Costain Ltd v Wescol Steel Ltd
Technology and Construction Court
His Honour Judge Richard Havery QC
24 January 2003
The contractor applied to the court for a declaration under CPR Part 8 that the adjudication was invalid firstly because there was no dispute at the time the sub-contractor referred the dispute to adjudication and secondly because the notice of referral contained to two disputes, ie the amount of the final account and whether an extension of time should be granted which related to interim payment applications.
The contractor’s first contention that there was no “dispute” was based on a letter it had sent shortly before the notice of referral stating that it was looking into the sub-contractor’s final account submission and on the sub-contractor’s receiver’s failure to appoint a surveyor to discuss the sub-contract with the contractor as he had earlier said he would. The contractor submitted that in these circumstances it could not properly be said that a dispute had arisen.
Judge Havery rejected this contention. He analysed the decision of the majority of the Court of Appeal in Halki Shipping v Sopex Oils (1998) which laid down a very broad test of what constituted a “dispute” for the purposes of arbitration. He concluded that the following tests in Halki were satisfied. Firstly a claim in the form of the final account submission had been advanced by the sub-contractor which the contractor had refused to admit or did not pay. Secondly the sub-contractor had claimed money and the contractor had not admitted that the sum claimed was due and payable.
The contractor’s second contention that the sub-contractor had referred more than one “dispute” was based on the repeated references in the sub-contract to a party’s right to refer a “dispute” in the singular (rather than “disputes” in the plural).
Judge Havery rejected this contention on the basis that the whole of the matters referred were bundled together and that it was not clear that the interim payment matter differed from that of the final account (except insofar as the date for payment of that account might be an issue before the adjudicator).
The courts appear to be taking an increasingly robust attitude to challenges to enforcement based on alleged “technical” defects as to the timing of when the dispute is referred or whether more than one “dispute” is encompassed in the claims referred.