CHERN v APILOA CORPORATION

There should be no transfer of the adjudicator’s action for the recovery of his outstanding fees from the Central London County Court to the Technology and Construction Court
 
CHERN v APILOA CORPORATION
Technology and Construction Court
Fraser J
7 November 2018

There should be no transfer of the adjudicator’s action for the recovery of his outstanding fees from the Central London County Court to the Technology and Construction Court

The adjudicator claimed the outstanding of his fees of some £41,000 from the parties in the adjudication. The proceedings were commenced in the Central London County Court. The case was in the TCC list at that court and would therefore be dealt with by a designated TCC judge. One of the defendants (the successful responding party in the adjudication) applied to transfer the case from the County Court to the Technology and Construction Court. The defendant identified the sum in issue as being the adjudicator’s total fees of £168,000 rather than the £41,000 on the face of the claim form because one of the issues in the substantive claim was the reasonableness of the fees generally, which included sums paid on account. The adjudicator did not oppose the application.

Fraser J in refusing the application stated that cases concerning the recovery of adjudicator's fees are often decided by Deputy High Court judges. The case of Fenice Investments v Jerram Falkus Construction was dealt with by Judge Waksman when he was the TCC specialist judge in the Central London County Court. Any suggestion that the calibre of the judges in the Central London County Court is insufficient to deal with issues such as these should be rejected. Whilst the defendant did not put its case as highly as that, its position was that the case in general, in terms of the nature of the issues, meant that it should be dealt with in the High Court. This position should be rejected because the case would be capable of disposal after a two-day trial and was in fact exactly the type of case that ought to be dealt with by a Specialist Circuit Judge.

When boiled down to its essentials, the case was really about the reasonableness of the level of the fees charged and, in particular (i) Whether the adjudicator did in fact spent the time he says he spent doing the activity and (ii) If he did spend the time he says he spent, what he was in fact doing while he was reading and considering the material in order to reach his decision. It was all very straightforward and did not remotely justify the action being transferred to the High Court.

THE FULL TEXT OF THE JUDGMENT OF FRASER J

1. This is an application by the second defendant in a multi-party action that was started in the Technology and Construction list in the Central London County Court. The application is to transfer the case from the County Court to the Technology and Construction Court which, as everyone knows, is a specialist list in the High Court, and part of the Business and Property Courts.

2. The claim is brought by an adjudicator called Dr. Chern who is a well-known adjudicator who name has appeared from time to time in other decisions, and he conducted an adjudication which led to a decision dated 16 August 2017. It was a Scheme adjudication which means it was conducted pursuant to the specific rules of the statutory Scheme which is a statutory instrument. Mr. Hussain who appears for the second defendant points out, and I am making no observations or findings about this, that it was a relatively straightforward adjudication decision.

3. Dr. Chern accepted the position argued by the second defendant throughout. I should say that the second defendant was one of the parties to the adjudication and the decision resulted in a finding that quantum would have been £2 million and the claim was, in fact, nil.

4. What then happened is Dr. Chern, who had been paid some monies on account by the parties, considered that he had been underpaid. He started proceedings against the defendants in the sum of approximately £41,000 to seek recovery of those fees. He started those proceedings against both defendants Apilosa Corporation and AR Architecture Ltd because his case is that the fees are not recoverable on a joint and severally liable basis from either of those defendants, and both of the defendants were parties to the adjudication to which I have referred. Only the second defendants appear before me and it appears that only the second defendant is likely to play any part in the proceedings.

5. The second defendant takes the view that this case, the County Court action should, in fact, be dealt with in the High Court rather than the County Court. I should say immediately that Mr. Hussain identifies that the sum in issue in terms of the fees of Dr Chern is £168,000 rather than the £41,000 on the face of the claim form. That is because one of the issues in the substantive claim is the reasonableness of Dr. Chern's fees generally and obviously these include sums that were paid on account. His total fees were therefore that higher figure.

6. He also points out certain characteristics of the case which he says show that it would be better to be dealt with by a High Court TCC judge. In support of that, he relies on a paragraph in West Country Renovations v McDowell [2012] EWHC 307 (TCC) a decision of Akenhead J as well as numerous other decisions which I will come to in a moment. In that decision, Akenhead J said what sort of work ought to be dealt with in the High Court in London. As he put it in [1]:

"This case has thrown up an administrative issue which affects the practice in the TCCC in the High Court in London, albeit that it is a relatively standard dispute final account-type claim."

7. Essentially, the issue is the extent to and circumstance in which relatively low valued claims should be conflated as High Court judge business within the TCC. At [10] of that he set down certain characteristics of cases which as he says at [10.1]:

"(1) Generally, claims which are for less than £250,000 should be commenced in the County Courts or other High Courts centres outside London which have TCC designated judges.

(2) However, a non-exclusive list of exceptions is as follows…"

There are then two exceptions which are relevant and Mr. Hussain relies on the first which reads:

"(a) Cases involving adjudications, including enforcements and arbitrations may be started in the High Court, irrespective of the financial amount involved; this is justified by the need to build up a body of case law which is consistent in these important areas of construction law business."

8. Pausing there, it is not unusual therefore for an adjudication enforcement of £150,000 to be started in the High Court. That is the correct place for it to be started and it is dealt with as adjudication business in the TCC, and would usually be dealt with by a High Court judge or a Deputy High Court judge. However, the other exception he goes onto at [10(2)](g):

"(g) Claims which cannot readily be dealt with effectively in a County Court or Civil Justice centre by a designated TCC Judge."

9. I should point out that this case is already in the TCC list at the Central London County Court. It will therefore be dealt with by a designated TCC judge because it is in that list, but putting that point to one side, I turn to Mr. Hussain's explanations as to why he says there are important issues in this case which ought to be dealt with by a High Court judge.

10. Mr. Hussain says that a High Court TCC judge is in a better position to judge the complexity of the adjudication itself, the reasonableness of time and the fees charged by Dr. Chern. He points out there were underlying difficulties in respect of Dr. Chern providing his timesheets when asked and there are questions in relation to the conduct both of Dr. Chern requiring payments on account and also the circumstances in which there was unilateral contact with the parties by his clerk (Dr Chern is also a barrister). He also relies upon the fact that Dr. Chern himself refuses to discuss or undertake discussions about his fees.

11. The underlying point of the reasonableness of his fees generally is in issue, and one of the issues is, he submits, sensitive. At the least one of the issues, for example, is the question of how long it would take Dr. Chern to read many thousands of pages submitted to him of the adjudication. Another is the sort of detail which should be included in his timesheets. Mr Hussein submitted that this is a very serious case which could result in substantial overcharging and there is a degree of sensitivity associated with resolving it.

12. Looking at the recently reported decisions which concern adjudicator's fees, they are often of relatively modest value compared to the cost of value of the cases that the TCC deals with generally. They are often decided by either Deputy High Court judges or, in the case of Fenice Investments Inc v Jerram Falkus Construction Limited [2011] EWHC 1678 (TCC), His Honour Judge Waksman QC, as he then was, who is now Waksman J. Prior to his appointment to the High Court bench, he was in fact the TCC specialist judge in the Central London County Court.

13. It seems to me any suggestion that the calibre of the judges in the Central London County Court is insufficient to deal with issues such as these, is a submission which would not gain any traction. To be fair to Mr. Hussain, I am not sure he puts it as highly as that. His position is that the case in general, in terms of the nature of these issues, means it should be dealt with in the High Court.

14. I disagree with him about that. The case is going to remain in the Central London County Court, and would be capable of disposal after a two-day trial. The further that Mr. Hussain sought to persuade me that the detail of the case was such that it ought to be dealt with by a full High Court judge, the more I became persuaded that in fact it is exactly the nature of the case that ought to be dealt with by a Specialist Circuit Judge.

15. In particular, when one boils it down to its essentials, the case is really about the reasonableness of the level of the fees charged by Dr. Chern, whether he did in fact spent the time he says he spent doing the activity and if he did, what he was in fact doing while he was reading and considering the material in order to reach his decision.

16. It is all very straightforward, it does not seem to me that it remotely justifies being transferred to the High Court and therefore, the application fails and this case is going to remain in the TCC list in Central London.