A High Court judge has ruled that building safety disputes between housebuilders and contractors can be heard by an adjudicator instead of going to arbitration, potentially relieving the courts’ backlog.
The case refers to a dispute between BDW Trading Ltd, a subsidiary of Barratt Development, and Ardmore Construction regarding missing cavity barriers in a residential scheme in Basingstoke that the contractor had built for BDW almost two decades ago.
The adjudicator ruled that Ardmore deliberately concealed missing cavity barriers from BDW and others when it built the flats and that the period of limitation applicable to BDW’s contractual claim did not begin until BDW discovered the faults.
This meant BDW was able to revive a stale contractual claim that was outside the 12-year limitation period and go to adjudication under the contract.
Ardmore argued that the adjudicator had no jurisdiction to hear the claim. However, High Court judge Mrs Justice Joanna Smith concluded that Ardmore’s breach of the Defective Premises Act 1972 was eligible for adjudication. The case also benefited from the extended periods of limitation provided by the Building Safety Act 2022.
Smith said: “I find that there is no significance in the differing wording in the arbitration and adjudication provisions of this building contract.”
‘A hugely significant ruling for construction’
Mark Pritchard, partner at Howard Kennedy, the firm leading the team representing BDW, said: “This is a hugely significant ruling for the construction industry as a whole and for any parties engaged in housebuilding. 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.
“The decision is consistent with public policy, as the government looks to release pressure on the courts system by directing certain types of cases away to other forms of dispute resolution. Moreover, it reflects the recent development of case law in relation to adjudication business where, through cases such as Murphy v Mayer, Aspect Contracts v Higgins and Bresco, the courts have sought to extend the ambit of adjudication.
“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.”
Ardmore Construction’s response
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.”
