Citation: [2024] EWHC 2295 (TCC)
This judgment raised two interesting issues of principle (1) was an adjudicator’s decision as to the liability to pay his fees final or could it be reviewed/reversed by the Court if it found, after trial, that the adjudicator’s substantive decision was wrong, and (2) was a contractual provision for a contractor to pay interest on late payments at 2% above base a substantial remedy for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998.
The Court’s answers to these issues were (1) not on current authority and it was not a pleaded issue in this claim, so it was not an appropriate case for the Court to reconsider the question, and (2) no.
Background
This was the sixth judgment in the series of a dispute originally referred to adjudication by the claimant. The dispute concerned a subcontract under which the claimant had agreed to carry out plumbing installation works at a university. This judgment was concerned with the liability to pay the adjudicators’ fees and interest.
On fees, the central issue was the liability to pay Mr Smith, who had previously ordered the claimant to pay his fees plus interest because it had been unsuccessful in the case before him. However, in subsequent litigation the Deputy Judge concluded that Mr Smith had erred in this conclusion. The issue was therefore whether Mr Smith’s decision could stand in light of this conclusion. The defendant’s case was that Mr Smith’s decision on fees and interest was final and not subject to a final determination or reversal by the Court.
In addition to this issue, the claimant sought interest on: (i) the measured works claim; (ii) the loss of profits damages claim; and (iii) the fees of the other adjudicator, Mr Blizzard.
Decision (Roger Ter Haar KC)
No order made in respect of Mr Smith’s fees. The Deputy Judge concluded that there was no pleaded claim in respect of the adjudicator’s fees (having only been advanced in oral arguments). Further, it was too late for such an amendment to be allowed because its success was contingent on a departure from the decision in Castle Inns (Stirling) Ltd v Clark Contracts Ltd [2005] CSOH 178, which was discussed extensively in the decision. (see paragraphs 25-48).
As to interest, the Court found that the claimant’s claim for loss of profits did not fall within the scope of the Late Payment of Commercial Debts (Interest) Act 1998 (“the Act”). The Court reached the same conclusion in respect of Mr Blizzard’s fees. However, the measured works claim was found to fall within the Act, despite a contractual provision for the payment of interest at 2% above the base rate of the Bank of England. This was because the clause did not create a “substantial contractual remedy” sufficient to oust the operation of the Act. Accordingly, the claimant was entitled to recover at 8% above base rate under the Act.
James Frampton (Keating Chambers) appeared for the Defendant, instructed by Hawkswell Kilvington.
The judgment can be found here.
