TCC decision underlines the breadth of adjudication clauses

The Technology and Construction Court (“TCC”) in BDW Trading Ltd (“BDW”) v Ardmore Construction Ltd (“Ardmore”) recently decided on the enforcement of an adjudicator’s decision in a historic fire safety dispute. The headline point is that a party to a construction contract can use the extended limitation periods under the Building Safety Act 2022 (“BSA”) to refer a claim under the Defective Premises Act 1972 (“DPA”) to adjudication. It also serves as a reminder of the importance of proper record-keeping and document retention.
Background
The case involved a dispute over fire safety cladding defects at a residential building constructed in 2003. The current owner, BDW, sought to hold the original contractor, Ardmore, responsible for the defects.
BDW referred the dispute to adjudication on two alternative grounds:
- BDW argued that Ardmore breached the building contract by failing to install cavity barriers and that this omission was deliberately concealed, meaning that BDW could rely on an extended limitation period; and
- BDW claimed that Ardmore breached the Defective Premises Act 1972 (“DPA”) by constructing a building that was not fit for habitation.
The adjudicator ruled in favour of BDW on points (1) and (2) above, and the TCC case relates to the enforcement of the adjudicator’s decision.
Jurisdictional Challenge
Ardmore disputed the jurisdiction of the adjudicator over a DPA claim on the basis that the adjudication clause was limited to disputes which arose under the contract, whereas the DPA claim arose under statute. In addition, Ardmore contended that different wording in the arbitration clause (which referred to disputes arising under the contract or “in connection therewith”) was further evidence that the adjudication clause was not intended to extend to the DPA.
Both arguments were rejected by the TCC on the basis that the adjudication clause was intended to cover any dispute arising out of the parties’ contractual relationship. In addition, the contract stipulated that Ardmore would bear the same responsibility as the relevant design professional, including responsibilities under the DPA. This reinforced the understanding that an alleged breach of the DPA could be addressed through adjudication as a dispute which arises under the contract.
Natural Justice Challenge
Ardmore also argued that using adjudication to pursue a £15 million claim on a 20-year-old project was unjust and violated the principles of natural justice. Ardmore contended that adjudication was principally intended to address current or recent disputes. As is so often the case with disputes of this nature, Ardmore lacked documentation from the project and heavily relied on BDW’s disclosure, which was also limited.
With regard to the value of the project, the TCC held that even complex cases can be dealt with by adjudication. With regard to the age of the project, the TCC held that the passage of time is not a sufficient defence and found that Ardmore’s situation arose largely due to its own poor record keeping, rather than from any scheduled disposal of documents following the expiration of the initial limitation period. The fact that BDW had complied with disclosure requests was considered relevant.
Key Takeaways
- Adjudication can extend to statutory claims related to the contract.
- Adjudication is a suitable forum for complex and historical disputes.
- Construction professionals should maintain comprehensive records and review document retention policies and processes.
A link to the judgment can be found here. The impact of this case will likely depend on the awaited Supreme Court’s judgment in the URS Corporation Limited v BDW Trading Limited which relates to similar issues.
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