Member Article

Are you in dispute?

With Watson Burton LLP Law Firm

You will generally find that your contracts will address the process that is to be followed when a dispute arises between the parties to that contract. Your contract may indicate that disputes must be decided by way of arbitration or alternatively by litigation. If you are a party to a construction contract you have the right to refer any ‘dispute’ to adjudication under section 108 of the Housing Grants Construction and Regeneration Act 1996.

This is all well and good but when, actually, does a ‘dispute’ arise? Are you sure you are actually in a dispute in the strict legal sense? Maybe you are in a dispute right now without even realising it?!

In simple terms a dispute can be seen to have arisen where A sends a claim to B, B writes back to A providing a defence denying the claim and expressly disputing the issues raised by A. Here it is clear that there is a difference of opinion and as such A and B are in dispute.

What if A argues that B has no defence whatsoever to their claim and as such there is no dispute (A may wish to take this action to avoid going through an alternative dispute resolution procedure)? Case law states that even here where B has no arguable defence a dispute can be said to arise.

What if B does not think the claim is sufficiently detailed or have had insufficient time to look through all of the material supplied by A? Just because B thought the claim was not sufficiently detailed, or felt they had not had enough time to think about it, this does not mean that they are not ‘in dispute’ with A.

In Beck Peppiatt Limited -v- Norwest Holst Construction Limited [2003] B argued that they were not in a dispute with A because they had not been able to consider the claim made by A and disagree with it. In judgement it was held that “The word ‘dispute’ has a plain and simple meaning. It includes any claim which the other party refuses to admit or does not pay. There is no need to show that a reasonable period of time has gone by once a dispute has been identified.”

What if B fails to respond to A at all? Can there be a dispute in this instance? The simple answer to this question is yes, a rejection could occur when B refused to answer the claim, thus giving rise to a dispute as in the case of Halki Shipping Corporation v. Sopex Oils Ltd. [1998]. The term ‘dispute’ was said to include any claim which the opposing party has been notified, which that party has refused to admit or has not paid, whether or not there is any answer to that claim in fact or in law.

The moral of this story, therefore, is if you think you have a dispute then you are probably correct in that conclusion, but you should stop and consider the sequence of events and how you have reached the situation in which you find yourself.

If you have any queries in relation to this article or believe you are in a dispute which you would like to discuss, then please contact Richard Proctor at Watson Burton LLP on 0191 244 4195 or email richard.proctor@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .