Costain Ltd v Wescol Steel Ltd [2003] EWHC 312 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

There are 'different meanings or nuances of meaning' of 'dispute', as set out in Halki. On the facts of this case, a dispute had arisen as the claim had been made but not paid.

HHJ Havery QC, Technology and Construction Court

24 January 2003

CL engaged WSL as a steelwork sub-contractor. The works were purportedly completed in July 2002. WSL entered administrative receivership in September 2002. 

On 24 September 2002 WSL said that its agents (C&B) would contact CL shortly to discuss the sub-contract. On 18 October 2002, without C&B apparently having contacted CL, WSL threatened to commence an adjudication in respect of its final account and extension of time entitlement, if CL did not pay WSL the requested sum by 11 November 2002. 

On 7 November 2002 CL told WSL that there could be no dispute presently as to WSL's final account as it was not yet due for determination and WSL had only just (with its letter of 18 October 2002) purported to provide the documents it was obliged to provide to support its final account. CL said that they were considering WSL's final account and would 'respond in detail in due course'. CL claimed that there was no dispute regarding WSL's extension of time entitlement either. 

On 13 December 2002 WSL served a notice of adjudication. WSL asked the adjudicator to determine the value of WSL's final account and WSL's entitlement to an extension of time. It appears that the adjudicator had not reached a decision before the matter came to court (because no such decision is mentioned).

CL sought a declaration that the reference to adjudication was not valid because a dispute had not arisen when the notice of adjudication was served.

The Judge held that there was a dispute when the notice of adjudication was served. He said that Halki Shipping Corporation v Sopex Oils Ltd [1998] supported the following 'different meanings or nuances of meaning' of 'dispute' in an arbitration clause:

  1. As including any claim which the other party refused to admit or did not pay.
  2. Where there is a claim which the defendant refuses to admit and refuses to pay.
  3. Once money is claimed unless and until the defendants admit that the sum is due and payable.
  4. Where a party has refused to pay a sum which is claimed or has denied that it is owing.

The Judge implicitly accepted that the Halki meaning/s of 'dispute' applied to adjudication. What had happened certainly fell within meanings (1) and (3), but CL had not, at any rate expressly, refused to pay the money or denied that the amount is correct. The Judge held there was a dispute when the notice of adjudication was served: 'given that [CL] deny that the money is at present due and have not accepted that the amount claimed is correct'.

There are 'different meanings or nuances of meaning' of 'dispute', as set out in Halki. On the facts of this case, a dispute had arisen as the claim had been made but not paid.

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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