Saturday, June 1, 2019

Sitol Ltd v Finegold & Anr

[2018] EWHC 3969 (TCC)

This was an application by Sitol, a specialist tiling and ceramic company, to enforce an adjudication decision in the sum of £45k plus the adjudicator’s fees of £42k. One of the arguments raised by the Finegolds was that the dispute was referred to the adjudicator too late by reference to specific notification provisions in the relevant contract. At clause 93.3 of the contract, it said: 

“A party may refer a dispute to the adjudicator if the party notified the other party of the dispute within four weeks of becoming aware of it.”

In this case, the relevant notification was not earlier than 25 April, and it may have been 30 April, being the dates of the notice of adjudication and the referral. However, the Finegolds said that a dispute had arisen by 19 February and Sitol was aware of the dispute by 19 February, so the clock started ticking then. If that was correct then the latest date for notification was 19 March and Sitol missed that and were out of time. Sitol said that the clock did not start running until 4 April because it was only by then that there was a dispute of which it was aware.

When it came to defining dispute, Mr Justice Waksman referred to the first four of Mr Justice Jackson’s seven propositions in the case of Amec Civil Engineering Ltd v Secretary of State for Transport:

“1) The word ‘dispute’ is to be given its normal meaning. 

2) Despite the simple meaning of ‘dispute’, there is no hard-edged legal rule as to what was or was not a dispute, but the accumulating judicial decisions have produced helpful guidance. 

3) The mere fact that one party notifies the other party of a claim does not automatically and immediately give rise to a dispute. It is clear, both as a matter of language and from judicial decisions, that a dispute does not arise unless and until it emerges that the claim is not admitted.

4) The circumstances from which it may emerge that a claim is not admitted are Protean. For example, there may be an express rejection of the claim. There may be discussions between the parties from which objectively it is to be inferred that the claim is not admitted … The respondent may simply remain silent for a period of time, thus giving rise to the same inference.”

Here, on 17 January, Sitol sent an invoice for unpaid fees to the Finegolds. It was delivered on 23 January. Sitol sent a chaser on 6 February and an email on 20 February. However, on 19 February solicitors for the Finegolds, DLA, wrote challenging whether Sitol had entered into a contract with the Finegolds or in fact the main contractor. On 9 March, Sitol wrote back, saying that they had still not been paid. 

On 16 March there was a reply, maintaining that there was no obligation to pay Sitol. In response to comments that no contract had been provided, Sitol duly sent copies of what they said was the contract. That made no difference and a further letter came from the solicitors concluding that the claim was without merit. Mr Justice Waksman said that this was not a case of silence:

“It is not a case where it is suggested the dispute has arisen simply because an invoice has been rendered that has not been paid. This is not even a case of an implied rejection. This is, on any analysis, a case of an express rejection of the claim. So, the difficulties that one finds in some ‘notification of dispute’ cases simply does not arise here. In my judgment, the dispute had crystallised once DLA had written its letter of 19 February. It made plain its contention that whatever Sitol might have said or got, there was no contract between the Finegolds and Sitol. That is made plain in the whole of the body of the letter of 19 February. There is nothing more to be said about that dispute.” 

Further, the fact that in the course of a dispute which has arisen one party says, “Show us what you have”, or, “Can you not do any better?” or “We will be interested to see what evidence you have”, does not indicate that the dispute has not arisen. It just means that it is possible that the dispute might be resolved, for example, without litigation, depending on what is produced. So, on any view, for the purposes of this notification clause, a dispute had most clearly arisen by 19 February.  Here, the dispute had been objectively brought to Sitol’s attention the moment they got the letters because they happened to be the other party to the letters. Accordingly the Judge noted that he had:

“come to the conclusion (with no great enthusiasm, I should add), that this adjudication was started too late. It may be regarded as a technical point, but I have to apply the law, I am afraid. The analysis and the correspondence here I am afraid only points one way.” 

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