The recent England and Wales judgment of BDW Trading Limited v Ardmore Construction Limited [2024] which was handed down by the Technology and Construction Court (‘TCC’) has opened the door for adjudications to be brought for historical defects under the Defective Premises Act 1972 (the ‘DPA’).
This case concerned the Crown Heights development in Basingstoke, England. Basingstoke Property Company Limited employed Ardmore Construction Limited (‘Ardmore’) as contractor for the development in 2002 and the works were completed in 2004. The contract was then assigned from the original employer to BDW Trading Limited (‘BDW’), who then claimed that there were defects relating to the fire safety cladding at the development.
The matter was referred to adjudication by BDW Trading Limited in 2024 and the Adjudicator decided that Ardmore was liable for breaches of contract and it was also liable under the DPA. BDW then applied to the TCC to enforce the adjudicator’s decision. These proceedings were disputed by Ardmore on several grounds, including:
- That the dispute had not yet crystallised, as Ardmore had not denied liability for the claims brought against it in the adjudication (they had instead sought more information prior to responding); and
- That the adjudicator had no jurisdiction to make a finding in relation to DPA claims as these were claims for breach of a statutory duty and were not claims arising under the contract.
Ground 1: A dispute had in fact crystallised
Ardmore was unsuccessful in convincing the TCC that the dispute had not crystallised. The TCC’s reasoning for this was that BDW had set out its claim years prior to the commencement of the adjudication and Ardmore had failed to take adequate steps to investigate the claim made against it.
Although BDW Trading Limited had not been given information on quantum prior to the 8 March 2024, the TCC found that the quantum dispute had also crystallised, particularly given that Ardmore Construction Limited had been aware of the essential claim on liability for some time prior.
Ground 2: Jurisdiction for the DPA claim
Under Article 5 of the contract in this case, disputes arising “under this contract” could be referred to adjudication, mirroring the wording used in Section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 (‘HGCRA 1996’).
This differed to the wording of Article 6A of the contract relating to arbitration, which read that disputes “arising under this contract or in connection therewith” could be referred to arbitration.
The issue which arose in this case concerned the meaning of the words “under the contract” in section 108(1) of the HGCRA 1996. As a DPA claim is a claim for breach of statutory duty Ardmore submitted that it did not constitute a dispute arising “under the contract”, and the difference in language between Article 5 and Article 6A indicated an intention for Article 5 to be construed more narrowly, such that the adjudication provision did not apply to the DPA claim.
The TCC held that the term “under the contract” should be taken to mean that the parties intended that all disputes arising out of the contractual relationship (rather than the contract itself) be capable of being dealt with by adjudication and that there should not be any semantic or linguistic difference between ‘under’ and ‘in connection therewith’. Unless there is clear language to the contrary, DPA claims should be deemed to fall under the scope of the adjudication provisions.
The TCC adopted the principle established in the case of Fiona Trust & Holding Corporation & others v Privalov & others [2007], namely that commercial parties to a construction contract should be assumed to have intended that all disputes be decided by the same forum, be it arbitration or adjudication.
Other Grounds
Ardmore also unsuccessfully disputed the proceedings on the ground that that the adjudication was inherently unfair to Ardmore given the lack of available contemporaneous documentation and that the works were completed over 20 years ago. Ardmore contended that it was reliant on BDW’s disclosure, putting it in an unfair position.
The TCC criticised Ardmore’s deficient record keeping and held that the mere passage of time is not in itself enough to create unfairness. BDW had responded to Ardmore’s disclosure requests and Ardmore had not identified any further necessary disclosure, therefore the TCC could not see how it was materially prejudiced in the conduct of the adjudication.
Finally, Ardmore contested the proceedings on a fourth ground that the Adjudicator intentionally failed to consider a material defence relevant to the allegation of deliberate concealment against Ardmore. The TCC rejected this ground and dealt with this ground briefly stating, among other things, that it was no more than an attempt by Ardmore to contend that the adjudicator’s reasoning was flawed.
What does this mean for the construction industry?
- Due to the extension of limitation for DPA claims under the Building Safety Act 2022, contractors can now potentially face adjudication referrals for historic projects dating as far back as 30 years;
- Courts will not look favourably at arguments centering around the lack of contemporaneous documents or simply the passage of time as a defence to claims. Businesses should ensure that historical documentation is properly retained and stored; and
- If a party delays, ignores correspondence or fails to properly engage with the other side, this will not avoid the crystallisation of a dispute. Although this was an English case there is equivalent legislation in Northern Ireland so the decision of the TCC is likely to persuasive here.
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While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
