Jurisdiction—disputed right to interest—effect of second award on enforcement of first award
when validity disputed

See Actavo UK Ltd v Doosan Babcock Ltd22

The Claimant carried out scaffolding and painting works for the Defendant contractor. A dispute
over payment of an interim payment application was referred to adjudication. The
adjudicator awarded the Claimant £630,000 and held that the interest provisions of the Late
Payment of Commercial Debts (Interest) Act 1998 (LPA) applied (the first award).

A dispute arose over the final account and the Defendant commenced adjudication proceedings
to determine its value. The same adjudicator awarded the Claimant £60,000 on the final account
(the second award).

Before the hearing of the Claimant’s application to enforce the first award, the Defendant amended
its defence asserting

a) the adjudicator had erred in making an award of interest under the LPA; and

b) seeking to reduce the amount due to the Claimant to

£60,000 in line with the second award.

On interest the Defendant argued further that the point was short and self contained
and could be determined without evidence at the hearing of the summary judgment application. The
Court held that even if the adjudicator was

wrong in awarding interest under the LPA that was a matter of fact and or law as it went to the
proper construction of the contract, the application of the LPA, and, on the facts, whether there
was a previous course of dealing between the parties giving rise to an agreement to apply the LPA.
Thus it clearly fell within the adjudicator’s jurisdiction. It was a case of pay now argue later
and it was not appropriate for the court to determine that issue by way of Part 8 claim at the
hearing of the summary judgment application as it required evidence about the previous course of
dealing and could not be settled simply on the documents before the court.

The effect of the second award depended on whether it was in time as the Defendant
contended or out of time as the Claimant maintained. There was confusion over an extension of time
for the second award in the absence of which the award was invalid. Evidence would be required to
determine that issue and a further date had to be fixed for that.

Judgement was entered for the full amount under the first award, with the undisputed part payable
within a week and the disputed balance to be paid after the hearing of the Defendant’s Part 8 claim.

 

This article was originally written and published on the internet by Slater Heelis on 07/06/18.

 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

 

BDAS specialise in: providing contract advice, resolving construction disputes, managing construction claims & adjudications and will give you competitive, independent advice tailored to your specific construction problems.

If you could benefit from this please call Jon now on 07795 231 231 or email: Jon@BDASweb.com