Fenice Investments -v- Jerram Falkus Construction (2011) CILL Technology and Construction Court
Facts
Fenice contracted with Jerram Falkus ('JF') to design and build its residential development in Camden, London. The parties fell out over delays, and Fenice tried to charge liquidated damages. An adjudicator was appointed by the RICS and wrote to both parties setting out his terms of business and indicating that he proposed to charge £350 per hour. Jerram Falkus did not object.
The Adjudicator subsequently found in favour of Fenice and sent JF a large bill. JF’s solicitors objected that the fees were too high, the rate was too high, and offered payment of £5,000 plus VAT However, the adjudicator was looking for £19,700 plus VAT! He collected payment in full from Fenice on the basis that they were jointly and severally liable even though under his award he had directed that as between the parties, JF should pay all his fees. Fenice then sued JF, who again argued the fees were too high. JF lost and were ordered to pay all of the fees.
HELD
- JF would struggle to convince the court that an hourly rate of £350 per hour was unreasonable when it had failed to make any objection at the outset.
- This hourly rate was not an unreasonable figure for the type of adjudication and the qualifications of the adjudicator.
- In general, the court will use a robust approach to adjudicator's fees (in his or her favour) and will bring "a considerable margin of appreciation" in the adjudicator's favour.
- The court will always take into account that adjudicators have to work at speed, and each adjudicator will approach the task differently.
- As a matter of policy, challenges to adjudicator's fees after the Decision should be discouraged, because if this became prevalent, adjudicators will be discouraged from taking on appointments.
Comment
The way in which this case developed caused considerable embarrassment and difficulty to Fenice. It was "the innocent party" in that JF had been ordered to pay the whole of the adjudication fee and yet Fenice found itself being pursued by the adjudicator's solicitors on the basis that it was, at least in theory, jointly and severally liable. This also caused Fenice the trouble and cost of having to pursue JF in turn.
The court suggested that in these situations, the best way forward would be for the party ordered to pay to seek a declaration as to the reasonableness of the disputed fees. If a party was not prepared to take the initiative then the adjudicator would have to bring proceedings. No doubt he would feel it necessary to pursue both parties in which the case the "innocent" party should confine itself to making a non-admission as to the adjudicator's fees, leaving it to the adjudicator and the "paying" party to argue it out amongst themselves.