BDW Trading Ltd v Ardmore Construction Ltd

Hearing date: 5 November 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on [date] by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This is a summary judgment application by the Claimant (“ BDW”) to enforce an adjudication decision (“ the Decision”) made by Mr John Riches (“ the Adjudicator”) on 17 September 2024 (as corrected on 18 September 2024), requiring the Defendant (“ Ardmore”) to pay £14,454,914.45 by way of damages together with £84,329.00 for the Adjudicator's costs and expenses. The Adjudicator held that Ardmore had breached its duties under a construction contract (and that limitation did not apply by reason of deliberate concealment) and, separately, that Ardmore was liable under the Defective Premises Act 1972 (“ the DPA 1972”).

Ardmore acknowledges that, in the vast majority of cases, the court will enforce the decision of an adjudicator, but it says that this is a rare case in which the court should take a different approach. Specifically, Ardmore raises four grounds of objection to the Decision which it says preclude enforcement. First, that the dispute referred to in the Decision had not crystallised (“ Ground 1”), second that the Adjudicator had no jurisdiction to determine a tortious claim for breach of the DPA 1972 (“ Ground 2”); third that the Adjudication was inherently unfair owing to the inequality of arms in terms of documentation (“ Ground 3”) and fourth that the Adjudicator intentionally failed to consider a material Defence relevant to the allegation of deliberate concealment against Ardmore (“ Ground 4”). I shall refer to Grounds 3 and 4 together as “ the Natural Justice Challenges”.

If Ardmore has a real prospect of success on either Grounds 1 or 3, then it will successfully resist enforcement by way of summary judgment. However, if these grounds fail, Ardmore accepts that (owing to the nature of the Decision made by the Adjudicator) it must have a real prospect of success on both Grounds 2 and 4 to resist enforcement.

Ground 2 raises a point of principle which may be of broad interest to the construction industry as a whole, given the current number of disputes in the industry relating to the fire safety of dwellings. Specifically it requires me to consider whether the reasoning of the House of Lords in Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, [2007] 4 All ER 951, HL (“ Fiona Trust”), a case in which the court considered the true interpretation of an arbitration clause, also applies to an adjudication provision. Accordingly, I am invited to determine the point even if my decisions on one or more of the remaining three grounds render it unnecessary to do so. Factual Background

On 30 October 2002, the Basingstoke Property Company Limited (“ BPCL”), as Employer, and Ardmore, as Contractor, entered into a building contract (“ the Building Contract”) for the design, erection and completion of the shell and core, primary services and partial fitting out of apartments at Crown Heights, Basingstoke, Hampshire (“ the Development”). Barratt Southern Counties (“ BSC”) was appointed as BPCL's Employer's Agent. Another Barratt company, Barratt East London (“ BEL”) appears also to have been involved. The Contract Sum was £22,593,000.

The Building Contract is a construction contract within the meaning of section 104 of the Housing Grants, Construction and Regeneration Act 1996 (“ the HGCRA 1996”).

Article 5 and clause 39A of the Building Contract make provision for the reference of a dispute or difference to adjudication. Clause 39A.2, read together with Appendix 1, provides that “[t]he Adjudicator to decide the dispute or difference shall be either an individual agreed by the Parties or, on the application of either Party, an individual to be nominated” by the Royal Institution of Chartered Surveyors.

By a Deed of Assignment of Building Contract dated 3 November 2004, BDW took an absolute assignment of the full benefit of all of BPCL's interests and rights under the Building Contract, together with all rights for BPCL to sue or take action in respect of any breach of the obligations contained in that contract.

It seems that practical completion occurred between December 2003 and June 2004. Accordingly, until the coming into force of the provisions of the Building Safety Act 2022 (“ the BSA 2022”), Ardmore had, for some time, a complete limitation defence under the Limitation Act 1980 (“ the LA 1980”) to any claims that might be brought against it by BDW under section 1(1) of the DPA 1972, which imposes a duty on “[a] person taking on work for or in connection with the provision of a dwelling” to carry out the work in a “workmanlike” or “professional manner” with “proper materials so that as regards that work the dwelling will be fit for habitation when completed”.

However, section 135 of the BSA 2022 inserted a new section 4B into the LA 1980 which had the effect, amongst other things, of increasing retrospectively the limitation period for a claim under section 1(1) of the DPA 1972 from 6 years to 30 years, thereby raising the spectre of a claim being pursued against Ardmore for its work on the Development.

This legislative change prompted BDW to write a Pre-Action Protocol letter to Ardmore on 14 July 2022 (“ the Letter of Claim”), nearly twenty years after practical completion, identifying “fire safety defects at the Development”. I shall return to the detail of the correspondence that then ensued between the parties which is relevant to Grounds 1 and 3, but that correspondence culminated in BDW issuing a Notice of Adjudication dated 21 March 2024. The Notice of Adjudication asserted that a dispute had arisen as to Ardmore's liability to BDW in respect of fire safety defects in the Development, arising by reason of Ardmore's breaches of the Building Contract and/or its duties pursuant to section 1(1) DPA 1972. BDW sought damages in the sum of £15,037,615.01 (excluding VAT), or such other sum as the Adjudicator may decide.

On 25 March 2024, the President of the Royal Institution of Chartered Surveyors nominated Mr John Riches as the Adjudicator.

In its Referral Notice dated 27 March 2024, BDW set out its case on two alternate legal bases: first, breach of the Building Contract, a claim that was said to be “in time” for limitation purposes by reason of the provisions of section 32(1)(b) LA 1980 on the basis that there had been deliberate concealment of Ardmore's alleged breaches of duty, including a duty to install fire barriers. Second, a claim under the DPA 1972, limitation no longer being an obstacle owing to the extended limitation period provided by the BSA 2022.

On 8 May 2024, Ardmore provided its Response to the Referral. Thereafter, over what was an unusually protracted timetable, the parties exchanged additional documents setting out their respective cases (a Reply, a Rejoinder to the Reply, a Surrejoinder, a Rebutter and a Surrebutter). The Decision, running to 166 pages, was provided to the parties on 17 September 2024. The Adjudicator declared that Ardmore had breached its duties under the Building Contract in respect of fire safety aspects in the Development and that it was also liable under the DPA 1972 in respect of the same fire safety defects. He required Ardmore to pay damages and costs in the sums to which I have already referred.

Ardmore subsequently informed BDW that it intended to resist enforcement of the Decision, thereby prompting BDW to issue a claim form seeking enforcement on 1 October 2024, supported by a witness statement from Mr Mark Pritchard of Howard Kennedy LLP, BDW's solicitors. On 3 October 2024, O'Farrell J granted permission to BDW to issue an application for summary judgement prior to service by Ardmore of either an Acknowledgement of Service or a Defence and gave directions for the hearing of the summary judgment application. Further evidence has since been served on both sides in the form of a witness statement from Ms Georgia Whiting, Legal Counsel for the Defendant and a second statement from Mr Pritchard.

It is common ground that the court may grant summary judgment “on the whole of the claim or on an issue”, if it considers that the relevant party (in this case Ardmore) “has no real prospect of succeeding on the claim, defence or issue” (CPR r.24.3(a)) and “there is no other compelling reason why the case or issue should be disposed of at a trial” (CPR r.24.3(b)). The overall burden of proof rests with BDW to establish that Ardmore has no real prospect of succeeding in the defences it raises against enforcement. However, if BDW adduces credible evidence in support of the application, then Ardmore comes under an evidential burden to prove some real prospect of success or other reason for having a trial (White Book Vol 1 at CPR 24.3.3).

At the hearing, Mr Pliener KC advanced Ardmore's four Grounds of objection to the Decision at the outset, with Mr Choat KC replying on behalf of BDW — a tacit acknowledgement from both sides that, in an adjudication enforcement, the existence of a decision in the adjudication will almost inevitably mean that it is for the paying party to satisfy the evidential burden of establishing that it has a real prospect of success on one or more of its arguments...