In MW High Tech Projects v Balfour Beatty Kilpatrick, the claimant (“MW”) sought a Part 8 declaration that an adjudicator’s decision was of no legal effect. The basis for this claim was that no dispute existed between the parties, and therefore the adjudicator did not have jurisdiction.

Facts

MW had engaged the defendant (“BBK”) to carry out mechanical and electrical works at a project in Hull. The contract was an amended JCT Design and Build Sub-Contract 2011, which provided for sectional completion in five sections.

The contract contained extension of time provisions under which BBK were required to issue a notice where a delay was occurring or likely to occur, along with supporting particulars (clauses 2.17.1 and 2.17.2). BBK also had a duty to notify MW of any changes to existing claims, or provide any information that MW requested in relation to those claims (clause 2.17.3). Once BBK submitted its initial notice, MW was obliged to give its decision in respect of the extension of time as soon as “reasonably practicable”, or alternatively within sixteen weeks from the date of the original notice (clause 2.18.2).

On 2 March 2018, BBK issued a notice claiming an extension of time on Section 3. Between then and 27 February 2019, they issued four further notices in relation to extension of time claims. MW replied to none of these notices. On 30 July 2019, BBK issued an expert report (the “Goodman report”) to MW, which consolidated its previous claims and stated that the overall critical delay to Section 3 was 282 days. Having received no response within seven days, BBK served a notice of adjudication on MW on 8 August 2019. The adjudicator decided in favour of BBK, and awarded it the full 282 days of delay on Section 3.

Parties’ arguments

In the Part 8 proceedings, MW argued that the issuing of the Goodman report amounted to a new claim, as the delay analysis identified a new critical path. This new claim would then trigger a fresh sixteen-week consideration period. MW contended that as that consideration period had not expired by the time BBK referred the dispute to adjudication, no dispute could be said to have crystallised and therefore the adjudicator did not have jurisdiction to decide on the extension of time.

BBK argued that the notices following the initial notice dated 2 March 2018 simply provided further information on the issue of delay to Section 3 and did not amount to a new claim. Therefore, the sixteen-week consideration period had elapsed and a dispute existed, thus giving the adjudicator jurisdiction to decide it.

Decision

O’Farrell J restated the principles set out by Jackson J (as he then was) in Amec Civil Engineering Ltd v The Secretary of State for Transport [2004] EWHC 2339 (TCC) as to whether a dispute exists between the parties. In Amec, the judge stated that the point where a claim which has not been expressly declined becomes a dispute for the purposes of The Housing Grants, Construction and Regeneration Act 1996 (as amended) (the “HGCRA”) are dependent on the underlying facts.

The judge also cited Cantillon v Urvasco [2008] EWHC 282, where Akenhead J stated that a dispute should be defined broadly, and that “the claiming party [in an adjudication] is not limited to the arguments, contentions and evidence put forward by it before the dispute crystallised”.

Consequently, O’Farrell J held that the claims notices issued up to and including 27 February 2019 were cumulative, and a dispute had crystallised sixteen weeks thereafter. She also held that the Goodman report sent by BBK on 30 July 2019 did not amount to a fresh notification, as it simply supported the previous claims. Therefore, a dispute existed, and the adjudicator had produced an enforceable decision.

The judge further stated that “[i]t is a matter of fact and degree whether in any given case, a proper analysis leads to the conclusion that information provided under clause 2.17.3 supplements a notified claim or gives rise to a new claim”.

Commentary

The judgment confirms that where a contract contains claims notice provisions and a consideration period, no dispute will arise until that period expires. O’Farrell J noted that such provisions should be construed in a “sensible and commercial” way, whilst maintaining a party’s right under the HGRCA to refer a dispute to adjudication “at any time”.

O’Farrell J confirmed that attempts by a contractor to avoid adjudication by treating additional information as a fresh claim could be subverted by a sub-contractor.  In this scenario, the sub-contractor could refer a dispute as to whether a new claim existed or the contractor was in breach of clause 2.18. This guidance is particularly helpful to users of JCT contracts.

It was also notable that MW had failed to acknowledge or respond to any of BBK’s claims notices, as required by the contract. Parties should follow the agreed contractual notice procedures, especially when they are designed to manage disputes within the confines of the contract.

Expert
Liam Hendry
Solicitor