Building Safety Act 2022 Adjudication Claims
High court ruling expands adjudication scope
A recent ruling in BDW Trading v Ardmore Construction confirms that claims under the Defective Premises Act 1972can be resolved through adjudication—even for defects from decades ago.
In a landmark decision, currently under appeal, the High Court recently confirmed that disputes related to the Building Safety Act 2022 (BSA) can be determined by an adjudicator. The ruling in BDW Trading Limited v Ardmore Construction Limited confirmed the wide scope of adjudication clauses and opened the doors for adjudications to be brought for historical defects under the Defective Premises Act 1972.
What implications does the ruling have on drafting dispute resolution clauses?
The ruling is likely to have major implications for the drafting of dispute resolution clauses and parties to many existing construction contracts should expect that disputes will be brought in adjudication. This includes not only Defective Premises Act claims, but also for misrepresentation and mistake.
Parties should review their existing contracts and existing disputes, particularly in relation to Defective Premises Act claims, to consider whether, tactically, these claims might now be run in adjudication rather that in litigation or arbitration. Parties negotiating new contracts should also consider including very clear carve out wording for tortious claims if the ambition is to prevent these types of claims being adjudicated.
How can companies protect themselves?
There are several ways that companies can help protect themselves:
- Companies should assess which prior contracts could be at risk of a claim under the extended limitation periods.
- The records of such historic projects should be reviewed to determine what information is (or is not) available, with assessment as to how these can be accessed quickly.
- As there is now a 15-year liability period, records should be kept for at least that period in a way which provides suitable access. It is not helpful if it takes a month to retrieve the records from the archive.
- As liability periods are longer than previously, it may be necessary to amend contracts, subcontracts, and other agreements, such as warranties and guarantees, to account for the longer liability period. For example, requiring consultants to maintain Professional Indemnity insurance for 15 years instead of the current standard of 12.
- Where claims are made or threatened under the BSA, suitable representation should be put in place as soon as possible. Adjudication is a fast-paced, rough and ready process, so it is useful to have an established relationship with a team that has the relevant knowledge, skills and experience to represent you in a high pressure and time constrained environment.
- Claims under the BSA will be made by claimants who will have obtained detailed expert evidence. Efficient provision of expert evidence for the defendant is vital.
- Where there are site inspections available, they should be viewed with the expert assistance of construction and legal professionals. This is particularly important to collate the best possible defence in the absence of relevant documentation.
Adjudication in the face of the BDW decision
Because it is not meant to be a final tribunal, adjudication is a fast-paced (weeks rather than months) process with very limited time for disclosure, and even less to properly consider disclosed documents. Decisions can be revisited in courts, but the general rule is that parties will have to comply with the decision, including making any payments, before that revisit can begin.
Defending an adjudication is always difficult given the short time allocated and this is a significant challenge, especially since companies often have limited records of projects because of the passage of time. Finding documents may take time or be impossible.
This was a point considered in the BDW case, with the TCC deciding that it would not prevent the enforcement of the £14m decision. The court determined that Ardmore’s record keeping was deficient, and as it was that failure that rendered it dependent on BDW’s disclosure, it was not unfair. The court did not consider the argument that Ardmore had no reason to keep documents beyond the previously standard limitation periods. While that potential argument remains open, defendants need to operate on the assumption that a lack of records will not provide a suitable defence.