The Supreme Court allowed an appeal over when interest began to run on costs awarded in an arbitration, ruling that it ran from the arbitrator’s final award on 26 November 1996 rather than from the High Court order enforcing it on 2 July 2001.
The dispute arose from a veterinary partnership formed in 1989 between Tadgh Horan and Thomas Quilter. They referred disagreements about the partnership to solicitor Joseph Dundon, who held hearings between 1992 and 1996. His final award provided that the applicant, Horan, was to receive his costs of the arbitration and witnesses’ expenses, but did not specify their amount.
The High Court later permitted enforcement of the award and ordered Quilter to pay £30,331.65, representing the amount of Horan’s bill of costs, as well as the costs of the court proceedings. The appeal concerned only whether interest on the £30,331.65 should run from the 1996 award or the 2001 enforcement order. No claim was advanced on appeal under the separate provision concerning pre-judgment interest.
Section 34 of the Arbitration Act 1954 provides that a sum directed to be paid by an award carries interest from the date of the award unless the award directs otherwise. Horan argued that “sum” included costs whose amount was quantified later. Quilter argued that the provision applied only to a specified amount and did not cover an arbitrator’s award of unquantified costs.
Giving judgment, Mr Justice Hardiman said the ordinary meaning of “sum” could include an amount not yet specified. He drew on the approach to court-awarded costs, under which the liability arises when costs are awarded and later quantification does not postpone the start of interest. He said the same principle applied to arbitration costs.
The court held that section 34 covered costs as well as other sums directed to be paid under an arbitration award. It ordered interest on the £30,331.65 to run from the date of the arbitrator’s final award, allowing the appeal to that extent. The ruling concerned the start date for interest; the judgment does not state a different principal sum or set out a new calculation of the amount.