Claiming interest in construction contract disputes By Belinda Green As readers will know, disputes arising under construction contracts are often resolved by reference to adjudication under the Construction Contracts Act 2002. A claimant will have various reasons for making a claim. But what a claimant wants out of the adjudication is almost always the same: they want the adjudicator to make a determination that the other party has to pay the claimant a sum of money. Because the money is overdue, most claimants will claim interest on that sum as well. So, what is the basis for claiming interest when a dispute is before an adjudicator? Interest under the contract The starting point is always the terms of the contract. If the claimant can point to a particular clause in the contract that allows them to claim interest on overdue sums, then the adjudicator can make a determination that interest is payable at the contract rate as a debt due under the terms of the contract. The respondent can raise the usual range of arguments to defeat a claim for interest. For example, the respondent might argue that the terms of the interest clause have not been met. Or if the interest rate under the contract is particularly high, a respondent might argue that it is a penalty and so unenforceable – although the scope of the law on penalties may be less wide than we previously thought, given the Supreme Court’s decision in 127 Hobson Street Limited v Honey Bees Preschool Limited. 1 Where the contract does not have an interest clause If there is no contractual entitlement, ie where there is an applicable clause in the contract that allows the claimant to charge interest on an amount due, then all is not lost. A claimant may still be able to obtain a determination that the other party is liable to pay interest on the basis of a common law damages claim. Interest as a common law damages claim If there was any doubt before, the 2020 High Court decision in Haskell Construction Limited v Ashcroft2 has confirmed that an adjudicator has the power to award damages for breach of contract. A claim for interest where there is no contractual right to claim interest is an example of a claim for common law damages. In any claim for damages, the claimant needs to prove that it has suffered a loss. In the case of an interest claim, the claimant might provide evidence that they themselves had to pay interest, for instance bank statements confirming the overdraft rate(s) applied on the overdue amount. Alternatively, a claimant might be able to show that they suffered some kind of opportunity loss in terms of the use that the money might otherwise have been put to. Once again, evidence of the loss claimed would need to be provided. This would usually be in the form of a letter from the claimant’s banker confirming the rate(s) of interest that the claimant would have received on monies deposited in an interest bearing bank account over the period of the debt.