Costain Ltd. v Wescol Steel Ltd.

A dispute for adjudication may arise where a claim has been made, the opposing party has not accepted the amount claimed, and payment is denied or said to be premature. A party need not expressly refuse payment if its position objectively shows that the sum is not accepted as due. Related issues may constitute one dispute where they are sufficiently connected. Contractual adjudication provisions may also make procedural non-compliance non-mandatory for the validity of the adjudicator’s decision.

Costain Ltd, the contractor, applied under Part 8 for a declaration that Wescol Steel Ltd’s reference to adjudication was invalid. Wescol, which had entered administrative receivership, claimed payment under its final account and sought decisions concerning the account, payment timing and an extension of time. Costain argued that no dispute had arisen, that the notice encompassed more than one dispute, and that the referral documents had not been served in the contractually prescribed manner.

1. Dispute. The court rejected the argument that no dispute existed. Although Costain had said that the final account was premature and was still being considered, it had not accepted the amount claimed or that it was presently due. Taking a common-sense view, those circumstances established a dispute by 13 December 2002. The court considered the range of meanings identified in Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR and the approach stated by HH Judge Thornton QC in Fastrack Contractors v Morrison [2000] BLR 168.
2. Single dispute. The court did not decide whether the singular wording of clause 38A permitted more than one dispute to be included in a notice. On the facts, the claims concerning the final account, payment timing and extension of time were sufficiently connected and constituted one compendious dispute.
3. Service. Clause 38A.9 prescribed service by fax and first-class post, and it was common ground that this method had not been followed. However, clause 38A.5.6 provided that failure to comply with any requirement under clause 38A would not invalidate the adjudicator’s decision. The court held that this applied to clause 38A.9, making compliance with that provision non-mandatory so far as validity was concerned.
4. The contractual adjudication procedure complied with the statutory requirements, so the statutory scheme was not invoked. The Part 8 application was dismissed.