Michael Wilson & Partners Limited v John Forster Emmott

A set-off does not extinguish a debt unless the parties agree that it has that effect, or a judgment or arbitral award determines that the cross-claims are to be netted off. A party may waive a jurisdictional objection, but the question depends on the party’s words and conduct in their full context. Express waiver is sufficient, but waiver should not be inferred from statements addressing related demands where an existing application consistently challenges the underlying jurisdiction. Evidence must be read as a whole and against the procedural background known to the parties.

Michael Wilson & Partners Ltd appealed from Master Whalan’s order of 9 November 2019 setting aside a default costs certificate under Civil Procedure Rules 1998, CPR 47.12(1). The certificate concerned costs awarded in arbitral proceedings. The Master held that the court lacked jurisdiction to assess the costs because the requirements of s 63(4) of the Arbitration Act 1996 had not been met.

The appeal was limited to whether Mr Emmott had waived his jurisdictional challenge, or had discharged the certified debt by set-off, through later witness statements. The court considered the statements alongside his earlier application to set aside the certificate and the statutory demand.

1. Appeal dismissed. The Master’s order setting aside the default costs certificate stood.
2. Set-off does not extinguish liability until the parties agree that the relevant cross-claims are to be netted off, or a judgment or arbitral award has that effect. The court applied that principle, citing Stemcor UK Limited v Global Steel Holdings [2015] EWHC 363 (Comm) at [34], and noting its subsequent application in Brown-Forman Beverages Europe Limited v Bacardi UK Limited [2021] EWHC 1259 (Comm) at [26]. No such agreement, judgment or award existed here.
3. The proposition that any party may waive a jurisdictional defect was too broad. The question was whether there had been an express waiver, or whether Mr Emmott’s words and conduct after 13 March 2019 amounted to waiver in the circumstances. Brims Construction Limited v A2M Development Limited [2013] EWHC 3262 (TCC) did not establish the wide and unqualified proposition advanced by MWP.
4. Mr Emmott’s May and July 2019 statements had to be read in the context of his existing application to set aside the certificate, his March statement, and the nature of the several statutory demands and petitions addressed. Read fairly as a whole, they did not amount to an express waiver and did not make his jurisdictional challenge unarguable.
5. The alleged set-off could not have settled the certified debt because MWP had not agreed to it. The appeal therefore failed and was dismissed.

• High Court (Commercial Court): Permission to appeal was granted on ground nine only. The appeal from Master Whalan’s order of 9 November 2019 was dismissed.
• Master Whalan: The default costs certificate issued on 12 February 2019 was set aside under CPR 47.12(1), principally because the court lacked jurisdiction to assess the arbitral costs under s 63(4) of the Arbitration Act 1996.