3) Jurisdiction to award interest – waiver – severance Aqua Leisure International Ltd v Benchmark Leisure Ltd [2020] EWHC 3511 (TCC) HHJ Bird Introduction The Late Payment of Commercial Debts (Interest) Act 1998 (‘LPCD’) introduced a statutory right to interest and fixed compensation for the late payment of commercial debts whenever the contract did not make adequate provision for the payment of interest. It was comparatively recently that the courts decided that an adjudicator does not have power to award legal costs under the LPCD[9]. It is well established that in the right circumstances a court has power to sever an adjudicator’s award (the bad from the good) and enforce the good part only. This power is available where part of the decision is made without jurisdiction. The facts Are you going to Scarborough fair? If you go to the Sands, North Bay you will find water rides and other attractions which the defendant, Benchmark, engaged the claimant, Acqua, to design supply and install. There was a dispute over payment which Acqua referred to adjudication. The adjudicator ordered Benchmark to pay Acqua £200,537 within 7 days. The sum awarded included £12,600 for legal costs pursuant to LPCD. Following negotiations the parties reached a compromise agreement in late August/early September 2017 under which Benchmark would make certain payments to Acqua,
Lord Clark decided that the defenders had not made an appropriate and clear reservation such as was required[8]. Therefore they had acceded to the adjudicator’s jurisdiction to decide whether or not the July 2018 agreement varied the subcontract or was a new and separate agreement and thereby waived their right to challenge it later on at the enforcement stage. It mattered not whether the adjudicator was right or not in finding it was a variation of the subcontract. Failure to exhaust jurisdiction This issue concerned the question whether the design costs were covered by a clause in the determination provision. It was a point the adjudicator had addressed before concluding the clause covered design costs. He did not overlook a material issue.
The decision was enforced.
Comment Lord Clark considered both English and Scottish authorities on the question of the requirements for a jurisdictional reservation to be appropriate, clear and timely and the consequences of failure meet them. He regarded what was said in the Response and the Rejoinder as “hinting at a challenge” rather than making one. Clear words are needed from the outset to protest jurisdiction and state plainly that a party will not accept or regard itself as bound by a decision on the contested issue. Contrast this with the situation where the issue is not inherent in the adjudication notice and only arises during the course of the adjudication, when obviously the protest can only be made once the protesting party becomes aware of the facts and matters giving rise to the lack of jurisdiction. A good example would be where a new or different claim is introduced in or by the referral evidence or a later submission.
[8] See Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2019] EWCA Civ 27 [9] See Enviroflow Management Ltd v Redhill Works (Nottingham) Ltd [2017] EWHC 2159 (TCC)
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