Described as a landmark judgement, a High Court judge has upheld an adjudication decision regarding legacy fire safety issues under the Building Safety Act 2022 (BSA) and Defective Premises Act 1972 (DPA)
As reported by Construction News, the ruling concerned building defects found at a residential complex in Basingstoke, Crown Heights, which has around 280 units. A contract between the builder Ardmore Construction and Basingstoke Property Company was initially signed in 2002, with the project reaching completion in 2003–2004.
Twenty years later, BDW Trading Ltd – a subsidiary of Barratt Development – claimed that contractor Ardmore had “deliberately breached its duty under the Building Contract and/or deliberately concealed [fire safety] defects from BPC and/or BDW”, with an adjudicator ruling in September 2024 that contractor Ardmore was liable for “cladding and fire cavity defects” including missing cavity barriers under the DPA.
Ardmore raised the following four grounds of objection:
- The dispute referred to in the decision had not crystallised
- The Adjudicator had no jurisdiction to determine a tortious claim for breach of the DPA 1972
- The adjudication was inherently unfair owing to the inequality of arms in terms of documentation
- The Adjudicator intentionally failed to consider a material Defence relevant to the allegation of deliberate concealment against Ardmore
Ardmore argued that the adjudicator had “no jurisdiction” to hear the claim as the limitation period had passed. Additionally, it stated that “it had not denied liability” for the allegations but was seeking further information before responding. After refusing to pay the damages, the £14.5 million dispute was brought before the Technology and Construction Court (TCC), with a High Court judge ruling in claimant BDW’s favour.
Rejecting the defendant’s arguments and noting the extension of the statutory limitation period for DPA claims in the BSA, from six years to 30 years, Mrs Justice Joanna Smith 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.”
The judgement has been described as a “hugely significant ruling for the construction industry as a whole and for any parties engaged in housebuilding” for issues relating to retrospective liability.
Representing BDW, Mark Pritchard, partner at Howard Kennedy, explained: “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 10 years or more.
“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.”
In response to the judgement, Ardmore Construction said in a statement: “We fundamentally disagreed with a number of aspects of the adjudicator’s decision (including the finding concerning alleged deliberate concealment) and therefore challenged BDW’s enforcement proceedings on a number of grounds, including jurisdiction and natural justice.
“We are disappointed the Court decided that Ardmore’s grounds for challenge did not meet the high bar needed to resist enforcement of an adjudicator’s decision, in particular that BDW could refer a dispute such as this under the Defective Premises Act and the inherent unfairness inevitably associated with referring such an historic project to adjudication. Those matters were of wider importance to the industry, as such the Court’s judgment will be of interest to many.
“Notwithstanding that disappointment, we shall however be complying with the Court’s judgment in accordance with its order. In any event, it remains that the adjudicator’s decision is only temporarily binding until the dispute is finally resolved by way of arbitration, preparations for which are under way.
“Ardmore considers that there remain important legal questions to be determined, including the employer’s responsibility for specifying potentially non-compliant systems and the reasonableness of remedial works proposed which can only be fairly determined in arbitration with proper disclosure and expert investigation.”
Sharing her insights on the case and what it means for the construction industry, Kate Lister, partner at Clyde & Co, writes: “Due to extended limitation under the Building Safety Act 2022, contractors may now face adjudication referrals for DPA defects claims on historic projects.
“Contractors should take this as a warning to hold onto historical building documents, as natural justice challenges on the basis of documentation imbalance and the passage of time may be unsuccessful.
“Finally, contractors should note that failing to engage or not actively denying liability does not prevent a dispute from crystallising. If a party has made a claim, it is important to move into investigating liability rather than sitting and waiting for further information.”