In an important decision, the Technology and Construction Court has ruled in BDW Trading Limited v Ardmore Construction Limited [2024] EWHC 3235 (TCC) that, for the first time, it is open to a party to bring a claim under the Defective Premises Act 1972 ("DPA") via adjudication.
The case related to historic cladding issues, with practical completion occurring between 2003 and 2004. BDW were awarded over £14 million in an adjudication, but Ardmore refused to pay. In enforcement proceedings, Ardmore argued, amongst other things, that the adjudicator did not have jurisdiction to determine a claim relating to the DPA.
Under Article 5 of the Contract, disputes arising “under this Contract” could be referred to adjudication - mirroring the wording used in section 108(1) of the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA”). This was contrasted with Article 6A of the Contract where disputes arising “under this Contract or in connection therewith” could be referred to arbitration.
Ardmore argued the difference in language – "under" versus "under… or in connection therewith" – meant the adjudication clause did not apply to the DPA claim. The DPA claim arising under statute – not "under the Contract."
The Court disagreed, deciding that all disputes arising out of the parties' contractual relationship - whether "under", "in relation to", or "in connection with" the contract - should be decided by the same adjudication clause. The rationale being that as the parties included such an adjudication clause, they are likely to have intended for all disputes arising out of that relationship to be adjudicated.
Impact on the Industry
Due to the recent changes to the DPA under the Building Safety Act 2022, the limitation period for a claim under section 1(1) of the DPA has been extended retrospectively to up to 30 years - requiring works to a dwelling to be done in a workmanlike or professional manner and with proper materials so that the dwelling will be fit for habitation.
This means that an adjudication could potentially now be brought for works completed up to 30 years ago, allowing historic cladding claims (which were otherwise time-barred) to be decided by adjudication.
Whilst this does offer claimants a potentially quick way to unlock a dispute on an interim basis, it places defendants at very high risk – potentially having to fend off highly technical, and high value, historic disputes in a summary dispute resolution procedure. This is a developing area of the law, and we will continue to monitor the position.
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