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In 2002, the Defendant, Ardmore entered into a building contract with Basingstoke Property Company (“BPC”), for the development of a block of apartments in Hampshire. The project reached practical completion between December 2003 and June 2004. BPC assigned its rights and interests under the building contract to the Claimant, BDW in November 2004. At some point prior to July 2022, BDW identified defects that it considers to be fire safety defects at the development.
In 2022, Section 135 of the Building Safety Act 2022 inserted a new section 4B into the Limitation Act 1980, increasing the limitation period or a claim under section 1(1) of the Defective Premises Act 1972 from 6 years to 30 years. On 14 July 2022, BDW sent a Pre-Action Protocol Letter of Claim to Ardmore in respect of the fire safety defects it had identified, alleging a breach by Ardmore of its obligations under the contract, the Defective Premises Act 1972, and/or the relevant Building Regulations. On 8 March 2024 BDW wrote to Ardmore stating that it considered that a dispute had arisen as to its liability for breaches of the contract, and that if Ardmore did not pay it the £14,580,714.76 BDW considered due, it would refer this to adjudication. Ardmore responded, alleging that an adjudication would be oppressive, unreasonable and in breach of natural justice and asserting that no dispute had arisen.
On 21 March 2024, BDW issued its Notice of Adjudication and subsequently issued its Referral Notice, which included two previously undisclosed expert reports. Ardmore sought to challenge the adjudicator’s jurisdiction on the grounds that there was no dispute on a major element of the claim, that BDW had no right to refer its claim to adjudication and no adjudication on such claims could comply with the rules of natural justice. The Adjudicator rejected this challenge. Subsequently, in his decision, the Adjudicator awarded BDW £14,454,914.45 from Ardmore, on the basis that BDW did have a claim under the Defective Premises Act 1972 and Ardmore had in his view deliberately concealed the lack of certain fire barriers.
Ardmore refused to pay this award, and BDW issued proceedings in the TCC for the enforcement of the adjudicator’s decision. Ardmore resisted enforcement on four grounds: (1) The dispute referred had not crystallised; (2) The adjudicator had no jurisdiction to determine a tortious claim for breach of the DPA 1972; (3) The adjudication was inherently unfair owing to the inequality of arms in terms of documentation; and (4) The adjudicator intentionally failed to consider a material defence relevant to the allegation of deliberate concealment against Ardmore.
The judge permitted the enforcement of the adjudicator’s decision. She held that Ardmore’s first ground failed as the bar for a dispute to not have crystallised is high, and it is rate for such challenges to succeed. Ardmore’s second ground also failed, with the judge deciding that the principle in Fiona Trust & Holding Corp v. Privalov 2007 applied to Adjudication. The Fiona Trust principle, which is generally applied to arbitration clauses governed by English law, holds that these will be interpreted with a presumption that the parties, as rational businessmen, intend it to apply to all disputes arising from the relationship between the parties. Ardmore’s third ground failed as the Adjudicator had considered that he was in a position to do justice to both parties, and in any event its lack of documents was its own fault. As to the fourth ground, Ardmore had conceded that this would not be a standalone defence to enforcement, and it failed as Ardmore’s other grounds had been dismissed.
There are a few key points to take away from this case. Firstly, Ardmore suffered in part due to its own omissions in record keeping and production of contemporaneous documents. Accordingly, it is of obvious benefit to be thorough about contemporaneous record-keeping, particularly when dealing with a project that could attract liability under the Defective Premises Act 1972. Secondly, the position taken in this case on the application of the Fiona Trust principle is interesting, as this case supports the application of this to adjudication, so this case if followed could see a further widening in the jurisdiction of adjudicators, in particular as regards fire safety claims.
