Aqua Leisure International Ltd v Benchmark Leisure Ltd

[2020] EWHC 3351 (TCC)  

The adjudication decision had included £12,500 in respect of legal costs under section 5A of the Late Payment of Commercial Debts (Interest) Act 1998. Before HHJ Bird, both parties accepted that the adjudicator had no power (jurisdiction) to award these costs (see Enviroflow v Redhill, Dispatch 207). Here, Mrs Justice O’Farrell had made it clear that the HGCRA required that any contractual provision dealing with the costs of the adjudication process must (i) be made in writing, contained in the construction contract, and confer power on the adjudicator to allocate its fees and expenses as between the parties or (ii) made in writing after the giving of notice of intention to refer the dispute to adjudication. 

There was no such agreement here, and Benchmark said that the adjudicator was therefore wrong in law to award costs and invited the Judge to make a declaration that the costs were not payable. Aqua focused on “jurisdiction” saying that the costs issue was referred to the adjudicator and Benchmark engaged with it, without any general or specific reservation of the position. Therefore Benchmark could not now argue they were not liable for this part of the adjudicator’s decision. 

HHJ Bird considered that the question here was one of jurisdiction in the most fundamental sense. The adjudicator had no jurisdiction to make the award at all because the statute under which the adjudicator purported to act, the Late Payment Act, had no application. It was not surprising that there had been no reservation of rights. Back in 2017, pre-Enviroflow, the parties and the adjudicator applied what had perhaps been a common approach. Enviroflow did not change the law, it explained what had always been the position. Therefore the issues raised by Aqua did not arise and HHJ Bird declined to enter judgment for the costs. 

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