Orange EBS Ltd v ABB Ltd [2003] EWHC 1187 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

A 'dispute' might arise as soon as a claim is made. Where a period of discussion or negotiation needs to pass before a claim crystallizes into a 'dispute', holiday periods count when determining whether sufficient time has elapsed.

HHJ Kirkham, Technology and Construction Court

22 May 2003

Orange were engaged as sub-sub-contractors by ABB to carry out mechanical services work. On 2 December 2002 Orange advanced a 'Final Account' claim. The parties had not communicated since the sub-sub-contract was terminated about five months earlier. ABB had not seen parts of the claim before and the 'Final Account' was well over twice the value of Orange's previous application.

On 12 December 2002, ABB said that it considered a dispute had not yet arisen and that it needed until 20 January 2003 to consider Orange's claim. ABB also said that if an agreement were not reached within 7 days thereafter, ABB would accept that there was a dispute, so that the claim could be referred to adjudication. The next day Orange's representatives said that they would take instructions on this and revert in due course. Without further ado, on 6 January 2003, Orange served a notice of adjudication on ABB. The adjudicator gave a decision in favour of Orange, which Orange sought to enforce. ABB objected saying that there was no dispute when the notice of adjudication was served.

The Judge held that there was a dispute by 6 January 2003 when the notice of adjudication was served. She applied two meanings of 'dispute' to arrive at this conclusion. The Judge firstly applied the 'simple test in Halki'; i.e. that there is a dispute once a claim is made unless and until the defendant admits that the sum is due and payable. Orange made their claim on 2 December 2002. ABB had not admitted the claim nor had they paid it by 6 January 2003. Thus, there was a dispute when the notice of adjudication was served.

The Judge arrived at the same result by applying the test approved in Beck Peppiatt (see page xx) (i.e. a dispute arises after a process of discussion or negotiation, it having become clear that there is something that needs to be decided). The Judge said:

I have found this aspect of the application difficult. On balance, I conclude that, by 6 January 2003, sufficient time had elapsed for evaluation then any discussion or negotiation of Orange's claim. I reach that conclusion notwithstanding that the holiday period intervened. Holidays at any time of year are a practical problem which companies must deal with. It is not fair that a company stands out of substantial sums of money simply because some in the industry do not work over the Christmas and New Year holiday. I bear in mind that [Orange's representatives] had not let ABB know that Orange did not accept the latter's suggestion to consider matters by 20 January. On the other hand, there was no agreement between the parties that Orange would hold off until 20 January…I bear in mind that ABB had engaged Daly [a firm of costs consultants and quantity surveyors] in December. Daly were already familiar with the project. Neither ABB nor Daly came to the matter cold.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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