Firstly, I am not sure why this would constitute a compensation event, as it looks like a normal charge which applies to most non-domestic property, including Contractor's site huts, etc
The clause you refer to (Taxes 114.1) looks like a typical 'standard type' clause which is related to indemnity, that is the Contractor indemnifying the Employer against 'actions, claims, costs, charges and expenses relating to the RECOVERY of the foregoing'.
This requires the stated 'charges' to be borne (paid) by the Contractor (whether or not they constitute a compensation event) , although if any action is taken to recover these 'charges' then the Contractor indemnifies the Employer against the costs of recovery, which may be charged directly to the Employer.
From what you have said the Contractor's notification of a compensation event is for a matter which the Contractor is responsible for anyway and the Employer is merely confusing the matter further by 'rejecting' the notification with reference to a clause which doesn't appear to apply in this instance, whether or not the notification was valid.
The clause you refer to (Taxes 114.1) looks like a typical 'standard type' clause which is related to indemnity, that is the Contractor indemnifying the Employer against 'actions, claims, costs, charges and expenses relating to the RECOVERY of the foregoing'.
This requires the stated 'charges' to be borne (paid) by the Contractor (whether or not they constitute a compensation event) , although if any action is taken to recover these 'charges' then the Contractor indemnifies the Employer against the costs of recovery, which may be charged directly to the Employer.
From what you have said the Contractor's notification of a compensation event is for a matter which the Contractor is responsible for anyway and the Employer is merely confusing the matter further by 'rejecting' the notification with reference to a clause which doesn't appear to apply in this instance, whether or not the notification was valid.