It is well established that adjudicators generally have jurisdiction to recover their fees and decide who should pay them. Paragraph 25 of the Scheme, for example, entitles the adjudicator to fees “reasonably incurred by him”. But what if the paying party believes the fees are excessive?
This was an issue the Court had to consider in Fenice Investments v Jerram Falkus Construction.
Fenice won an adjudication against JFC. The adjudicator’s fees were almost £20K plus VAT which were payable by JFC. JFC argued the fees were excessive and paid £5K saying that was all the adjudicator was entitled to.
As the parties were jointly and severally liable for the fees, the adjudicator’s firm threatened to sue Fenice. Whilst Fenice said JFC should be pursued, it capitulated and paid up to avoid litigation. Fenice then claimed reimbursement from JFC, together with the adjudicator’s and its own legal fees.
JFC said the adjudicator’s fees should be subject to assessment.
The Court agreed that the adjudicator was entitled to his reasonable fees, and that they should be assessed by reference to (a) hourly rate, and (b) time spent on the matter.
In this case, the Court held that an hourly rate of £350 plus VAT was reasonable on the basis that: (a) this was the rate charged in previous adjudications between the parties which JFC had not been specifically objected to; (b) JFC had not specifically objected to the rate in this adjudication; and (c) the adjudicator was a senior professional and the rate was commensurate with his position.
The Court also held that the number of hours spent was reasonable. Therefore, Fenice was entitled to recover the balance of the adjudicator’s fees.
The Court did, however, only allow the adjudicator’s and Fenice’s legal costs in part.
COMMENT: The judgment suggests that an adjudicator’s fees can be challenged if they are not “reasonable”. However, the Court did not expect frequent challenges and lengthy satellite litigation to be realistic. Interestingly, Fenice’s costs of bringing the claim against JFC were significantly reduced by the Court on assessment.
