Cases - Beck Peppiatt Ltd v Norwest Holst Construction Ltd

Record details

Name
Beck Peppiatt Ltd v Norwest Holst Construction Ltd
Date
[2003]
Citation
EWHC 822
Keywords
Adjudication - jurisdiction - jurisdiction of adjudicator - notice of intention to refer - dispute at time of notice of intention to refer
Summary

Beck Peppiatt were subcontractors to Norwest Holst in relation to construction works at First Central Guinness headquarters. Disputes arose in relation to entitlements to extensions of time, the valuation of loss and expense and the final evaluation of the variation account.

Beck claimed that its subcontract final account was undervalued by more than £750,000 and threatened to start adjudication proceedings in respect of certain claims. Discussions in relation to these items had been ongoing for a considerable amount of time during 2002, culminating in a letter from the chairman of Beck Peppiatt to Norwest Holst setting out Beck Peppiatt's claims and stating that unless their account was settled at a minimum of £2,300,000 and 90% of the balance of money owed to them was paid by the end of January 2003, they would commence adjudication.

On 29 January 2003 Norwest Holst served on Beck Peppiatt 11 lever-arch files of information. The covering letter to these lever-arch files stated that unless Beck Peppiatt agreed to the account by close of business on 12 February 2003, Norwest Holst would consider that the account is not agreed, that the 2 companies were in dispute and that adjudication would then be immediately commenced.

Beck Peppiatt responded to this letter stating that they needed longer than the period from 29 January 2003 to 12 February 2003 to consider the information contained within the files and that if Norwest Holst carried out their threat of commencing adjudication it would no doubt fail on the basis that the dispute has not crystallised.

Norwest Holst rejected Beck Peppiatt's stance and initiated the referral to adjudication on 17 February 2003.

These proceedings arose out of an application by Beck Peppiatt for a declaration by the court that the adjudicator did not have jurisdiction to decide the matters referred on the basis that a dispute had not crystallised at the time that the notice of intention to refer was served.

The judge concluded that a point was reached in February 2003 when the process of discussion and negotiation had ended and that something was needed to be decided, namely the correct position with regard to the outstanding items on the final account.

Mr Justice Forbes (head of the Technology and Construction Court) held that:

  1. it was bound by the Court of Appeal's decision in Halki v Sopex (an arbitration case) that there is a dispute once money is claimed unless and until the defendant admits payment is due;
  2. however, the decision in Sindall v Solland satisfactorily stated the law - for a dispute to arise, it must be clear that a point has been reached when the process of negotiation and discussion has ended and that something remains undecided; and
  3. the mere service of the 11 files made it clear that Norwest Holst was rejecting Beck's position and putting forward its own position. This was the point at which a dispute had clearly arisen.

Therefore the judge refused to give the declaration requested and advised the parties to get on with the adjudication.