It might sound obvious but, if you are a party to a construction dispute and you are considering commencing an adjudication, one of the key considerations is to ensure that a dispute does actually exist. We lawyers refer to this as a dispute having ‘crystallised’. If a dispute does not exist (i.e. it has not ‘crystallised’), the adjudicator may not have jurisdiction to make a decision.
So, what does this mean in practical terms? Well, it means that you need to plan how you will create the dispute. Part of this process will be to ensure that all of the issues involved have been put to your opponent.
Over the years, the courts have dealt with numerous cases where the issue was whether or not the dispute between the parties had crystallised. In a recent case* this issue reared its head once again.
Celtic Composting Systems Limited (Celtic) and Devon County Council (the ‘Council’) had entered into a contract for Celtic to design and construct a composting facility. There had been a series of adjudications between the parties. In one of those adjudications there was a dust up about delay in which Celtic claimed an extension of time and its associated costs.
Celtic started another adjudication. In response, the Council argued that there was no ‘crystallised’ dispute. The Council said that the claims being brought by Celtic in this adjudication were new claims that they had not commented on and, as such, there could be no dispute.
The judge found on the facts of this case that the claim in the latest adjudication was not wholly different and it was not unfair to let it proceed as a dispute had arisen. In particular, the fact that the council had applied to court for security to cover its costs meant that there was a clear implication that this claim was disputed. In coming to his decision, the Judge reiterated that the courts should “not take too legalistic an approach to what constitutes crystallisation” and gave some helpful guidance that, as a minimum:
1) A claiming party should make a claim in sufficiently clear terms to enable the responding party to decide whether or not they accept it; and
2) it should be apparent from the responding party’s conduct whether the claim is accepted.
There has been a raft of cases on this legal point but there are some key points that can be summarised as follows:
- The fact that one party notifies another of a claim does not automatically mean that a dispute has arisen
- You can’t avoid a dispute from arising just by ignoring it! In fact, it is possible for a dispute to be inferred from a responding party’s silence in response to the claim. This will largely depend on the length of time of the silence. However, as this case shows, it can just as easily be the wider conduct of the responding party, e.g. the application for security for its costs, not only their silence, which may be indicative that a claim is disputed.
For more information, email firstname.lastname@example.org.
*Devon County Council v Celtic Composting Systems Limited  EWHC 552 (TCC)