Landmark decision confirms historical Building Safety claims can to go to adjudication

The ruling in BDW Trading Limited v Ardmore Construction Limited (2024) is critically important as it has confirmed the wide scope of adjudication clauses and opened the doors for adjudications to be brought regarding historical defects under the Defective Premises Act 1972.

The dispute related to alleged fire safety defects on a development where Ardmore (the contractor) completed the works completed in or around 2003-2004. The contract was assigned from the original employer (Basingstoke property Company Limited) to BDW Trading Limited, who claimed that there were fire safety cladding defects present. 

In a successful adjudication for BDW, it was found that Ardmore was liable for breaches of the contract and the Defective Premises Act. Subsequently, BDW applied to the TCC for summary judgment to enforce this decision. These proceedings were disputed by Ardmore on several grounds, including:

• That the dispute had not crystallised as Ardmore had not denied liability for the claims brought against it in the adjudication; rather, they had sought more information before responding;
• That the adjudicator had no jurisdiction to make a finding in relation to the Defective Premises Act claims because the contract stated disputes arising ‘under this Contract’ could be referred to adjudication. This mirrors the wording in section 108 of the Housing Grants, Construction and Regeneration Act 1996 (which affords construction contracts the right to adjudicate disputes); and
• That the works were completed around 20 years ago and the lack of documentation put Ardmore at an unfair position.

The crystallisation argument was unsuccessful, despite BDW submitting the Notice of Adjudication only 13 days after its full letter of claim. The Court found that BDW had set out its claim in the years previously and Ardmore had failed to take adequate steps to investigate its liability. It was determined that Ardmore had sought to avoid the crystallisation of a dispute by not asking for more information in that time. Therefore, the Court decided that the dispute had crystallised despite Ardmore’s lack of definitive response. 

In relation to the jurisdictional point, both the contract, and the Act, refer to disputes arising ‘under the contract’. Therefore, it was argued that adjudication provision should not apply to claims arising under the Defective Premises Act, rather than the contract. 

The Court decided that the term ‘under the contract’ should be taken to mean that commercial parties intended all disputes arising out of the contractual relationship (rather than the contract itself) be capable of being dealt with by adjudication; there should not be any linguistic or semantic difference between ‘under’ and ‘in connection with’ and, unless there is clear indication to the contrary, Defective Premises Act claims should be deemed to fall under the scope of those adjudication provisions. 

This interpretation by the Court is adopting the Fiona Trust Principle used in relation to arbitration (arising out of Fiona Trust & Holding Corporation & others v Provalov & others [2007]) that rational businessmen should be assumed to have intended any dispute to be decided by the same tribunal. 

Therefore, this case relays some important lessons:

1. Due to the extension of limitation for Defective Premises Act claims under the Building Safety Act 2022, contractors can now potentially face adjudication referrals on historic claims from projects as far back as 1992;
2. Courts will not look favourably on arguments relating to the lack of contemporaneous documents as a defence to claims. Therefore, parties should ensure that historical documentation is retained; and
3. If a contractor delays, ignores correspondence or fails to properly engage in efforts to avoid crystallisation of disputes, this does not necessarily prevent the commencement of adjudication. It is important to investigate liability and engage with the process, rather than employing delay tactics. 

If you have any queries on Building Safety claims, Defective Premises Act claims or adjudication, please contact our Construction team.