Issue 4: Was Mr Davies guilty of bad faith?
"there may be justifiable reasons why the Adjudicator is prevented from determining the dispute referred to him through no fault (or default) of his own (e.g. illness, technical mishap, or the parties withdrawing the dispute from him)"
Coulson LJ had little difficulty in finding (as had the judge) that Mr Davies had acted “with diligence and honesty.” As a matter of principle and for the purposes of clause 1 of the Terms, there was plainly a difference between default or misconduct and bad faith. The latter must involve some form of unconscionable or deliberately unacceptable conduct on the part of the adjudicator. The qualitative difference between the two was also reflected in paragraph 26 of the Scheme, where, liability for the adjudicator's acts or omissions is excluded, unless there is also bad faith. Plainly bad faith was more serious than simple default or misconduct. This difference also explained why, Mr Davies drafted a clause in his Terms so the parties could not avoid the payment of his fees on the basis of an inadvertent mistake on his part. Mr Davies was faithful to his bargain more so than the parties themselves. His conduct got “nowhere close to the higher bar of bad faith”. Subject to UCTA, therefore, Mr Davies was entitled to his fees.
Coulson LJ rejected that submission.
Clause 1 did not differentiate between the myriad different circumstances which might result in the dispute not being determined and no decision being delivered. The clause addressed the fact of there being no decision, not the reasons why there was no decision, much less differentiating between those reasons.
To read such distinctions into Clause 1 would be to rewrite the term.
Moreover, there was no commercial unreality about such an interpretation. It made complete commercial sense. Clause 1 sat easily with paragraph 26 of the Scheme, which exculpated the adjudicator for liability for all acts or omissions save where there was bad faith. Neither was there any justification for limiting the right to fees to situations where the decision was ‘reached’ but not ‘delivered’. That submission by SWS ignored the express provision in the Terms which provided that "in the event of the Adjudication ceasing for any reason whatsoever prior to a Decision being reached, a Fee Invoice will be raised immediately and is due for payment…" [emphasis supplied]. Finally, once Mr Davies had resigned, the MAP no longer applied and, in accordance with the Terms, he was entitled to charge his stated hourly rate for all the work he had done prior to resignation.
Issue 5: Was clause 1 of the Terms contrary to UCTA?
The court agreed with the trial judge, that clause 1 of the Terms was not caught by section 3 of UCTA.
Clause 1 did not mean that Mr Davies was entitled to render a contractual performance substantially different from that which was reasonably expected of him, or to render no performance at all. He had an unqualified right to resign, which he exercised. In any case the clause was not unfair. As had been conceded below, such terms were commonly found - indeed ubiquitous.
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