Orange EBS Ltd. v ABB Ltd.

For adjudication purposes, a dispute arises in accordance with the ordinary meaning of that word. A claim is generally disputed once money is claimed and the responding party has neither admitted nor paid it. The court should avoid exhaustive definitions, although the circumstances must be examined carefully. Where a contract has been repudiated and terminated, contractual machinery governing the timing of payment claims may fall away, while the underlying contractual entitlement remains to be established. Contractual sums, such as payment for variations or prolongation, cannot be recategorised as damages merely because the contract was repudiated.

Orange EBS Ltd. sought summary judgment under CPR Part 24 to enforce two adjudication decisions made under the Housing Grants, Construction and Regeneration Act 1996. Orange had subcontracted mechanical services work to ABB. ABB denied Orange access to site and purported to terminate the subcontract. Orange later submitted a substantial final account and referred the dispute to adjudication.

The adjudicator found that ABB had repudiated the subcontract, assessed Orange’s accrued contractual claims and damages, and awarded Orange £90,283.77 plus VAT and interest. ABB accepted the adjudicator’s jurisdiction over the repudiation issue and a small damages claim, but contended that no dispute existed concerning the wider final account when the adjudication commenced.

1. Application granted. The adjudicator had jurisdiction to decide both decisions, and Orange was entitled to judgment for the sums awarded.
2. The court was bound by Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR 726. The word dispute retained its ordinary meaning. A dispute arose once money was claimed unless and until the claim was admitted and paid. The court rejected attempts to create an exhaustive definition.
3. The guidance in Beck Peppiatt Ltd v Norwest Holst Construction Ltd [2003] EWHC 822 (TCC) was given careful attention. The approach in Sindall v Solland (June 2001), that discussion or negotiation must have ended and something must remain to be decided, was also considered.
4. A dispute existed by 8 July 2002 about whether ABB had been entitled to terminate and whether Orange was entitled to damages. However, no dispute then existed about the amount of the later final account. Several heads of claim had not previously been advanced, and ABB had invited Orange to submit an account.
5. Claims for variations, extension of time, prolongation, loss and expense and head-office overheads were accrued contractual entitlements. They could not be transformed into damages by retrospective categorisation. Following repudiatory termination, the contractual payment machinery fell away, although Orange remained required to prove its substantive entitlement.
6. By 6 January 2003 ABB had neither admitted nor paid the final account. Sufficient time had elapsed for evaluation and negotiation, and there was no agreement that Orange would wait until 20 January. A dispute had therefore arisen before the adjudication notice was served.

First-instance decision. No appellate history was stated in the judgment.