A “hugely significant” legal judgement has paved the way for decades-old cladding-related disputes to pass through the adjudication system.
A High Court judge this week sided with BDW Trading – property developer Barratt Developments’ main trading arm – in a £14.5m dispute over building defects on a 2002 contract with contractor Ardmore.
Ardmore had refused to pay up after an adjudicator earlier this year ruled that it was liable for building defects on the scheme to build and apartment block in Basingstoke.
The contractor had argued that the adjudicators did not have the jurisdiction to bring the case because it had passed its limitation period. But High Court Judge Justice Joanna Smith upheld the adjudicator’s decision – the first instance of a judge upholding an adjudicators’ decision following the extension of building liability under the 2022 Building Safety Act (BSA).
Her judgement said: “I find that there is no significance in the differing wording in the arbitration and adjudication provisions of this building contract and I consider that BDW has successfully established that Ardmore has no real prospect of success in establishing a lack of jurisdiction on the part of the adjudicator…for the purposes of the summary judgment application.”
Mark Pritchard, partner at Howard Kennedy who led the team representing the claimant, BDW Trading, said the ruling was “hugely significant” for the construction industry, in that it will allow adjudicators to take on historically old cases around building liability.
“We now have clarity that both claimant housebuilders and their defendant contractors can refer to adjudication all the building safety cases which have threatened to clog up the courts for the next ten years or more,” he added.
“Crucially this ruling has confirmed that a party to a construction contract, who can bring an adjudication at any time, may do so after the usual contractual limitation periods expire.”
The dispute centred over an apartment block in Basingstoke which Ardmore built for the Basingstoke Property Company, signing a £22.6m contract in 2002.
The property company the building contract to BDW Trading – property developer Barratt Developments’ main trading arm – in 2004. BDW argued that Ardmore had breached its contract and was liable for cladding and fire cavity defects on the site.
The case came to adjudicators in 2022, 20 years after the signing of the construction contract.
Amongst other things, the BSA – which was introduced in the wake of the Grenfell Tower Fire – retrospectively increased building liability from six to 30 years. But, before this ruling, it was unclear if that would apply to adjudications.
Under the build contract, Ardmore was responsible for design and build, and partial fit out of the 280-unit apartment block, called Crown Heights.
BDW was only able to bring the claim in 2022 – before that, Ardmore had a “complete limitation defence” which meant disputes more than six years old could not be taken forward in the courts or adjudication.
The claim focused on allegations that Ardmore used an “inappropriate” cladding system on the site, different to the product specified in the design intent, and failed to install horizontal fire barriers on the site.
That left BDW “at substantial risk of loss”, it said. It sent through a letter of claims to Ardmore in 2022, registering its claims over the site.
The adjudicator deemed that the claim on cladding was irrelevant to the case because “both potential external cladding systems require fire stops”.
However, they said that Ardmore had “breached its duties” under the contract in relation to the lack of fire stopping, and that it was also liable under the Defective Premises Act.
They also found that Ardmore had deliberately concealed the missing cavity barriers from firms including BDW during construction.
Ardmore had argued that any adjudication in this case would be “oppressive, unreasonable and in breach of natural justice”.
“The unique combination of a 20 year old project and the pursuit of a £15m professional negligence claim by way of adjudication, a procedure which was primarily designed for the resolution of live or recent disputes, has created an inherently unfair situation,” Ardmore said.
It added that it had “almost no relevant contemporaneous documentation” on the case and that most of its staff who worked on the project had left by the time the case entered adjudication – meaning it had to rely on documents provided by BDW.
“To expect these [remaining] employees to have any cogent recollection of the project after 21 years and with many other projects completed since is unrealistic,” it argued in a letter to BDW in March this year. It added that it expected the little data it had gathered to be “irrelevant to the external wall render system”.
But Judge Justice Joanna Smith said: “I take the view that there is nothing in the complaints raised by Ardmore and that it is not entitled to any additional degree of latitude by reason of the passage of time,” she said.
“The mere passage of time is not in itself enough to create unfairness,” she said.
The judge said the contractor should have taken “proper steps over a number of years to find, and gather together, the documentation it had relating to its works”, following a letter of claims from BDW in 2022.
“It is not clear to me that such proper steps were in fact taken,” she added, adding that it was “quite clear” Ardmore’s record keeping at the time was “deficient”.
BDW had also invited Ardmore to inspect the site before the remedial works began, according to court documents. But Ardmore did not inspect the building and “has provided no explanation as to why it did not do so”, the judge added.
Read More
Joshua Stein