Construction contract – Dispute – Adjudicator making award in claimant’s favour – Adjudicator ordering payment of interest from specified period – Whether court having discretion to extend interest period – Application dismissed
The defendant employed the claimant to carry out various works in connection with a new vehicle distribution centre. The contract between them was in the standard JCT form (with Contractor’s Design 1998 ed) and provided for applications for interim payments to be made from time to time. In provisions that mirrored those set out in section 110 of the Housing Grants, Construction and Regeneration Act 1996, the defendant was required, within seven days after receipt of such an application, to give written notice to the claimant specifying the amount of the payment proposed. In another provision mirroring section 111 of the 1996 Act, provision was made for the defendant, within a set time, to give a written notice to the claimant. Should the defendant fail to give such notice, it was to pay the claimant the net amount stated in the application for interim payment.
A dispute arose concerning the claimant’s interim application dated 16 May 2007. The claimant contended that, since it had not received the requisite notice by 24 May, it was entitled to the net amount claimed together with interest to run from that date. The matter was referred to adjudication. By his decision dated 14 July 2007, the adjudicator ordered the defendant to pay the claimant the sum of £1,303,704.95 plus VAT together with interest and his fees and expenses. However, he decided that the claimant was entitled to interest only from 2 July.
The claimant issued proceedings and applied for summary judgment to enforce that decision. The defendant sought declarations that the adjudicator had no jurisdiction to make the determination he had. The court confirmed the adjudicator’s jurisdiction and gave judgment to the effect that his decision was enforceable and should be enforced: [2007] EWHC 2421 (TCC).
When the judgment was handed down, the claimant applied, inter alia, for interest back dated to 24 May 2007. This gave rise to a new issue as to whether the court, upon enforcement of an adjudicator’s decision, had a discretion, under section 35A of the Supreme Court Act 1981, to order interest upon any sum adjudicated due and payable for a longer period.
Held: The application was dismissed.
The court had a discretion to award interest under section 35A of the 1981 Act. However, the limits of that discretion were the date upon which the cause of action arose and the date of judgment.
In the present case, the claim was for the enforcement of the adjudicator’s decision. Although that decision was only temporarily binding, it had to be enforced because the contract required adjudicators’ decisions to be complied with once properly given, whether they were right or wrong. Thus, the date upon which the cause of action arose was when the defendant failed to honour the adjudicator’s decision. The claimant had not, as such, sued the defendant for a debt or damages arising from the defendant’s failure to pay the sum due under the JCT contract.
Since the adjudicator had ordered the defendant to pay the sums that he had decided were due no later than 21 August 2007, the cause of action upon which the claimant had to rely arose on 22 August. However, since the adjudicator had sensibly quantified interest up to 21 August and ordered interest at a daily rate of £375.04 until the sum due under the decision had been paid, that sum would be allowable as interest.
Stephen Dennison QC (instructed by CMS Cameron McKenna) appeared for the claimant; Abdul Jinadu (instructed by Moran & Co, of Tamworth) appeared for the defendant.
Eileen O’Grady, barrister
