FENICE INVESTMENTS INC V JERRAM FALKUS CONSTRUCTION LTD
Technology and
His Honour Judge David Waksman QC
6 July 2011
The dispute between the employer and the contractor was resolved by the adjudicator making an award in the employer's favour. The adjudicator directed that the contractor should pay him his fees. The adjudicator’s invoiced fees were £19,775 (56.5 hours times his hourly rate of £350). The contractor only paid £5,000 towards the adjudicator’s fees. The employer brought proceedings against the employer for the recovery of the fees in which the adjudicator was not a party.
Judge Waksman held that the employer should recover from the contractor by way of summary judgment the balance of the fees charged by the adjudicator and paid by it to the adjudicator of £14,775 (plus VAT). In giving his reasons the judge stated that the employer was wrong to contend that its claim was a simple enforcement of an adjudication decision and that the adjudicator's determination of his reasonable fees could only be challenged if there was bad faith on his part in setting or claiming his fees via paragraph 26 of the Scheme for Construction Contracts. Instead the appropriate approach to be adopted by the court was to assess what the employer was clearly entitled to as against the contractor by considering on the facts of the case what level of the fees charged by the adjudicator could clearly be found to be reasonable and whether and to what extent the employer acted reasonably in paying the balance of the fees charged by the adjudicator. There was an evidential burden on the paying party to make out at least a prima facie case to say that an adjudicator’s fees were unreasonable and simply putting the adjudicator to proof was not enough. If the paying party properly raised the issue of reasonableness, the court's approach on any assessment should be a robust one with a considerable "margin of appreciation" given to the adjudicator. In the light of the above a party to an adjudication considering a fees challenge should give careful consideration as to whether there was any realistic basis for disputing the fees claimed and take the initiative where necessary. On the facts of the case the adjudicator's hourly rate and the number of hours he spent could not be said to have been unreasonable.

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