently exist in law to enter into a binding contract. In July 2008, L asked the claimant to make two alternative proposals: one identical to the contract between the claimant and the defendant and another involving a higher fee and the provision of additional services, in particular contract administration. There was no evidence that L had decided which option to use when, in February 2009, it was decided to dispense with the claimant’s services.
The claimant gave notice of adjudication. The adjudicator, appointed by the Royal Institute of British Architects (RIBA) found decided that the defendant should pay the claimant £76,905 plus interest, daily compensation with interest until payment was made, costs and the adjudicator’s fees. The claimant issued proceedings to enforce that decision.
Issues arose as to whether: (i) there had been a novation whereby the defendant had been replaced by Euro, thus rendering unenforceable a decision by the adjudicator as between the defendant and the claimant; (ii) the contract had been or had become one between the claimant and L; and (iii) the adjudicator was biased, inter alia, regarding his decision on costs.
Held: The claim was allowed.
In the instant case, there was a contractual arrangement for adjudication, albeit constituting a construction contract within section 104(1) and (2) of the Housing Grants, Construction and Regeneration Act 1996. The 1996 Act, in the absence of suitable contractual arrangements for adjudication, would otherwise have imposed statutory rights on the parties to refer disputes to adjudication. The adjudication arrangements set out in the RIBA Standard Form of Agreement for the Appointment of an Architect, which was expressly incorporated into the contract, complied with the 1996 Act. Therefore, it was necessarily implicit in the adjudication requirements of that standard form that adjudication had to be between the two parties to the contract. It followed that where there had been a clear, unqualified and fully retrospective novation by which a new party was substituted for an original party to a contract, the new party could seek adjudication and it was against that party that the other had to seek adjudication. However, on the evidence before the court, there was no realistic prospect of the defendant establishing its jurisdictional challenge on the basis that there had been an effective novation.
The court would not enforce an adjudicator’s decision that he or she had had no jurisdiction to make. Similarly, where the issue of jurisdiction was one that could not be determined summarily, the court would order a trial of the issue. The courts should be cautious when considering jurisdictional challenges particularly where some challenges, on analysis, did not go to the jurisdiction issue. However, in some cases an adjudicator might have jurisdiction to resolve issues if and to the extent that those issues were part of the substantive dispute: Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358; [2006] BLR 15 and Air Design (Kent ) Ltd v Deerglen (Jersey) Ltd [2008] EWHC 3047 (TCC); [2009[ CILL 2657 considered.
Furthermore, the complaint of bias had not been established. A wrong decision by an adjudicator did not give rise to any entitlement to challenge that decision. The defendant’s challenge was no more than a thinly disguised challenge to the correctness of the adjudicator’s decision on costs. It could not be said that the adjudicator was actually or ostensibly biased. If anything, he had acted fairly and within his discretion. Even if he was wrong on the law, the facts or the exercise of discretion, the court would not interfere.
Adjudicators were required to act fairly and in accordance with the rules of natural justice. In the event of a material failure on the part of adjudicator, the courts would not enforce their decisions. However, the courts were constrained to see that challenges were not dressed up as challenges as to fairness when, in reality, they were simply complaints that the adjudicator got the facts or law wrong. Provided that the adjudicator had asked the right questions, the court would not interfere to prevent enforcement of the decision, even if the answer was factually or legally wrong.
Lucie Briggs (instructed by Berrymans Lace Mawer LLP) appeared for the claimant; Sarosh Zaiwalla (instructed by Zaiwalla & Co) appeared for the defendant.
Eileen O’Grady, barrister