Linnett v Halliwells Llp

An adjudicator’s contractual right to payment depends on an agreement with the relevant party, which may arise expressly or by conduct. A responding party that challenges jurisdiction but continues to participate requests the adjudicator to carry out work and will generally be liable for the adjudicator’s reasonable fees and expenses, even if the adjudicator ultimately lacked jurisdiction. A party that raises jurisdiction and withdraws without participating will ordinarily incur no such liability. Procedural non-compliance with an adjudication timetable does not automatically invalidate the adjudication where the breach concerns detailed procedural steps and the adjudication remains validly constituted. An express adjudication clause remains enforceable despite an alleged oral variation of the underlying construction contract.

The claimant was the adjudicator appointed in an adjudication between ISG InteriorExterior Plc and Halliwells LLP concerning fit-out works. Halliwells challenged the adjudicator’s jurisdiction, first alleging late service of the referral and later alleging that the construction contract had been varied orally and was no longer wholly evidenced in writing.

Halliwells nevertheless participated in the adjudication, made submissions on jurisdiction and the merits, and invited the adjudicator either to withdraw or to proceed after revising the timetable. The adjudicator rejected the jurisdictional challenges, decided the dispute and apportioned his fees and expenses to Halliwells. Halliwells refused payment. The central issues were whether a contractual or restitutionary liability to pay arose, whether the adjudicator had jurisdiction, and whether Halliwells could rely on its jurisdictional objections after relying on the adjudication decision.

1. Liability for fees. The adjudication process involved an agreement between the construction parties and a separate agreement between the adjudicator and one or both parties. The statutory adjudication provisions did not themselves confer a right on the adjudicator to payment. ISG had expressly accepted the adjudicator’s terms and was liable on that agreement.
2. Halliwells’ silence did not amount to acceptance of the adjudicator’s terms. However, its letter requesting withdrawal or, alternatively, revised directions and continued participation amounted to a request that the adjudicator proceed. A contract was therefore formed by conduct, with an implied obligation to pay reasonable fees and expenses. Halliwells was jointly and severally liable with ISG for those reasonable sums. Alternatively, the adjudicator had a restitutionary claim because Halliwells had accepted the benefit of work carried out at its request.
3. A jurisdictional challenge did not itself alter the position. A party that withdrew and took no further part would ordinarily make no request for work and would not be liable absent agreement. A party that participated without prejudice generally remained liable for reasonable fees, although an invalid adjudication decision could not allocate fees between the construction parties or support recovery under the adjudication agreement.
4. The referral was served on Halliwells within time, but accompanying documents reached the adjudicator late. This breached clause 41A.4 but did not invalidate the referral. The failure was a detailed procedural defect, not a fundamental failure to constitute the adjudication. Clause 41A.5.6 also applied to this procedural non-compliance. The court distinguished defects which would deprive an adjudicator of jurisdiction, such as a fundamentally invalid appointment.
5. An express adjudication provision complying with Housing Grants, Construction and Regeneration Act 1996, s 108 remained effective despite an alleged oral variation. Section 107 did not invalidate the adjudication clause, and the absence of evidence of any oral variation provided an additional reason for rejecting the challenge.
6. Halliwells had relied on the earlier adjudication decision in the Second Adjudication. The doctrine of election prevented it from approbating and reprobating that decision. Judgment was therefore given for the adjudicator’s reasonable fees and expenses, with the parties invited to agree the order and make written submissions on ancillary matters.

First-instance proceedings in the Technology and Construction Court. No appeal is stated in the judgment.