Introduction

In the case of Steve Ward Services (UK) Ltd v Davies & Davies Associates Ltd [2022] EWCA Civ 153, the England and Wales Court of Appeal addressed the nuanced issue of an adjudicator's entitlement to fees following their resignation from a referral under disputed jurisdictional circumstances. The principal parties involved were Steve Ward Services (UK) Limited ("SWS") as the appellant and Davies & Davies Associates Ltd, represented by the adjudicator Mr. Davies as the respondent. The core dispute revolved around whether Mr. Davies was rightfully entitled to his fees after resigning due to perceived jurisdictional overreach.

Summary of the Judgment

The Court of Appeal upheld the initial decision granting Mr. Davies entitlement to his fees of £4,290 plus VAT and interest. The Court concluded that Mr. Davies acted honestly and diligently, adhering to the terms of his appointment which did not breach the Unfair Contract Terms Act 1977 ("UCTA"). Although SWS contested the adjudicator's entitlement, asserting that Mr. Davies exceeded his jurisdiction by resigning, the Court found that there was a legitimate jurisdictional issue. Furthermore, Mr. Davies was not guilty of bad faith, thereby validating his claim to fees for the work performed prior to resignation. The Court also dismissed SWS's arguments regarding the construction of Mr. Davies' terms of appointment and their applicability under UCTA.

Analysis

Precedents Cited

The judgment referenced several key precedents that influenced the Court's decision:

• TRW Ltd v Panasonic Industry Europe GmbH [2021] EWCA Civ 1558 - Emphasized the necessity for clear spelling out of issues when granting permission to appeal.
• Thomas-Frederic's (Construction) Limited v Keith Wilson [2003] EWCA Civ 1494 - Highlighted that absence of contractual party designation could negate adjudicator jurisdiction.
• PC Harrington Contractors Ltd v Systech International Ltd [2012] EWCA Civ 1371 - Established that adjudicators are not entitled to fees if their decision is unenforceable due to misconduct.
• Yam Seng PTE Limited v International Trade Corporation Limited [2013] EWHC 111 (QB) - Discussed good faith in commercial contracts, albeit tangentially relevant.

Legal Reasoning

The Court dissected the contractual terms governing the adjudicator's appointment and the circumstances surrounding his resignation. The key points of legal reasoning included:

• Jurisdictional Authority: It was determined that Mr. Davies reasonably identified a jurisdictional issue, as the contraction contract was ostensibly between SWS and Ms. Patel, not BIL. The lack of clear agreement from BIL to submit to Mr. Davies' jurisdiction further solidified this concern.
• Entitlement to Resign: Under paragraph 13 of the Scheme and paragraph 31 of the MAP, the adjudicator had an unfettered right to resign, especially in the face of legitimate jurisdictional doubts.
• Clause Interpretation: Clause 1 of Mr. Davies' terms was interpreted to entitle him to fees for work performed unless there was bad faith—a high threshold requiring evidence of dishonesty or unconscionability, which was absent.
• Unfair Contract Terms Act 1977: The Court found no breach of UCTA, as the contractual terms were reasonable, both parties had equal bargaining power, and Mr. Davies had the option to reject the terms.

Impact

This judgment sets a significant precedent regarding the boundaries of adjudicator authority and fee entitlement upon resignation. Key implications include:

• Clarification of Jurisdictional Roles: Adjudicators must diligently verify their jurisdiction, particularly when contractual parties are ambiguously identified.
• Fee Entitlement Conditions: Clear contractual terms are essential to delineate fee entitlements, especially in scenarios involving resignation or disputed jurisdiction.
• Promoting Good Faith Conduct: Emphasizes that adjudicators must act in good faith, and only conduct meeting high standards of honesty and diligence qualifies for fee recovery.
• Guidance for Future Contracts: Parties drafting adjudication contracts will take heed to include precise terms regarding fee arrangements and jurisdiction to avoid similar disputes.

Complex Concepts Simplified

Conclusion

The Court of Appeal's decision in Steve Ward Services v Davies & Davies Associates reinforces the importance of clear contractual terms and the necessity for adjudicators to exercise their authority judiciously. By affirming that Mr. Davies acted within his rights to resign and was entitled to his fees in the absence of bad faith, the judgment underscores the procedural and ethical standards expected in adjudications. This case serves as a crucial reference for both adjudicators and contracting parties to ensure clarity in their agreements and the proper conduct of dispute resolutions.