John Sisk & Son Ltd v Carmel Building Services Ltd

On an appeal on a question of law from an arbitrator, the court accepts the arbitrator’s factual findings. It intervenes on mixed questions of fact and law only where the correct legal test could not reasonably have produced the result reached. A contemporaneous valuation may provide a proper evidential starting point without transferring the legal burden of proof. Global or total cost claims are not inadmissible in principle, but involve added evidential difficulties. A contractual interest clause confined to interim payments is not a substantial remedy for late payment of a termination account, so statutory interest applies.

The claimant contractor appealed under Arbitration Act 1996, section 69, against a partial arbitration award concerning sums due following the defendant subcontractor’s insolvency and termination. The appeal raised three questions: the burden of proof and use of a prior valuation under the termination payment clause; whether the contractor’s set-off claim was an impermissible global or total cost claim; and whether contractual or statutory interest applied.

The arbitrator awarded the subcontractor sums for work, late-payment compensation and interest. The contractor sought variation or remission of the award.

1. Approach to the appeal. The court dismissed the claim on all three issues. Appeals under section 69 involve determination of the legal question, but arbitration awards are read reasonably and commercially. The court accepts the arbitrator’s findings of fact. On mixed questions of fact and law, intervention is justified only where application of the correct legal test necessarily leads to a different result. The court must also guard against factual issues being presented as questions of law.
2. Burden of proof and valuation. The legal burden remained on Carmel to prove the value of work executed but unpaid, on the balance of probabilities. The arbitrator’s reference to an evidential burden on Sisk merely identified the practical evidential hurdle created by Sisk’s earlier, agreed valuation. Treating that valuation as the best available starting point was a factual finding within the arbitrator’s jurisdiction. It was not treated as conclusive and did not reverse the legal burden.
3. Global or total costs. The principles in Walter Lilly v Mackay were correctly understood. A global or total cost claim is not barred in principle. It carries added evidential difficulties, including proof that the claimed costs were properly incurred and, where relevant, that the hypothetical comparative cost was financially valid. The arbitrator rejected Sisk’s primary claim on the evidence, so no material error of law arose.
4. Interest. Properly construed, clause 4.10.5 concerned interest on late interim payments under clause 4. It did not provide a remedy for late payment of sums due under clause 7.7.4 following termination. Clause 4.12 contained a separate provision for final payments, reinforcing that construction. The statutory interest provisions therefore applied. The court’s reasoning differed from the arbitrator’s, but the result was upheld.
5. The court permitted Carmel to raise a new point concerning clause 7.7.3 because it was a pure question of law and caused no irremediable prejudice. It nevertheless found the point unnecessary to the result and, if required, would have rejected it. The parties were invited to draw up an order and agree outstanding matters, including costs.

The judgment does not state any prior court decision in the same litigation. It was an appeal from a partial arbitration award dated 20 November 2015 under section 69 of the Arbitration Act 1996.