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Dispute over Contract Adjudicator’s Fees Triggers Debt Recovery Test Case

It is in the nature of contract adjudicators’ work that they cannot please everyone and often have to make decisions that are contrary to the interests of those responsible for paying their fees. Exactly that happened in one High Court case that raised issues of particular interest to debt recovery specialists.

A builder who had been embroiled in a number of disputes with property owners who had employed him objected when the adjudicator ordered him to pay a little under £300,000. The builder’s challenge to the award, on grounds of delay and apparent bias, was rejected by a judge. The builder was ordered to pay £11,721 – that being his half share of the adjudicator’s fees – to the employers, who had initiated the adjudication. On their receipt of that sum, they passed it on to the adjudicator.

Given the delay in him receiving his fee, the adjudicator launched proceedings against the builder under the Late Payment of Commercial Debts (Interest) Act 1998. Despite the low value of the claim, the matter was transferred to the High Court due to the difficulty and novelty of the issues raised.

In upholding the claim, the Court found that, by his conduct, the builder had agreed to pay his share of the adjudicator’s fees. The contract was on the terms contended for by the adjudicator and the builder had enjoyed no right to cancel it. It had been entered into by the builder in his business capacity and was thus a commercial transaction within the meaning of the Act.

In the circumstances, the builder was ordered to pay interest of £283.88 and £100 by way of fixed statutory compensation in respect of late payment. The adjudicator was also entitled to recover his debt recovery costs of £1,469.50. The builder was required to pay any VAT due on those sums.