John Roberts Architects Ltd v Parkcare Homes (No. 2) Ltd

An adjudicator’s contractual power to award legal costs as part of his decision arises only where the adjudicator decides the matters referred. If the referring party abandons the adjudication before that decision, the power does not extend to a free-standing costs award. The court will not imply a term merely because the result appears undesirable or unfair. Implication requires necessity for business efficacy or obviousness in the strict contractual sense. Participation in an adjudication does not ordinarily estop a party from relying on the later loss of jurisdiction following discontinuance. A contractual entitlement to invoke adjudication where a dispute exists does not, without more, create an implied prohibition or damages claim where the referring party mistakenly invokes the procedure without a dispute.

The claimant provided architectural services under a contract incorporating the RIBA Conditions of Engagement, including adjudication provisions based on the Construction Industry Council’s Model Adjudication Procedures. The defendant referred a substantial claim to adjudication but later accepted that no relevant dispute had arisen before the notice was served and discontinued the adjudication.

The adjudicator had already been paid his fees and then awarded the claimant its adjudication costs, assessed at £87,131.04, together with further adjudicator’s fees. The claimant sought to enforce that costs direction or recover the same sum as damages. The defendant contended that the adjudicator lacked jurisdiction after discontinuance. The central issues were the construction of the contractual costs power, implication of terms, estoppel or election, and whether invoking adjudication without a dispute constituted a breach of contract.

1. Claim dismissed. The adjudicator had no jurisdiction to award the claimant’s costs after the defendant discontinued the adjudication.
2. Clause 29 of the amended Model Adjudication Procedures permitted the adjudicator to direct payment of legal costs only “as part of his decision”. The relevant decision was the decision on the matters identified in the notice under clause 20. No decision on those matters had been made. The costs power therefore did not operate independently.
3. The contractual context did not justify a broader construction. The statutory model terms in S.I. 1998 No. 649 did not require provision for recovery of parties’ adjudication costs. It was therefore not startling that the parties had agreed a limited costs power.
4. No implied term gave the adjudicator jurisdiction to award costs after discontinuance. The proposed term was neither necessary to prevent failure of consideration, applying The Moorcock (1889) 14 P.D. 64, nor so obvious that it went without saying. The court did not need to decide whether the business-efficacy and obviousness tests were cumulative.
5. The defendant was not estopped or otherwise precluded from relying on the loss of jurisdiction. Its participation and payment of the adjudicator’s earlier fees amounted only to treating the adjudicator as having jurisdiction under the contract. It did not amount to an election not to discontinue the adjudication.
6. Section 23 of the Arbitration Act 1996 did not assist the claimant. No equivalent statutory restriction prevented unilateral discontinuance of an adjudication.
7. Although the contract contemplated referral of a dispute or difference, the defendant’s mistaken invocation of adjudication did not necessarily breach an express or implied contractual prohibition. The proposed implied term again failed the tests of necessity and obviousness. The court was not invited to decide whether a dispute existed when the first notice was served, but held that there was clearly a dispute by the second notice.